Nov 232010

Beach Home On Bolivar Peninsula, taken after Hurricane Ike in September 2008

Overhead and Profit is a term that insurance companies like to avoid as much as possible.  The mere mention of it to your agent is liable to send them sidestepping for a politically correct and often confusing answer.  There is a tremendous amount of confusion, deception and litigation over these words.  What does this mean to you, the insured?  Without your insurance company including Overhead and Profit as part of your claim settlement, you will then be responsible for either trying to cut corners and make repairs yourself or you will have to cover this expense out of your own pocket.  Even though many of the state’s insurance boards have issued interpretations of how insurance companies are to handle it, many are still reluctant to include it as part of their claim settlement.  Some have even tried to access a depreciation loss to it, as if labor and cost of new material can actually depreciate before it’s even purchased.

The Texas Department of Insurance issued a Commissioner’s Bulletin on June 12, 1998.  It was earmarked to the attention of all property and casualty insurance companies.  Here is the closing excerpt “The Department has concluded that an insurer providing property coverage under replacement cost residential policies that allow for the adjustment of covered losses to structures on an actual cash value basis may not calculate actual cash value on the basis of replacement cost with proper deduction for depreciation, less contractor´s overhead and profit, nor may the insurer deduct sales tax on building materials. Any insurer that determines actual cash value on this basis may be subject to disciplinary action for violations of the Texas Insurance Code, including unfair claims practices pursuant to Article 21.21 § 4(10)(a) and Article 21.21-2.”

That excerpt from the Commissioners bulletin was issued back in 1998 and even though it warns insurance companies that their refusal to cover Overhead and Profit may result in disciplinary actions, they still do their best to get away with it.  This is why you may want to hire a licensed public adjuster to represent you.  Someone to act on your behalf and your best interest, that’s what does.  We become your advocate when preparing your claim.  If you would like to provide you with a FREE claim review, simply click on the Documents tab above, select your appropriate states documents and complete the attached checklist.  We will then contact you to set up a thorough inspection of the damages.  Once completed, we can then advise you whether or not you are owed more money on your claim.  If you agree, we will then prepare the documentation and file the adjusted claim with your insurance company.  We don’t get paid unless we are successful in getting you more money.


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