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.
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.