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A General Contractor’s Ability to Receive "Overhead and Profit" Payments from Amounts Paid on Claims for Structural Losses Covered by a Homeowner’s Insurance Policy under Oklahoma Law

by Laura C. Hill
GableGotwals - Tulsa Office

February 15, 2011

Recently, homeowners and general contractors have faced uncertainty as to whether an insured can receive payment for a general contractor’s overhead and profit (“GCO&P”)2 charges as a reimbursable expense under Oklahoma law. Research reveals that Oklahoma law is unsettled on the issue of whether an insurance company’s denial of GCO&P charges under certain circumstances constitutes a breach of contract or an act of bad faith on the part of the insurer. Nor has the Oklahoma Supreme Court expressed an opinion on whether the so-called “three trade rule” is an industry standard that justifies use of a general contractor and payment of GCO&P given that more recent class action lawsuits have settled before these issues reached a jury. Accordingly, this article discusses factors relevant to this determination and analyzes general trends in the law, particularly in the aftermath of Burgess v. Farmers Ins. Co., Inc.3 It is important to remember that any potential claim or action against an insurer who refuses to pay GCO&P can only be asserted by the policyholder—not the general contractor—because the insured has the legal right, or standing, to bring such a claim. Moreover, the likelihood of success for any potential claims requires a highly fact-specific and individualized analysis, including an examination of the nature and extent of the damage, and the specific language, terms, and definitions contained in the individual insurance policy at issue.


The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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