Insurance Estimate Scenario: Overhead and Profit (O&P) — Why It’s Included, Removed, and What Actually Determines It

Most homeowners assume that when multiple types of work are required after a loss, the cost of managing that work is automatically included in the estimate.

This is commonly referred to as overhead and profit (O&P).

The expectation is simple:

👉 if more than one trade is involved, the work must be coordinated

In reality, O&P is one of the most commonly debated parts of an insurance estimate.

This scenario is based on real claim outcomes and field experience. It reflects how O&P is handled in practice — including when it is included, when it is removed, and why those differences occur.

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The Situation: A Multi-Trade Repair

After a property loss, the repair requires:

• drywall
• painting
• flooring
• electrical or plumbing

Even in smaller losses, this may also include:

• insulation
• finish carpentry
• additional minor trades

At this point:

👉 the project involves more than one type of work

Outcome 1: O&P Is Not Included

In some cases, the estimate is written without O&P.

Instead, it includes:

• individual trade labor
• material costs
• standard line items

In this scenario:

👉 the estimate reflects the work, but not the coordination of the work

Outcome 2: O&P Is Challenged With Common Arguments

In many cases, O&P is directly challenged.

Common responses include:

• “There are not enough trades involved”
• “O&P only applies above a certain number of trades”
• “Some of this work can be completed by one trade”

This can lead to situations where:

• trades are grouped together
• scope is simplified on paper
• coordination is minimized within the estimate

Real-World Example

In some situations, even when multiple trades are clearly present, the scope may be interpreted differently.

For example:

• drywall
• painting
• finish carpentry
• minor insulation

A common response may be:

👉 one trade can perform portions of another

Such as:

• drywall installers placing insulation
• combining tasks under a single trade

This changes how the estimate is interpreted — even though the work itself has not changed.

Outcome 3: O&P Is Included

In other cases, O&P is included.

This typically occurs when:

• multiple trades are clearly defined
• sequencing and coordination are evident
• the estimate reflects the project as a whole

In this scenario:

👉 both the work and the coordination of the work are included

Outcome 4: The Homeowner Performs the Work

In some situations, a homeowner may choose to manage or perform the work themselves.

This can include:

• coordinating trades
• scheduling work
• overseeing the project

In these cases, O&P may not be included when:

👉 the project is not structured around a general contractor

The estimate may instead reflect:

• individual trade costs
• materials and labor
• limited or no coordination costs

If the homeowner later decides to:

• hire a contractor
• or transition the project

Revisiting the estimate may require:

• updated scope
• additional review
• revised documentation

Where the Difference Comes From

All scenarios involve the same work.

The trades did not change.

The damage did not change.

The difference is:

• how the project is defined
• how the estimate is structured
• how the work is interpreted

The Reality: What Happens on Every Job

Regardless of how the estimate is written:

• trades must be scheduled
• work must be sequenced
• the project must be reviewed
• decisions must be made on site

Even on smaller jobs:

👉 someone still has to go to the property
👉 someone still has to coordinate the work

What This Means in Practice

When more than one trade is involved:

👉 the work must be coordinated

That coordination includes:

• scheduling
• communication
• sequencing
• oversight

If the estimate assumes:

👉 one trade will perform multiple roles

That assumption still defines:

👉 how the work is being organized and managed

The Hidden Factor: How the Scope Is Presented

The inclusion of O&P is tied to how the scope of work in an insurance claim is defined.

If the scope is presented as:

• separate tasks → coordination may not be clearly reflected

If the scope is presented as:

• a coordinated project → the structure of the work becomes clear

Why This Matters

From a homeowner’s perspective:

• two estimates may look very different
• one may include project-level costs
• another may not

The difference is not the damage.

👉 it is how the work is defined and organized

The Most Important Takeaway

👉 Work involving more than one trade requires coordination
👉 That coordination exists regardless of how the estimate is written
👉 The estimate determines whether that coordination is reflected
👉 The estimate controls how the project is valued

What Homeowners Should Understand

• Multi-trade repairs involve coordination, even on smaller jobs
• Estimates may reflect that coordination differently
• How the project is structured affects how it is evaluated
• Decisions made early in the estimate can affect options later

One Last Thing (What Everything Comes Down To)

Everything comes down to the estimate.

If your claim is delayed, underpaid, or being pushed back, that’s usually the reason.

If you’re not finding a clear answer to your situation here, go through the other case studies. Most real-world claim problems — and how they were handled — are already shown there.

And if your estimate is in good shape, the other issues tend to be straightforward to push through.

To understand why this happens and how to fix it, review the following:

Why Insurance Claims Get Delayed (It Comes Down to the Estimate): The Real Reason Claims Get Delayed
The Entire Insurance Industry Runs on One Thing That’s Rarely Explained: It’s the Estimate — And This Is Why Contractors Get It Wrong: Contractors Don’t Fail at Building — They Fail at Writing
The Entire Insurance Industry Runs on One Thing That’s Rarely Explained: It’s the Estimate — And This Is Why Adjusters Rewrite Instead of Approving: Adjusters Don’t Approve What They Can’t Follow
The Entire Insurance Industry Runs on One Thing That’s Rarely Explained: It’s the Estimate — And This Is What It Should Look Like: A Proper Estimate Is Not Just a Number

How to Read an Insurance Estimate (Room by Room): Why Most Homeowners Feel Confused by Estimates

How to Vet a Contractor, Public Adjuster, and Mitigation Company: Why This Matters More Than Anything Else

If you still have questions about your claim, visit our Homeowners Insurance Claim FAQs page for quick answers and links to detailed guides.

Learn More At ClaimHelpMe.com

This page explains the basics of how this part of the insurance claim process works.

However, inside ClaimHelpMe.com, homeowners can access real repair estimates, detailed examples, and step-by-step explanations showing how claims are documented, evaluated, and presented to insurance carriers.

The free content explains the fundamentals.
The ClaimHelpMe platform shows how the process actually works.

Explore more homeowner insurance claim guides in our Claim Guides section.

About The Author

Mark Grossman is a Licensed Public Adjuster and NASCLA Certified Contractor with 28 years in the restoration insurance industry and 35 years in construction.

Learn more → Mark Grossman