Xactimate and General Contractor Overhead & Profit: A Plain-Language Analysis

StormPro Public Adjusters L.L.C. Mailing Address: 207 Islander Drive 722 Cedar Point Boulevard Suite A1 Box 209 Emerald Isle, NC 28594 Cedar Point, NC 28584 Xactimate and General Contractor Overhead & Profit A Plain-Language Analysis for Restoration Contractors Authored by: Ron Hicks, Public Adjuster StormPro Public Adjusters Date: April 13, 2026 Overhead and Profit is the difference between being the sub and prime contractor, whether subs exist or not, the retail markup for a prime contractor is stripped out of the pricing, only to be added when O&P is applied at the estimate level. When Overhead and Profit are not applied, the estimate reflects subcontractor-level pricing for prime contractor performance. Xactimate Subcontractor pricing does not include the cost of operating a contracting business. Those costs exist regardless of trade count and must be accounted for at the estimate level. StormPro Public Adjusters L.L.C. Mailing Address: 207 Islander Drive 722 Cedar Point Boulevard Suite A1 Box 209 Emerald Isle, NC 28594 Cedar Point, NC 28584 Executive Summary Xactimate’s official glossary and its Overhead and Profit White Paper establish a critical and often ignored fact: Xactimate does not use the common construction-industry definition of a “General Contractor.” Instead, Xactimate defines a General Contractor based on who holds the direct contract with the property owner or entity, not based on trade count, job size, or project complexity. Webster Xactimate At the same time, Xactimate’s pricing is built so that: • Unit prices are developed at subcontractor-level cost only • General Overhead and Profit are not included in those prices • Those costs are handled separately through the estimate-level O&P function This creates a non-negotiable reality: If Xactimate is being used, then Xactimate’s definition of “General Contractor” applies, and Xactimate’s pricing structure must be applied as designed. Xactimate does not defer to: • Webster’s dictionary • Insurance company interpretations • Industry customs StormPro Public Adjusters L.L.C. Mailing Address: 207 Islander Drive 722 Cedar Point Boulevard Suite A1 Box 209 Emerald Isle, NC 28594 Cedar Point, NC 28584 Xactimate defines its own terms and builds its pricing model around those definitions. Xactimate Definition of a General Contractor: “A general contractor is a group or individual that contracts with another organization or individual owner for the construction, renovation, or demolition of a structure.” This paper explains how that definition and pricing structure work together and why they must be applied consistently when using the software. Overhead and Profit is the difference between being the sub and prime contractor, whether subs exist or not, the retail markup for a prime contractor is stripped out of the pricing, only to be added when O&P is applied at the estimate level. When Overhead and Profit are not applied, the estimate reflects subcontractor-level pricing for prime contractor performance. Xactimate’s pricing is built so that: • Unit prices are developed at subcontractor-level cost only • General Overhead and Profit are not included in those prices • Those costs are handled separately through the estimate-level O&P function This creates a non- negotiable reality: If Xactimate is being used, then Xactimate’s definition of “General Contractor” applies, and Xactimate’s pricing structure must be applied as designed Subcontractor pricing does not include the cost of operating a contracting business. Those costs exist regardless of trade count and must be accounted for at the estimate level. StormPro Public Adjusters L.L.C. Mailing Address: 207 Islander Drive 722 Cedar Point Boulevard Suite A1 Box 209 Emerald Isle, NC 28594 Cedar Point, NC 28584 1. Xactimate Defines the General Contractor — Not the Insurance Company From Xactimate’s official glossary: “A general contractor is a group or individual that contracts with another organization or individual owner for the construction, renovation, or demolition of a structure.” This is the definition used inside the Xactimate system. It is not optional. It is not conditional. It is not subject to reinterpretation. The party that holds the direct contract with the owner is the General Contractor within Xactimate. It does not require: • Multiple trades • Project management • Permitting responsibility • Job size or complexity In Xactimate, the definition of a General Contractor is strictly contract-based. Any attempt to redefine “General Contractor” while still relying on Xactimate pricing is a direct contradiction of the system being used. 2. Xactimate Pricing Is Built Without General Contractor O&P Xactware’s Overhead and Profit White Paper explains how pricing is constructed: • Pricing contributors are instructed not to include General Overhead and Profit in unit costs • General Overhead consists of business-wide expenses (office, administrative, licensing, marketing, etc.) • These costs are not included in line item pricing • They are intended to be added separately as O&P at the estimate level At the same time: • Unit prices include job-personnel (subcontractor-level) overhead and profit • They do not include retail contractor overhead and profit This means: Xactimate pricing is intentionally built at a subcontract level, not a retail level. StormPro Public Adjusters L.L.C. Mailing Address: 207 Islander Drive 722 Cedar Point Boulevard Suite A1 Box 209 Emerald Isle, NC 28594 Cedar Point, NC 28584 3.