The Battle for O&P: It’s Not Just About “Three Trades”

General Contractor Overhead and Profit (O&P) is arguably the most frequently disputed 20 percent in the insurance repair industry. A common objection from carriers sounds like this:

“This job isn’t complex enough. You don’t have three trades, so we aren’t paying O&P.”

The problem is that the so-called “three trade rule” is not a universal policy requirement. It is a common internal guideline used by some carriers to evaluate complexity, but O&P is not strictly determined by the number of trades on an estimate.

The real question is: Are you functioning as a general contractor or as a single-trade contractor?

O&P is typically justified when the contractor assumes responsibility for coordination, scheduling, risk management, and site supervision. Counting trades (for example, drywall plus paint plus flooring) does not tell the whole story. The justification is based on the management burden.

Ask yourself:

• Did you coordinate material delivery sequencing, such as flooring arriving after paint but before trim installation?
• Did you manage municipal permitting or inspections?
• Did you supervise multiple subcontractors or specialty trades?
• Did you control access, scheduling, and homeowner communication?
• Did you assume liability for the overall project performance and outcome under your contract?

If you are acting like a carpenter, you will be paid like a carpenter. If you are acting as a general contractor, your estimate should reflect that role.

How to document it

If you assume GC responsibilities, you also assume risk. Do not simply request “10 and 10” without explanation. Include a clear narrative in an F9 note (or opening statement) describing why the project required active coordination and supervision. (See: Why Your Xactimate Estimate Failed)

Example justification language:

“Project required sequencing of multiple trades, coordination of material logistics, management of permitting and inspections, subcontractor oversight, and active site supervision to ensure code compliance and homeowner safety.”

That narrative reframes the conversation.

It makes it clear that you are not just performing tasks.

You are managing a project.