Contractor Overhead & Profit Gap Estimator
RJContractor Overhead & Profit Gap Estimator
This estimator compares a 's and , often called , with what is already on an insurance repair estimate. The default rates are 10% overhead and 10% profit. The result is a discussion figure, not a promise of payment.
Step 1 of 5, Your claim
What to do with your results
Whatever number the estimator gave you, treat it as a starting point for questions, not a final answer. The most useful thing you can do in the next day or two is turn the figure into a paper trail.
Save the PDF, then pull up the insurer's itemized estimate and look for two things: whether overhead and profit appears as its own line, and whether the trades you listed are all accounted for. If a trade is missing, or the pricing looks like each crew will work in isolation, write that down next to the line item.
Next, get one to three written bids from general contractors, and ask each to show their markup as a separate line. Contractor bids turn a vague "this seems low" into something an adjuster can actually compare against. While you wait, ask the insurer in writing how it decided whether a general contractor was needed, and keep a simple log of every call and email, with dates and names.
Finally, make sure everyone is working from the same picture of the job. Much of the disagreement over overhead and profit traces back to agreeing on the scope of damage, meaning which repairs are covered and whether they are replaced or patched. A photo-backed list of rooms, materials and trades makes that conversation shorter.
The mistake that costs homeowners the most
The most common mistake is treating the first estimate as the final number, especially when it looks long and detailed. A page of line items can feel thorough even when it prices every trade as if it will show up alone and nobody has to schedule, supervise, or carry the risk of the whole project.
A single storm can turn into a multi-trade job fast. Hail damage, for example, can mean roofing, gutters, siding, window screens and interior ceiling repairs, all of which have to happen in a sensible order. If the estimate leaves out the cost of coordinating that work, the gap doesn't disappear; it lands on you, either as a bill from the contractor who does coordinate or as a patchwork repair you end up managing yourself.
A related trap is hiring each trade separately to avoid the conversation, then discovering that no one is responsible for the gaps between their work. It can be the right call on a small, simple repair. On a complicated one, it often costs more in time, delays and rework than the markup would have.
When outside help makes sense
You do not have to use any of this alone, but it helps to know who does what. A general contractor prices and runs the repair itself, and is the right first call for bids that show real costs, including their own markup. A public adjuster works for the policyholder rather than the insurer: they review the policy, document the damage, prepare the claim, and negotiate it. That is a different skill set from building, and it is hard to replicate on your own because it depends on knowing how policies are worded and how estimates are typically built. An attorney comes into the picture mainly when there is a dispute over what the policy means or the insurer will not engage.
On cost, fees are commonly structured as a percentage of the settlement, sometimes with hourly work or benchmarks for particular claim stages, and they vary by state. Ask for the fee terms in writing before you sign anything, and make sure the person you hire is licensed where you live.
Frequently asked questions
How do I read the overhead and profit gap this calculator shows?
The gap is the difference between the overhead and profit you would expect at the rates you chose and whatever overhead and profit the insurance estimate already includes. Treat it as a starting point for a conversation with your insurer, not a promised payment. A strong signal means your repair has features, such as several trades, permits, or a required work sequence, that usually make a general contractor reasonable. A weak signal means the insurer may argue that the work is simple enough not to need one.
Is overhead and profit just a bonus the contractor adds on top?
No. Overhead covers the general contractor's cost of running your job, such as scheduling, supervising the trades, insurance, permits, and office expenses. Profit is the margin for taking responsibility for the whole project. The common 10 percent plus 10 percent figure is an industry convention, not a law, and the right amount for your repair depends on your policy, your state, and the contractor.
What documents do I need to ask for overhead and profit?
Start with the insurer's itemized estimate showing every line item and whether overhead and profit appears as its own line. Add photos of the damage, a list of every trade involved, written bids from general contractors that show their markup, permit requirements from your local building department, and a simple timeline of which trades must finish before others can start.
Can my contractor or an attorney handle this instead of a public adjuster?
They serve different roles. A general contractor can give you written bids and explain what the work will cost, including their own markup. A public adjuster prepares and negotiates the insurance claim itself. An attorney becomes relevant mainly when there is a dispute over what the policy means or the insurer refuses to cooperate. Many homeowners use more than one of these at different stages.
How accurate is this overhead and profit estimate?
It applies a simple percentage to the repair subtotal you enter, so it is a ballpark figure for discussion. Actual overhead and profit depends on the contractor's rates, your local market, your policy language, your state's rules, how the insurer prices individual line items, and whether depreciation is withheld. It is not a quote, a legal opinion, or a prediction of what your insurer will pay.
