Documenting O&P When a Carrier Cites a Three-Trade Minimum

Some carriers deny General Contractor's Overhead and Profit on the theory that it only applies when three or more trades are coordinated on a job. Ask the carrier to identify the specific policy provision, statute, or rule it is applying to your claim. Policy language and state rules differ, so the answer depends on your policy, your jurisdiction, and the claim. If the answer is an internal adjusting guideline rather than a policy term, your documentation of the job is what you have to work with, and that is what the rest of this article is about.

O&P is generally described as compensation for the coordination, the sequencing, and the liability a general contractor carries on a job. Whether a particular job supports it depends on the facts of that job and on the applicable policy and jurisdiction, not on a trade count alone. A single-trade job with real scheduling complexity, subcontractor liability exposure, and oversight may support a claim for O&P. A four-trade job with no actual coordination, where every sub showed up and did their piece independently, may not. A trade count is easy to tally, which is one reason it gets cited. Documented coordination is what lets you show the actual picture of your job. NanoForce's file review checks whether the O&P claimed on a file is supported by the coordination and liability record in it.

So the fix isn't arguing "we deserve O&P" as a principle. The carrier is usually not disputing the principle. It is questioning your specific file. What helps is documentation: the sequencing you managed, the subs you supervised, the liability you carried, the decisions only a GC on that job could have made. Write that down on every job, the way you'd write down a moisture reading. If it isn't in the file, an adjuster reading the file has nothing to evaluate it against

The second problem is easier to miss, and it's one contractors do to themselves. "General Contractor's Overhead and Profit" is a line item in Xactimate. It is not an IRS category, and it is not a standard accounting classification. Your books may not separate "GC overhead" from regular overhead. You report one number: your real overhead and profit, the number your accountant defends every year. Xactimate commonly starts from a round default percentage, often ten and ten, which may have little to do with your actual cost structure.

When your real number doesn't match the software's default, that mismatch can raise questions. It helps to arrive with your own number rather than letting the software's number stand in for it. A file that uses the default percentage can look like nobody checked it. A file that cites your own figure, and shows where it comes from, shows the work behind it.

Put the two together and the preparation gap is clear. A contractor who can produce the actual sequencing and liability carried on a specific job, and the overhead and profit percentage their business actually runs on, independent of what Xactimate assumes, is better prepared when a carrier cites a three-trade minimum, because the file already documents the coordination. Outcomes still depend on the policy, the jurisdiction, and the claim, and no result is assured

That's the whole fix: document what you actually coordinated, and know your real number before the adjuster asks for it.

This article discusses documentation and negotiation practices for insurance claims. It is not legal advice. Contractors should consult a licensed attorney or public adjuster for guidance specific to their claims and jurisdiction.

NanoForce's Claims-to-Cash system audits every file's documentation before submission, including whether the coordination and liability record supports the O&P claimed on that specific job, so the file doesn't rely on carriers overlooking a gap that was never closed. See how it works on the Claims-to-Cash page →

Related reading: The pre-submission audit restoration owners are missing · How owners spot leakage across locations at once Deciding if a full audit engagement is worth it for O&P disputes alone? See pricing.