I have posted entries on a few threads about the O&P subject with a lot of detail, explaining that there have been multiple suits and rulings around the U.S. that say it is owed to the insured whether or not they hire a contractor, do the work themselves, or even don't do the repairs. Here is the first quote that I have posted, although this is just part of a longer article. The link takes you to the Merlin Law Group web site where Chip Merlin posted the article, and at the end allows it to be sent to others, so I assume it is ok to post here.
Hopefully this will clear up the misunderstanding where some have expressed the opinion that the homeowner is not entitled to overhead and profit, although I am sure some will not agree with the various court descisions. As to the question about the Nationwide lawsuit in Oregon, the lawsuit was class action nationwide against nationwide, so far as I know. I know that Texas, Ark, and Ok were included because I received notfication of the lawsuit for properties I own in Texas and Oklahoma although I declined to be part of the class since I had never had a claim other than for hail with Nationwide. The following article, I think, clearly states the position that the Texas Dept. of Ins. takes in this matter, as do several other states based on rulings that I have studied.
"On June 12, 1998, the Texas Department of Insurance issued Bulletin #B-004598, indicating that the deduction of a prospective contractor’s overhead and profit and sales tax, in determining the actual cash value under a replacement cost policy, is improper. The Department noted that the wrongful interpretation of language in the Texas Standard Homeowner’s Policy generated two class action lawsuits and various inquiries to the Department’s position on the matter.
In explaining its reasoning, the Department noted that “there is no situation in which the deduction from replacement cost of depreciation and contractor’s overhead and profit and/or sales tax on materials will be the correct measure of the insured’s loss.”
Further, the Department noted that insurance companies are not allowed to charge premiums in excess of the risk to which they apply. Thus, under a replacement cost policy, the value of the contractor’s overhead and profit, as well as sales tax on building materials, are included in the premium, and if the insurer receives a premium on insurable values which loss may never be paid, “the insurer reaps an illegal windfall.”
Finally, the Department dispensed with the common argument that contractor’s overhead and profit, as well as sales tax on building materials, should be excluded from Actual Cash Value settlements because the insured has not incurred these expenses as illogical:
"Using this logic, an insured who opts not to repair or replace damaged property would not incur any of the expenses necessary to repair or replace the damaged property, including the costs of building materials, and would collect nothing under an actual cash value loss settlement. This result would be contrary to the purposes of the subject insurance policy."
In 2009, this rule still applies, and insurers that violate it can expect to be sued. "
P.S. I hope my spelling is correct - I have never been able to get spell check to work on this web site, even after trying the suggestion made earlier. I am using edit at this time to add this P.S. line and still can not get spell check to run, even if I highlight the content. Anyone have any other suggestions?