Most homeowners don’t spend much time thinking about their deductible—until they have a claim. Recently, I met with a homeowner who learned this lesson the hard way.
She was insured with Indiana Farm Bureau and received a letter stating that because her roof was over 16 years old, her policy would now require a 1% wind and hail deductible. On top of that, her roof was insured on an ACV basis (Actual Cash Value), not replacement cost.
At first glance, that might not sound like a big deal. In reality, it can be extremely expensive.
Let’s break this down in simple terms.
What Is a 1% Deductible?
A 1% deductible is based on the insured value of your home—not a flat dollar amount.
Example:
- Home insured value: $300,000
- 1% deductible: $3,000
That means if you have a wind or hail claim, you’re paying $3,000 out of pocket before insurance pays anything.
Compare that to a flat deductible, such as $1,000 or $2,500, which stays the same no matter how much your home is insured for.
What Is ACV (Actual Cash Value) on a Roof?
ACV means the insurance company factors in depreciation.
If a roof is 16 years old, the insurance company may say:
- “This roof has already used up a large portion of its life.”
So instead of paying to fully replace the roof, they only pay what the roof is worth today, not what it costs to replace.
Real-world example:
- Cost to replace roof: $15,000
- ACV payout after depreciation: $7,000–$9,000
- Minus a $3,000 deductible
- Homeowner could be left paying $6,000–$8,000 out of pocket
That surprises a lot of people.
Replacement Cost Coverage: A Big Difference
We moved this homeowner to ERIE Insurance, where we were able to:
- Switch from a 1% deductible to a flat deductible
- Change her roof coverage from ACV to Replacement Cost
Replacement Cost means:
- If the roof is damaged by a covered loss, insurance pays to replace it, not depreciate it.
- Age of the roof does not reduce the payout.
So instead of worrying about depreciation and percentage deductibles, she now knows:
- Exactly what her deductible is
- That her roof is properly protected
Why This Happens More Often with Older Roofs
Many insurance companies automatically adjust policies when a roof reaches a certain age:
- Percentage deductibles
- ACV roof endorsements
- Coverage restrictions that aren’t always clearly explained
That’s why it’s so important to review your policy before you have a claim—not after.
The Bigger Lesson
This isn’t about one company being “good” or “bad.” It’s about understanding what you actually have.
Two homeowners can both say:
“I have insurance.”
But one might owe $3,000+ and get a depreciated payout, while the other has a flat deductible and full replacement cost.
That difference can mean thousands of dollars when it matters most.
Final Thoughts
Your deductible and roof coverage matter far more than most people realize. If your roof is over 10–15 years old, it’s especially important to:
- Check whether you have a percentage deductible
- See if your roof is ACV or Replacement Cost
- Understand what a claim would really look like financially
Insurance should protect you—not surprise you.
If you’re unsure what your policy says, that’s a conversation worth having before the next storm rolls through.