Yeah, I read about that yesterday and thought it was interesting that the mutual agreement (out of court) between Nationwide and the Plaintiff was to allow O&P on 3 or more trades.
That was industry standard practice for many years, but it seems some litigation several years back changed many Insurance carriers perception about O&P, specifically:
A). That it didn't matter so much WHO did the work. In other words if 2 houses sustained the exact scope of damages and one hired a General Contractor and one didn't, or even did all the repairs himself, they were both entitled to O&P.
B). A focus on the coordination of trades (as separate from a specific number of trades). Was coordination of the trades required, or not. Example: call the drywaller after the burned framing and electrical have been replaced.
Real world issues include someone with a $7,000 roof replacement (roofing) and a stain on the ceiling that requires some drywall to be removed, and maybe even allow for some insulation. Do you give them a 20% bonus on the roof replacement cuz they have a stain on the ceiling? Is it OK to bury their deductible and perhaps force the Insd into profiting from an Ins claim because you give them 20% yet the roofer only wants (contract amount) and the interior work is something that can be done at anytime, in any sequence to the other claim damages?
Is the one single bat or 2 of insulation something that will require an insulation contractor, or is the guy in the truck sent out from XYZ restoration going to take care of this small project himself. Consider it only needed drywall & paint. Add the roof replacement, and that is 3 trades.
Of course we know that those who specialize in water-fire restoration tend to expect O&P on everything but emergency service dry-out, but they aren't usually the same "General Contractor" co-ordinating the roof replacement part of the project. Sometimes they are.
At the end of the day, licensed adjusters are relied upon to make decisions. If there is a "trend" of incorrect decisions that catches the attention of Dept of Ins or a semi-large group of disgruntled homeowners, then I suppose the topic comes up and gets resolved.
2 cents: I have attended a lot of "Alternative Dispute Resolution" events with opposing parties butting heads.
It would be easy to visualize a scenario where a large Insurance company is defending these allegations, and there are a Ka-Zillion potential claim files to be reviewed and compared against some sort of yardstick. The Mediator, or Judge, or whoever is trying to get these opposing sides to "meet in the middle" before hitting the wall (court->trial).
You can't analyze each claim that was settled in the past and come up with a perfect answer to this question, then tabulate the result. They would have to come up with a more practical, expedient answer to what "standard" they should have upheld. So the old 3-trades thing gets dusted off and held up as the yardstick.
If anyone out there is thinking that Nationwide arbitrarily held back O&P on all claims, I can tell you from personal experience that this is not the case, and I will leave it at that.