Can a contractor company really keep the GCO&P on work not done?

I had damage to my home, Insurance claims rep cut us a big check and we signed it over to the contractor provided by the insurance company ( we were all there ) they did a break down on what needed replaced and cost per item it even stated that the Replacement cost value RCV included general contractor overhead and profit.

They did not do most of what they got paid for and I called them out on it. They agreed to pay me minus their profit and overhead, which made the refund $477 less than what was already paid.... is that double dipping? Is that really allowed or did I misread the contract??