Contractor General Practice Question United Policyholders Staff asked 1 year ago
Contractor General Practice Question

I know United Policyholders are generally here to assist with insurance questions, but I’ve been looking online and am struggling to find a clear definition of the expenses included in the overhead portion of the contractors bid. My home burned to the ground in the Valley Fire. My contractor is charging 10% overhead, but made a separate line on my list of materials for general liability insurance & is charging 2.5% of the entire direct cost of the job (Over $7k). I’ve always thought G/L insurance would be considered overhead, so I’m trying to find out if this is a general practice or if he’s charging me too much? My contract is not very detailed, but does not contain a provision for general liability insurance on a separate line. The materials estimate was given to me months following the contract. I should never have signed this contract, but that is beside the point.

1 Answers
Michael McCutcheon Michael McCutcheon Expert answered 1 year ago

It is standard industry practice for General Contractors to charge for insurance, in addition to charging for overhead and profit. The rate of 2.5% in this case is reasonable, in my opinion. We charge 3%, example. When contractors charge for insurance, the rates are typically in the 1-4% range.