Overhead & Profit on Insurance Xactimate Claims

If you deal with insurance, you understand the “10&10” which stands for Overhead and Profit. Here’s an actual conversation from last week

(Note: we were working in support of one of our Public Adjuster Clients during this conversation)

Adjuster: This claim does not warrant Overhead and Profit.

Me: There are over 5 trades – roofing, gutter, siding, windows, satellite, and fencing.

Adjuster: Yes – but it’s not complex enough.

Me: This job is $252,000 without O&P. It involves 13 buildings. It requires logistics, planning, permitting, and must be conducted by a General Contractor.

Adjuster: So you are saying because it is a lot of buildings, you deserve Overhead & Profit?

Me: No, I’m saying because the policy allows such, because the owner incurred the cost, because there are many trades, and because it is complex. More than anything, can you name me a place where I’m not going to win this argument? Appraisal, Litigation, your boss? Do you really think the examiner isn’t going to get this.

Adjuster: Well, they told me not to approve Overhead and Profit before I went to the job. So I don’t think you will get it.

Me: Let me talk to your Supervisor!

We won this argument for the Public Adjuster we were serving. The 20% additional on the job was a welcome addition to the loss repair funding. At my company, WriteLoss, I can tell you we carry a broad burden in dealing with the O&P payments to Insureds, for Contractors and Public Adjusters.

There are really three arguments the carriers use to avoid giving O&P:

  1. There are too few trades on the job. So you don’t need overhead and profit because you don’t need a General Contractor
  2. The job lacks the “complexity” to demand management no matter how large or how many trades
  3. There is no reason, we just don’t want to give it to you.

The insurance carriers often seek to avoid paying O&P as a matter of internal policy. In November of 2013, one of the largest carriers trained its staff to “stop offering baby-boomers overhead and profit, unless they ask.” If you imagine for one moment this system is fair, it is not. All this said, knowing a strategy up front to get the 10/10 award on the job, makes most claims go without a hitch. Those that are not tried by this same fire and know a strategy for such, often fail to get deserved Overhead & Profit.

If you are fighting out Overhead and Profit, it becomes a discipline of data more than anything else. If you can bring actual incurred costs most of the time you can win. Our Supplement Claims Manager, recently said; “I’d rather fight O&P in the middle of the job within another supplement for the job, then fight it out initially.” He makes a powerful point. By bringing: the list of trades, additional items, contracts, and invoices, it becomes easier to win the Overhead & Profit Argument.

WriteLoss Inc. has provided great deal of work to Independent Adjusters. We used to provide the narratives and the scopes for carrier scopes. We stopped this work in 2015 because it just was not a good fit for our constant and growing core business. We see a great deal of logical and crazy demands relating to Overhead & Profit. When we ask the IA about these prohibitions, we are often met with an answer on “how” to get Overhead & Profit paid from a particular carrier. This has fed the other side of our work, but more than anything, it has highlighted the nature of the “game.” O&P is winnable, but not always the same from claim to claim.

Most contractors and Public Adjusters don’t have the time to fight these fights. But doing this back end work to end the argument for this addition 20% of every job requires such. We do this work and offer help to anyone needing the Overhead & Profit fight handled, or just need some advice.

P. David Herring, CEO
WriteLoss Services
Xactimate Insurance Scopes for Adjusters, Contractors, & Attorneys

If you are an Adjuster, Contractor, or Lawyer needing to build your business with detailed scopes and other insurance oriented work, that is all we do at WriteLoss. We would love to serve in any way possible.