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Contractors O&P - The insurance companies are trying not to pay!

Writer's picture: Brenda HeffnerBrenda Heffner

In this article you will learn why the insurance companies should and need to pay contractors Overhead & Profit.

Overhead and profit are essential components of construction projects that ensure the success and sustainability of contractors and their businesses. Contractors incur various costs, including rent, utilities, salaries, insurance, and equipment, which are considered overhead expenses. These expenses are necessary to run the contractor's business and cannot be directly attributed to a particular construction project.

Profit is the additional amount that contractors earn on top of their overhead expenses. It compensates contractors for their expertise, risk, and investment in a construction project. Profit also motivates contractors to provide high-quality workmanship, complete projects on time, and ensure client satisfaction.

Paying overhead and profit on construction projects is necessary to ensure that contractors can continue to operate and provide the necessary services. Without overhead and profit, contractors would not be able to sustain their businesses, leading to a decline in the quality of workmanship, decreased availability of contractors, and ultimately higher costs for construction projects.

Moreover, overhead and profit are standard industry practices that have been recognized and accepted by clients, regulatory agencies, and the construction industry as a whole. They are considered fair compensation for contractors and are an integral part of the construction contract negotiation process.

In conclusion, paying overhead and profit on construction projects is necessary to ensure the success and sustainability of contractors and their businesses. It compensates contractors for their overhead expenses and provides the necessary profit to sustain their operations and continue providing high-quality services.


The insurance company does not have the final say in who or what they will pay for the insurance claim.


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