Commercial Water Loss: Owner Educated, Scope Corrected, and Full O&P Recovered
Snapshot
A commercial property owner reached out after a significant water loss disrupted operations and damaged multiple rooms, wall systems, flooring materials, and mechanical components. The contractor on the project believed insurance policies rarely allow for General Contractor Overhead & Profit (O&P) — a costly misconception that would have left the owner underfunded and the contractor unable to perform the work properly.
Property Loss Pro stepped in, explained the complexities of commercial insurance claims, corrected the scope, and ensured full 10% Overhead + 10% Profit was added and approved. The owner gained clarity, the contractor gained confidence, and the project received a fully funded, accurate repair budget.
The Problem
The commercial contractor handling the loss assumed that:
O&P was “not allowed” unless a special approval was granted
The insurance company “almost never pays O&P on commercial projects”
Multi-trade coordination was “just part of the job” and could not be billed
The carrier's first estimate was “probably close enough”
The carrier’s adjuster didn’t volunteer any clarification — leaving the owner believing their limited estimate was final.
Critical omissions included:
Project management and trade coordination
Complex scheduling involving multiple subs
Temporary business disruption considerations
Multi-material and multi-trade demolition
Commercial-grade floor systems and moisture barriers
HVAC and mechanical considerations
Equipment protection and safety protocols
Drying, monitoring, and microbial treatments
Structural moisture and wall cavity restoration
No O&P added for any trade
This left the owner under-informed, the contractor underpaid, and the project under-scoped.
What Property Loss Pro Did
1. Educated the Owner on Commercial Claim Complexity
We reviewed the policy provisions with the owner in plain language and explained:
Why O&P is allowed in most policies
The difference between ACV and RCV in commercial settings
Why multi-trade coordination qualifies the project as GC-managed
How commercial claims differ from residential
Why the adjuster’s initial estimate was incomplete
Why the contractor should never waive legitimate GC functions
The owner immediately understood that the missing funds were not “contractor profit padding” — they were essential project management costs built into industry-standard pricing.
2. Clarified O&P Requirements for the Contractor
We walked the contractor through:
The definition of Overhead
The definition of Profit
The industry standard 10% + 10%
When O&P is triggered (multi-trade involvement)
Why commercial losses almost always meet the criteria
How to document GC functions clearly
How to communicate O&P correctly to carriers
This eliminated confusion and gave the contractor the justification needed to bill accurately without fear of rejection.
3. Performed a Full Scope & Estimate Review
Our analysis revealed major shortcomings in the adjuster’s estimate:
Missing demolition quantities
Incorrect water classification
Limited microbial treatment despite commercial exposure
Improper moisture-mapping assumptions
No mechanical system checks
No equipment protection or containment
Incorrect flooring calculations (commercial continuous materials)
Incomplete drying equipment
No safety or OSHA compliance line items
No project management
No trade coordination
No O&P
We rebuilt the entire Xactimate estimate to reflect proper commercial restoration standards.
4. Prepared a Carrier-Ready Supplemental Package
We produced:
A corrected Xactimate estimate
A commercial reconstruction variance report
Policy-based O&P justification
Documentation on multi-trade coordination
Photo and moisture-log verification
OSHA, IICRC, and code-based reasoning for each item
F9 notes to support approval
A clear explanation of commercial vs residential scope differences
The package was structured for quick adjuster approval with minimal friction.
The Result
✔ Full 10% Overhead & 10% Profit approved on all eligible line items
The carrier acknowledged that multi-trade involvement and GC coordination triggered standard O&P.
✔ The owner gained complete clarity and avoided costly misunderstandings
They understood their rights under the policy and why the initial estimate was incomplete.
✔ The contractor received a correct, profitable, and fully justified budget
This allowed them to perform the work:
Safely
To code
Without absorbing unjustified costs
Without cutting corners
✔ The final repair scope reflected a true commercial reconstruction project
Not a stripped-down version of a residential repair.
Why This Case Matters
Commercial water losses often involve:
Multiple trades
Larger, continuous materials
Higher drying requirements
HVAC and mechanical impacts
Specialized safety and access challenges
Business disruption concerns
Much higher coordination effort
Yet many contractors simply don’t realize that O&P is typically allowed and expected in these situations.
Property Loss Pro bridges that gap — protecting owners from underfunded claims and contractors from underpaid work.
