What does 10 and 10 mean in insurance?

It is shorthand for 10% overhead plus 10% profit, the usual general contractor allowance, as the NFIP Claims Manual describes it. A 2013 NFIP bulletin, archived in 2018, applied both percentages to the same gross building estimate.

When is overhead and profit included in a claim estimate?

Usually when the repairs are complex enough to need a general contractor to coordinate the trades. The NFIP Claims Manual uses that test, and the adjuster evaluates each claim and documents the decision in the file.

Is overhead and profit deducted from actual cash value?

It depends on the state. Texas calls deducting prospective contractors' O&P and sales tax, in addition to depreciation, an improper claim settlement practice. Colorado's Division of Insurance prohibits it for dwellings under replacement cost policies that are not repaired or replaced.

Is overhead and profit paid if the owner manages the repairs?

An owner who runs the job takes on the coordination but earns no contractor's profit. Under the NFIP Claims Manual, a policyholder who performs the duties of a general contractor may get up to 10% overhead, but no profit.

Overhead and profit

Claims · Cloudbreak team · Updated October 29, 2026 · 5 sources

Definition

Overhead and profit (O&P) is the charge a general contractor adds to a repair estimate to cover the cost of running the business and the job, plus a profit. In a property claim it usually belongs in the estimate when the repairs are complex enough to need a general contractor to schedule and coordinate the work.

How it works

A repair estimate prices labor, materials and equipment trade by trade. A general contractor who hires the trades, schedules them and runs the site also has costs those line items do not capture, and expects a profit. O&P is how the estimate pays for both.

Overhead comes in two kinds. General, or indirect, overhead is the cost of running the business that no single job carries: office rent, utilities, business insurance and licenses, office staff, marketing, travel and legal fees. Job, or direct, overhead is what this project needs beyond labor and materials, such as job trailers, foremen, schedulers and superintendents, and temporary water and sanitation.

O&P is usually written as two percentages of the repair estimate. A common allowance is 10% overhead and 10% profit.¹

Several trades repairing an apartment building at once

Example

An example $50,000 gross building estimate at the usual 10% overhead and 10% profit, each figured on the gross estimate as the archived 2013 NFIP bulletin did:^1,2

Example O&P on a $50,000 building estimate^2,1
	General contractor runs the job	Owner runs the job
Gross building estimate (example)	$50,000	$50,000
Overhead	$5,000 (10%)	Up to $5,000 (up to 10%)
Profit	$5,000 (10% of the same $50,000)	$0
Estimate with O&P	$60,000	Up to $55,000

The example $60,000 estimate with a general contractor^1,2

Repairs: labor, materials, equipment$50,000
Overhead, 10%$5,000
Profit, 10%$5,000
Total$60,000

O&P also matters in an actual cash value payment. Using the $60,000 estimate above with an example $15,000 of depreciation, actual cash value is $45,000. Also taking out the $10,000 of O&P would leave $35,000, a deduction the Texas Department of Insurance calls an improper claim settlement practice.³

Flood claims: the NFIP rules

For National Flood Insurance Program claims, FEMA's NFIP Claims Manual (March 2025) lets the adjuster add O&P when the complexity of the repairs requires coordination by a general contractor, usually 10% overhead and 10% profit.¹

Specialty equipment such as cranes, backhoes and scaffolding is not part of O&P under the manual. It goes on its own line item, with a reason and an invoice or contractor's estimate.¹
Some work is left out of the base. The manual lists "Non-OHP trades": cleanup, mold and mildew treatment, building dry-out, HVAC, kitchen appliances, carpet and padding, contractor receipts or quotes, and dumpsters. If a contractor's estimate adds O&P to Non-OHP trades, the adjuster must justify it and note the file.¹
When a policyholder acts as the general contractor, the manual allows up to 10% overhead for hiring, scheduling and overseeing the work, depending on the complexity and the number of trades, and no profit.¹
NFIP Bulletin W-13064 of October 8, 2013, archived in April 2018, applied both percentages to the same gross building estimate and allowed more in extraordinary, fully explained cases.²
FEMA publishes appeal decisions, such as C11, that apply the Claims Manual's O&P rule to specific claims.⁴

Where you'll see it

Repair estimates: the adjuster's building estimate and the general contractor's estimates and invoices, usually as overhead and profit lines below the trade subtotal.
Actual cash value payments, where the question is whether O&P is deducted along with depreciation.
Flood claims under the March 2025 NFIP Claims Manual, and FEMA's published NFIP appeal decisions.^1,4

State rules

Texas: Bulletin B-0068-08 of September 29, 2008 says the insured is entitled to reasonable and necessary expenses to repair or replace the damaged property, including a contractor's services, less proper depreciation. It calls deducting prospective contractors' O&P and sales tax, in addition to depreciation, an improper claim settlement practice.³
Colorado: Bulletin B-5.1, reissued May 8, 2007, states the Division of Insurance's position that insurers may not deduct O&P in addition to depreciation when a dwelling under a replacement cost policy is not repaired or replaced.⁵

Questions

What does 10 and 10 mean in insurance?: It is shorthand for 10% overhead plus 10% profit, the usual general contractor allowance, as the NFIP Claims Manual describes it. A 2013 NFIP bulletin, archived in 2018, applied both percentages to the same gross building estimate.^1,2
When is overhead and profit included in a claim estimate?: Usually when the repairs are complex enough to need a general contractor to coordinate the trades. The NFIP Claims Manual uses that test, and the adjuster evaluates each claim and documents the decision in the file.^1,4
Is overhead and profit deducted from actual cash value?: It depends on the state. Texas calls deducting prospective contractors' O&P and sales tax, in addition to depreciation, an improper claim settlement practice. Colorado's Division of Insurance prohibits it for dwellings under replacement cost policies that are not repaired or replaced.^3,5
Is overhead and profit paid if the owner manages the repairs?: An owner who runs the job takes on the coordination but earns no contractor's profit. Under the NFIP Claims Manual, a policyholder who performs the duties of a general contractor may get up to 10% overhead, but no profit.¹

Related terms

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Sources

Written by the Cloudbreak team. Numbers, dates and rules cite the published sources below.

1. FEMA, National Flood Insurance Program: NFIP Claims Manual (March 2025)
2. FEMA, National Flood Insurance Program: Bulletin W-13064: Allowance for Overhead and Profit (October 8, 2013; archived April 2018)
3. Texas Department of Insurance: Commissioner's Bulletin B-0068-08: Loss settlement calculation of actual cash value under a replacement cost policy (September 29, 2008)
4. FEMA, National Flood Insurance Program: Overhead and Profit Decision Overturned, FEMA Flood Insurance Appeal Decision #C11
5. Colorado Division of Insurance: Bulletin B-5.1: Calculation of Actual Cash Value, Prohibition Against Deducting Contractors' Overhead and Profit from Replacement Cost Where Repairs Are Not Made (reissued May 8, 2007)

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