The core books have rules dealing with armor deterioration in combat, but the system employed by Wizards is more complicated than it should be. Their system gives armor hardness scale and hit points, which requires extra rolling at the table. Employing this method can cause combat to drag significantly. A simpler yet optional system is presented herewith.
The System
Armor shares a percentage of the owner's total hit points depending on the armor type (Light, Medium, Heavy). Once a certain percentage of a character's hit points has been lost the armor becomes destroyed and must be replaced. Destroyed armor will not cause any penalties during the combat scenario in which it is rendered useless. A character maintains his/her Armor Class until the end of combat. However, if another scenario arises before that character replaces the damaged armor, the new Armor Class (without armor) takes effect.
The breaking point of armor always follows the character's total hit points, not the percentage of his/her current hit points. A character may be healed before the breaking point, which in turn gives that armor a little longer life. If a character is healed after the breaking point, the armor does not get healed also; it is already destroyed.
Explanation
This house rule has been implemented in order to make the game slightly more challenging and realistic. It adds slightly more responsibility to maintaining a character by way of resource management. Aside from skill and reputation, an adventurer or mercenary must supply his/her own equipment, and the state of the equipment can be crucial to the success or failure of a given adventure or job. Adventurers sometimes get paid for work but mostly rely on acquiring items to be sold for coin; mercenaries are strictly paid for their work as guards, soldiers, etc. A professional allocates a percentage of money found or paid to maintain equipment and even upgrade it. In combat a person's armor takes a beating and thus it stands to reason money should be spent to maintain or repair armor, even replace armor too damaged to offer sufficient protection. No matter the profession, all businessmen must spend money to make money.