Somebody beat your renewal by $450. Here's what they took out.

Nobody sells a worse policy for the same money. That's worth sitting with for a second, because it explains the entire dynamic of how homeowners insurance gets sold.

When an agent beats your current premium by $450, one of three things happened. You got a better rate from a carrier that likes your risk profile. You picked up discounts you weren't getting. Or coverage came off the policy.

The first two are real and they happen. I've written plenty of policies that were cheaper and better, and when that's the situation, it's a great day for everybody.

The third one happens more than the first two combined. And the homeowner almost never knows, because the number went down and the paperwork looks the same.

So let's do an autopsy. Two quotes on the same house, $450 apart. I'll show you the three cuts that made up the difference, then run a real claim through both policies and total up the damage.

The house and the two quotes

Same home from my last post: 2,800 square feet, semi-custom, metro Georgia. Rebuild cost runs about $826,000 at current construction prices.

	Policy A	Policy B
Coverage A (dwelling)	$826,000	$600,000
Roof loss settlement	Replacement cost	Payment schedule, ACV after 10 years
Coverage C (contents)	Replacement cost	Actual cash value
Deductible	1%	1%
Annual premium	$2,850	$2,400

Illustration built from current metro Georgia rebuild and repair costs. Your numbers will differ.

Policy B saves $450 a year. The homeowner takes it, because of course they do. Nobody handed them this table.

Three lines changed. Here's what each one does.

The dwelling limit dropped $226,000

Dwelling limit is the biggest single lever on a homeowners premium. Take $226,000 off Coverage A and the price drops hard, immediately, with no visible consequence.

I wrote a whole post on why this number gets set wrong, so I'll keep it short here: market value is not rebuild cost, and this house costs $826,000 to put back.

The part that matters for today is a clause most people have never heard of. Standard homeowners forms settle partial losses at replacement cost only if your Coverage A is at least 80% of the real rebuild cost. Eighty percent of $826,000 is $660,800. Policy B carries $600,000.

That policy is under the line. It pays less on every claim, at every size.

The roof went on a payment schedule

This one is the quietest and it's everywhere in Georgia right now.

Your roof can be covered two ways. Replacement cost pays what a new roof costs. A roof payment schedule pays a percentage based on the roof's age, and that percentage drops every year you own it.

A brand new roof might settle at 100%. At 5 years, maybe 80%. By 15 years, some schedules are down around 30%.

Carriers moved hard toward these schedules after the hail losses of the last few years, and they're a legitimate product. A schedule is the honest answer for some houses, and sometimes it's the only way a carrier will write an older roof at all.

The problem is how it gets sold. It's a checkbox on a quoting screen, it saves real premium, and it produces no reaction from a customer who doesn't know what changed. I read dec pages where the homeowner had no idea their roof was on a schedule until an adjuster explained it to them in a driveway.

Related, and worth checking while you're in there: cosmetic damage exclusions. Some policies won't pay for hail that dents your roof or siding without causing a leak. Dented is ugly. Dented is also how a roof starts failing early.

The contents moved to actual cash value

Coverage C pays for your stuff. It settles one of two ways.

Replacement cost pays what it costs to buy a new one today. Actual cash value pays what your 8-year-old sectional is worth as an 8-year-old sectional, which is close to nothing.

Furniture, electronics, appliances, clothes, mattresses. All of it depreciates fast on paper. A $35,000 loss of contents can settle around $17,500 on an ACV policy.

Replacement cost on contents typically runs about 10% more in premium. It's one of the best dollar-for-dollar buys on the entire policy, and it's routinely the first thing cut.

Now run a claim through both

Severe thunderstorm. Hail and straight-line wind. This is a normal Tuesday in Georgia in April.

The roof is destroyed. Water gets into the upper floor before anybody can tarp it. Drywall, insulation, flooring, paint. Furniture and electronics are soaked.

The scope comes in at:

• Roof replacement: $24,000

• Interior repairs: $46,000

• Contents: $35,000 to replace

Total: $105,000 of damage. Identical house, identical storm, identical claim. Here's what each policy pays.

Policy A

Item	Paid
Roof (replacement cost)	$24,000
Interior (RC, clears the 80% line)	$46,000
Contents (replacement cost)	$35,000
Subtotal	$105,000
Less 1% deductible on $826,000	($8,260)
Check	$96,740

Policy B

The roof is 14 years old. On the schedule, that settles around 40%.

Item	Paid
Roof (schedule, 14 years old)	$9,600
Interior ($600,000 ÷ $660,800 = 0.908, × $46,000)	$41,768
Contents (ACV, depreciated)	$17,500
Subtotal	$68,868
Less 1% deductible on $600,000	($6,000)
Check	$62,868

Out of pocket

	Policy A	Policy B
Damage	$105,000	$105,000
Insurance paid	$96,740	$62,868
Homeowner writes a check for	$8,260	$42,132

The homeowner on Policy B saved $450 a year. Say they had it four years. That's $1,800 saved.

Then they paid $33,872 more than they would have on the other policy. One storm erased 75 years of savings.

One thing in Policy B's favor, because it's true

Policy B has a lower deductible in dollars. One percent of $600,000 is $6,000. One percent of $826,000 is $8,260.

Insuring your house correctly makes your percentage deductible bigger, and that's a real cost you should know about before you get there. It's $2,260 in this example.

I'd rather you hear that from me now than find out at claim time. If a $8,260 deductible doesn't work for your savings account, say so and we'll build the policy around that. There are ways to handle it. Pretending the tradeoff doesn't exist isn't one of them.

How to autopsy your own policy in 5 minutes

Pull your declarations page. Look for four things.

1. Coverage A. Divide it by your square footage. Under $200 per square foot on a decent home in metro Atlanta, Nashville, Birmingham, or Columbus, start asking questions.

2. How your roof settles. Look for "roof surfaces," "payment schedule," "ACV loss settlement for windstorm or hail," or a table of percentages by roof age. If any of that appears, your roof is not covered at replacement cost. You may be fine with that. You should know it.

3. Coverage C settlement. Find "replacement cost" or "actual cash value" on personal property. If it says ACV, get a quote on the difference before you decide. It's usually cheap.

4. What changed at your last renewal. Compare this year's dec to last year's. Carriers can and do move coverage at renewal, and it arrives in an envelope nobody opens.

Send it to us

You don't need me to do any of the four steps above. Do them yourself tonight.

If you want a second set of eyes, send your dec page to michael@ins.insure or book 15 minutes. We'll read it line by line and tell you what's on it.

Two honest notes about that. First, plenty of the policies we review are fine. When yours is one of them, you'll hear "this is a good policy, keep it," and I'll mean it. Second, sometimes the right answer is that you're paying for coverage you don't need, and we'll tell you that too, even though it makes us less money.

We win clean or we don't win.

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INS. (In Noble Service) is an insurance agency based in Alpharetta, Georgia, writing personal home and auto in Georgia, Alabama, Tennessee, and Ohio.