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A resource from RocketLevel for restoration company owners and estimators, backed by decades of experience in the trade. About a 6-minute read.
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Reviewed October 2026. Policy forms and state insurance rules vary. Use this page to know what to ask, then confirm with your state insurance department or a construction attorney before you rely on it.
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Ask a room of restorers about overhead and profit and you will get a dozen different answers, which is exactly the problem. O and P is money you have earned for work you actually did, and a lot of contractors either leave it off, fail to justify it, or assume it will never be approved, so they stop asking. On a large commercial job the coordination you provide is real work, and giving it away quietly is the same as discounting the job. The fix is to understand what O and P is, when it applies, and how to make your entitlement obvious rather than arguable.
General contractor overhead and profit, commonly expressed as ten percent overhead and ten percent profit, is not part of the cost of the physical work. It compensates the contractor for the cost and the skill of running the job: coordinating multiple trades, scheduling, supervising, managing the site, and carrying the risk of the whole project. The line items pay for the work; O and P pays for the general contracting. Conflating the two is how the entitlement gets lost.
Before you quote the number, know what it produces. The 2025 RIA Cost of Doing Business Report, the Restoration Industry Association (RIA) annual benchmark report on fiscal year 2024 (FY2024) data, works this through on its printed pages 47 and 48: on $100 of cost, a 10% markup for overhead followed by a 10% markup for profit bills out at $121, which leaves $21 of profit, and $21 divided by $121 is a margin of about 17.4%. Markups are calculated on cost, margins on revenue, and the two get used interchangeably. The model also assumes your overhead runs at 10% of the job, while the same report puts average total overhead at 38.53% of revenue for FY2024 on its printed page 37. The full working, and what it means when you are reading an estimate someone else built, is in How Restoration Pricing Actually Works: Price Lists, Market Conditions, and O and P.
This page is on the Getting Paid shelf, and on that shelf the money comes from two very different places. Read the right half.
On an insurance-funded loss, O and P is an entitlement question. Whether general contractor overhead and profit is owed, and at what stage of the claim, is governed by the policy language and by any regulation or case law your state has on what a reasonable settlement includes, so look up yours. You are documenting to support a position, and the carrier's file is where it gets decided.
On a direct-pay commercial job, there is no carrier and there is no entitlement. A property owner, facility director, or general contractor is paying you out of their own budget. O and P is simply a markup, and it is worth exactly what your signed contract or your accepted schedule of values says it is worth. Get it into the agreed pricing structure before you mobilize. Adding twenty points to the bill at closeout because the job turned out to require general contracting changes a contract price the owner never agreed to, and it is a quick way to turn a paid invoice into a disputed one.
The documentation discipline below serves both.
The practical test is coordination and complexity. When a job requires general-contractor-level coordination, multiple trades that have to be sequenced, supervised, and managed, that is the work O and P exists to pay for, and whether it is owed on a given claim turns on the policy language and your state's rules. You may have heard a rule of thumb that O and P applies once a job involves three or more trades. It circulates as trade lore with no published source behind it, so treat it as a guideline and never as a rule. The real question is whether the job required you to act as a general contractor coordinating the work, and on multi-trade commercial and large-loss jobs the answer is usually yes. A multi-trade reconstruction in an occupied commercial building is general contracting by any honest definition.
One pushback worth understanding ahead of time: when you self-perform most of the trades with your own crews rather than hiring subcontractors, some carriers will question paying general-contractor O and P at all, on the view that O and P is the coordination margin a general earns for managing separate subs. The contractor's counter is straightforward and fair: the coordination, sequencing, supervision, and risk of a multi-trade job are real work whether the trades are subbed out or run in-house, and that general-contracting effort is what O and P compensates, not the act of writing subcontracts. The way through this is the same as everywhere else on the page: document the coordination and complexity the job actually required, and keep the conversation on the facts rather than the principle. Confirm how your state and the specific policy treat self-performed work with your own advisors.