Report says the baseline homeowners
insurance product has changed
“[C]overage architecture” refers to all the stuff agents and brokers
are expected to know when comparing policies for their
clients but are easily overlooked by focusing on … price.
By Joseph S. Harrington, CPCU
For purposes of full disclosure, let me say that I have no professional or investment interest in ZestyAI, a prominent developer of insurance decision-making applications. For purposes of fair use, let me add that observations in this posting are from a recent report by ZestyAI, and attributed as such.
Finally, for purposes of candor, I readily acknowledge that many readers will remark: “Well, I could have told you that!”
Zesty’s report[1] introduces a new term (new to me, at least): “coverage architecture.” The term encompasses all the various factors for determining the cost and value of an insurance policy, including the premium rate(s), deductibles, exclusions, restrictions, limits, sub-limits, and more.
In other words, “coverage architecture” refers to all the stuff agents and brokers are expected to know when comparing policies for their clients but are easily overlooked by focusing on the bottom-line price.
So what’s new?
What makes the Zesty report noteworthy is how it systematically summarizes all we know about homeowners insurance product evolution to claim that “the baseline product has changed.”
“This shift is not primarily about price,” the report reads. “It is about how policies behave at claim time: how much is paid and under what conditions.” As a result, “a gap is emerging between how policies are engineered and how they are competitively compared.”
To reach that conclusion, the firm used artificial intelligence (AI) to review thousands of state homeowners insurance filings submitted over recent years. The analysis determined that the use of percentage deductibles, actual cash value settlement for roof damage, and exclusions for “cosmetic” damage or “matching” losses had steadily increased from 2015 to 2025.
Today, in one form or another, these limitations are features of most homeowners policies—but not in equal measure, which compounds the difficulty of comparing coverage. It gets even more complicated when the benefits associated with these features—premium reductions and credits, and guaranteed renewals—are applied explicitly, embedded in the policy, or a function of carrier operations.
As a result, policyholders do not see the cost-benefit tradeoff unless and until a loss occurs. That’s nothing new, but now manifests itself in more ways, leading to more unpleasant surprises for insureds and their insurance producers.
The “standard” homeowners policy, the one relied upon by consumers and mortgage lenders to provide coverage as expected, is increasingly elusive.
It’s up to personal lines agents and brokers to explain what’s at stake, but you know that already. Now there’s a report systematically describing what you’re seeing.
Happy reading.
[1] ZestyAI, “Why Coverage Architecture — Not Pricing — Is the New P&C Competitive Battleground,” February 2026; accessed at https://zesty.ai/resource/pc-coverage-architecture-2026
