What is O&P in restoration?
O&P is overhead and profit, a markup of 10 percent for overhead plus 10 percent for profit that a restoration contractor adds to an estimate when acting as the general contractor coordinating multiple trades on an insurance repair. In the trade it's called the 10-and-10, and it's one of the most denied items in property claims.
What the 10-and-10 actually covers
The two tens aren't padding. Overhead is the cost of running the company that never shows up on a line item: office staff, estimating hours, project management, insurance, trucks, the warehouse. Profit is what you earn for carrying the risk and running the job. Xactimate line-item pricing assumes a single trade doing its own work. The moment you're sequencing demo, drying, rebuild, and four subs behind them, somebody is doing general contractor work, and the 20 percent is how that work gets paid.
Why carriers deny it
The standard denial script is the three-trades test: no O&P unless the job involves three or more trades. Here's the problem with that script. It's claims-desk guidance, not policy language. Most policies never mention a trade count at all. The test that actually holds up is whether a general contractor's coordination was reasonably necessary for the repair, and plenty of two-trade jobs need real coordination.
The denials keep coming because the math favors them. Strip 20 percent off every rebuild estimate and it compounds into serious money across a carrier's book. One receipt shows what happens when the denial gets tested: a dispute over roughly a $33,000 restoration invoice settled for $335,000 after a retired Allstate claim manager testified the carrier acted in bad faith by refusing to pay O&P. Read that number both ways. Denial has a price, and that price shows up rarely enough that the playbook hasn't changed.
The three-trades fight
Even when adjusters accept the test, they play counting games with it. Drywall and paint get lumped into one trade. Mitigation gets excluded from the count because that's your own work. Or the job gets called simple enough that a homeowner could have coordinated it themselves. Notice what all of these have in common: they argue about arithmetic instead of the actual question, which is who scheduled, sequenced, supervised, and carried responsibility for the work.
What to do about it
You win the O&P fight with the file, not the phone call.
- Put O&P on page one of the estimate from the start. Holding it back as a negotiating chip makes it read as optional.
- Document the GC function from day one: sub schedules, permit records, sequencing notes, supervision logs, the punch list. If you coordinated it, the file should prove it.
- When it's denied, ask for the specific policy language supporting the denial, in writing. Most three-trades denials cite an internal guideline, and adjusters know the difference.
- Track your O&P recovery rate by carrier. The shops that get paid treat this as a system, not a per-job argument.
The pattern under all of it: O&P is defensible when the coordination is provable. Make it undeniable on page one and you stop renting a lawyer to collect it three years later.
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