THINKING AHEAD
Recent Changes
To Property Insurance Coverage That
May Affect You
Having insurance for your home or business is meant to provide peace of mind — a safety net to protect against life ’ s unpredictable challenges .
However , with insurance premiums rising more than 30 % since 2020 and policies growing increasingly complex , the answer to the once-simple question “ Am I covered ?” has become anything but straightforward .
Recent changes to property insurance , particularly in areas like roof coverage and deductible structures , have caught many property owners off guard when filing a claim . Whether you own a residential or commercial property , understanding these changes is critical to avoiding costly surprises and making informed decisions about your coverage .
KEY CHANGES IN PROPERTY INSURANCE POLICIES
Navigating property insurance policies has become more challenging as insurers adjust coverage terms to address rising costs and increased risk . For property owners , staying informed about these changes is critical to understanding how their coverage will respond when disaster strikes .
Two key areas to watch are roof coverage , which has shifted toward depreciationbased or ACV ( actual cash value ) settlements ; and deductibles , where percentage-based models are becoming more common rather than a fixed-dollar amount .
ROOF COVERAGE : FROM REPLACEMENT COST TO ACTUAL CASH VALUE
In the past , many property insurance policies offered Replacement Cost Value ( RCV ) for roof repairs or replacements , which covered the full cost of a new roof if it was damaged by a covered peril like hail , wind , or fire .
Today , however , there ’ s a shift toward policies that use Actual Cash Value ( ACV ). This means coverage is reduced based on the roof ' s age and depreciation , leaving property owners to cover a significant portion of the cost .
For example :
• A 10-year-old roof with a replacement cost of $ 20,000 might be valued at only $ 10,000 under ACV due to depreciation .
• If your deductible is $ 5,000 , you would receive just $ 5,000 toward the replacement — leaving you to pay the remaining $ 15,000 out of pocket .
This change is particularly impactful for older properties and those in regions prone to severe weather such as hail or hurricanes . Some insurers offer functional replacement coverage , which provides repairs with materials that function similarly but may not match the original materials exactly . Understanding these distinctions is crucial for property owners evaluating their policy options .
THE RISE OF PERCENTAGE-BASED DEDUCTIBLES
One of the most significant shifts in property insurance is the growing prevalence of percentage-based deductibles . Unlike traditional deductibles , which are typically a fixed dollar amount ( e . g ., $ 1,000 ), percentagebased deductibles are calculated as a percentage of the insured value of the property .
For residential properties :
• A 2 % deductible on a $ 300,000 home
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