Overhead and Profit: Its Place in a Property Insurance Claim

Adjusters International Disaster Recovery Consulting

Overhead & Profit: Its Place in a Property Insurance Claim

By Edward Eshoo Jr.

An interesting discussion is now taking place in the insurance industry over general contractor overhead and profit and its rightful place in the property insurance claim.

The terms “repair cost” or “replacement cost” are not clearly defined in the typical property insurance policy. Nevertheless, no reasonable property insurer would dispute that labor and materials are elements comprising repair or replacement cost. But what about general contractor overhead and profit? Before answering this question, it helps to have a clearer understanding of the role of the general contractor and exactly what falls into the category of general contractor overhead and profit.


In the property insurance claim, there is occasional room for debate between policyholders and their insurers. Questions may arise about what to repair or replace, or there can be uncertainty over the fairest and most reasonable methodology used to calculate actual cash value (ACV).

There might also be discussions over which expenses contribute to an ACV estimate — labor, materials and one that readers of our feature article might find particularly interesting and useful — general contractor overhead and profit (GCO&P).

In this issue of Adjusting Today, attorney and first-party property insurance expert Edward Eshoo Jr. takes on those insurers that “... withhold, exclude, deduct or fail to include the costs of general contractor overhead and profit, GCO&P, in their calculation of the repair or replacement cost …”

Citing compelling case law, state insurance commissioner bulletins, and accepted insurance industry practices, Eshoo brings us an insightful discussion of the various conditions and circumstances that support the inclusion of GCO&P in the cost to repair or replace.

We hope you find this information helpful.

Sheila E. Salvatore Editor