When you're a contractor dealing with insurance claims, understanding industry-specific jargon is crucial. One term you'll frequently come across is "O&P," which stands for Overhead and Profit. In this blog, we'll demystify O&P and guide you through the process of incorporating it into your insurance claims, ensuring you're fairly compensated for your services.
What is O&P (Overhead and Profit)?
O&P, Overhead, and Profit are expenses that contractors incur while managing and executing a project. Overhead covers the indirect costs of running a business, such as office rent, utilities, insurance, and administrative staff salaries. Profit is the margin that contractors earn for their expertise and the risks they undertake in the construction industry. These two components are essential for the financial stability and growth of your contracting business.
Why is O&P Important in Insurance Claims?
In the context of insurance claims, O&P refers to the additional costs that insurance companies should cover when you're repairing or rebuilding a structure. When a disaster, such as a fire or storm, damages a property, insurance claims typically cover the actual cost of repairs, including materials and labor. However, what many contractors overlook is that these claims should also include Overhead and Profit, as these are legitimate costs of doing business.
How to Get O&P into Your Insurance Claim?
- Document Everything: The first step in including O&P in your insurance claim is thorough documentation. Keep meticulous records of all project-related expenses, including invoices, receipts, and payroll. This will substantiate your claim.
- Know Your Policy: Familiarize yourself with the insurance policy. It may explicitly state that O&P is covered, or it may not. If it's not mentioned, you'll need to negotiate with the insurance company to have it included.
- Provide a Detailed Estimate: When submitting the insurance claim, provide a detailed estimate that clearly outlines the costs of materials, labor, Overhead, and Profit. This transparency will make it easier for the insurance adjuster to understand your request.
- Support Your Claim: To strengthen your case, you can provide evidence of industry standards. Show that including O&P is a common practice in the construction industry. This can be done by presenting documents from professional associations or industry publications.
- Negotiate Effectively: Be prepared for negotiations with the insurance company. Understand the importance of O&P in ensuring that your business remains financially stable and can continue providing quality services. Be persistent and polite during negotiations, and be willing to provide additional documentation or clarification if necessary.
- Consider Professional Help: If negotiations stall or become too complex, it may be wise to consult with a public adjuster or legal counsel, like The Voss Law Firm, experienced in insurance claims. They can provide valuable guidance and support in securing O&P.
As a contractor, getting Overhead and Profit (O&P) into the claim is essential to ensure that your business remains financially healthy while providing high-quality services. By understanding the concept of O&P, meticulously documenting expenses, and effectively negotiating with the insurance company, you can increase the chances of a successful claim.
At the Voss Law Firm we strive to help policy holders get back to normal as fast as possible after an insurance denial, or “low ball” offer. If you feel you have been unfairly treated by your insurance company, please call (888) 296-1986, input your information for a Free Claim Review or chat with us today.