As anyone who has been involved in a major construction project will tell you, construction supervision is critical.  Contractor overhead and profit is what pays for that supervision, and it is a necessary expense of any project that involves multiple trades that have to be coordinated. This expense is generally referred to as "O & P".

Yes, some insurers looking for ways to reduce claim costs apparently approached the Colorado Division of Insurance for permission to exclude those costs from their benefit calculations.  Their idea was to convince the Division to withdraw a longstanding bulletin that specifically requires payment of benefits to cover O & P.  The Division initially agreed and issued a notice that it was going to withdraw the bulletin.  Colorado-based volunteer Damian Arguello agreed to represent UP in filing comments opposing the proposed withdrawal and supporting the value of the bulletin.  Executive Director Amy Bach discussed our concerns directly with Division Director Michael Conway earlier this year.

In response to opposition from policyholder advocates including Merlin Law Group, United Policyholders, contractors and trade associations and others, the Colorado Division of Insurance decided not to withdraw the bulletin that would have changed the state's rules on insurance payouts for a category of construction costs that are routinely incurred:   

To read the comments UP filed with the Division, click here.  To read Merlin Law Group's comments and Chip Merlin's recent blog on this topic, click here.

For more on the topic of insurance payments for Overhead and Profit, use the search box on this website. 

About The Blogger

Amy Bach

Amy Bach has been a professional advocate for insurance policyholders since 1984 and an attorney since 1989. While practicing insurance regulatory law and representing clients in litigation matters, she co-founded United Policyholders in 1991. Bach migrated from the private practice of law in 2005 to become the organization's full-time Executive Director and primary spokesperson; shaping and overseeing the Roadmap to Recovery™, Roadmap to Preparedness, and Advocacy and Action programs. She is a nationally-recognized expert on insurance claim and legal matters; frequently interviewed in print and broadcast media, and the author of numerous legal and consumer publications including "The Disaster Recovery Handbook," "WISE UP: The Savvy Consumer's Guide to Buying Insurance," and tips and guides in the UP Claim Help Library.  Recognized by Money Magazine as a Money Hero, Bach has served as an official consumer representative to the National Association of Insurance Commissioners since 2009 and is in her second term as an appointed member of the Federal Advisory Committee on Insurance. She also currently serves on the American Bar Association’s Standing Committee on Disaster Preparedness and Response.