Summary: Whenever covered property sustains a loss from a covered cause, the insurer should include overhead and profit in its claims payment to the insured. After all, the insured is paying for it, and actual cash value is replacement cost less depreciation or usage. The question is, how much should be paid and when? It would make sense to pay part of the overhead and profit at the time of the actual cash value payment and the rest when the property has been repaired. Interestingly, however, the focus of argument is that overhead and profit be paid at the time of actual cash value payment and only when it is "reasonably likely" that insureds will be using contractors to do the work. For insureds to recoup that money to do the work themselves is viewed by some insurers as being a windfall and will not be paid. To say the least, this is a controversial subject with no solution in sight. Involving predominately personal lines insurance, many insurers would rather fight it out even if it means being confronted with class action allegations.

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Introduction