Louisiana requires overhead and profit when a general contractor is reasonably foreseeable

Most states treat general contractor overhead and profit as a question of policy interpretation. Louisiana put it in the insurance code. Two paragraphs of R.S. 22:1892(F) decide most of these disputes, and the second one is the paragraph carriers tend to skip.

What the statute says

Subsection (F) applies to "the adjustment or settlement of first-party losses under fire and extended coverage policies."

(1) In the adjustment or settlement of first-party losses under fire and extended coverage policies, an insurer is required to include general contractor's overhead and profit in payments for losses when the services of a general contractor are reasonably foreseeable. This requirement applies to policies that provide for the adjustment and settlement of losses on a replacement cost basis and to policies that provide for the adjustment and settlement of losses on an actual cash value basis.

(2) The deduction of prospective contractor overhead, prospective contractor profit, and sales tax in determining the actual cash value of an adjustment or settlement is not allowed on replacement cost policies or on actual cash value policies.

Why (F)(2) matters as much as (F)(1)

An actual cash value payment that "holds back" overhead and profit until repairs are complete, or strips sales tax out of the calculation, is doing the thing (F)(2) forbids. The two paragraphs work together: (F)(1) says the money belongs in the loss when a general contractor is foreseeable, and (F)(2) says you cannot remove it on the way to an ACV figure.

This is separate from depreciation. Louisiana defines depreciation to include "the cost of goods, materials, labor, and services," and requires the insurer to give a written explanation of how it was calculated under (B)(6)(d) and to keep it reasonable under (B)(6)(e). Whether labor can be depreciated is a different argument from whether prospective overhead and profit can be withheld.

What it does not settle

• "Reasonably foreseeable" is not defined. The statute gives you the standard, not a threshold. A scope spanning several trades is the usual way to show a general contractor would be needed.
• No percentage is prescribed. The statute does not set 10% and 10%, or any other markup; those come from the estimate and local practice.
• It does not require you to hire a general contractor before the item is owed.
• Catastrophic losses run through a different penalty provision (R.S. 22:1892.2), so the remedy section is not always the one you expect.

How to use it on a claim

1. Read the payment basis first. RCV and ACV policies are both covered by (F)(1), but the arithmetic differs.
2. Ask why not, in writing. If overhead and profit is absent from the estimate, ask the adjuster to explain why a general contractor was not reasonably foreseeable given the number of trades in the scope.
3. Check the ACV calculation. If overhead, profit or sales tax was deducted, point to (F)(2) and ask for the revised figure.
4. Ask for the depreciation explanation required by (B)(6)(d) if any depreciation was applied.
5. Mind the clock. Payment timing and penalties sit in (A) and (B); the two-year prescriptive period for penalties and fees is in (B)(7).

Sources

La. R.S. 22:1892(F), read at legis.la.gov on 24 October 2026. Quoted text follows the official publication.

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