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Types of Homeowner Insurance: An Interview with Justin Fowler of Fowler & Associates Insurance Services, LLC.

By Justin Fowler

Tell us a little bit about your company and its foundation.

This insurance agency was a direct result of our founder's experiences as an employee of a large insurance company during the mid-1990s. During this period, it appeared that larger insurance agencies prospered from higher policy premiums while smaller agencies suffered from shrinking capacity and the resulting termination of insurance company relationships. Smaller agencies were increasingly absorbed by their larger competitors, often times to the dismay of consumers. Their dilemma was, "how could smaller agencies gain the required purchasing power without giving up agency ownership?" Fowler & Associates formed to offer large carrier product quality, with small-town personal service that most companies have gotten away from. F&A offers all lines of coverage from large carriers with localized, personal service that customers crave. No hiding behind scripts and prompts and corporate procedure. We are real people that get things done quickly. We represent Clients, not Corporations!

Please briefly explain the idea of home insurance to our readers, what it is, why it was created, etc.

Home insurance started in the US around 1752, and originally began as a pool of building owners that banded together to help replace structures after fire damage. If a single building owner suffered a fire loss, it was likely that they would not have the resources to rebuild on their own. The concept worked well, by pooling resources, the few that suffered losses were able to replace their structures by pooling resources. Over time, companies have expanded the simple notion of protecting buildings from fire loss to include other types of losses, such as lightening, explosion, wind damage, etc. Modern home insurance has been greatly expanded from its humble beginnings and now most risks that homeowners face can be insured against for a premium.

What different types of homeowners' insurance are available?

Home insurance products are not all created equally. Unlike car insurance, there are more moving parts buried within the insurance contracts of home insurance policies. Some offer basic coverage, that protect against fire damage only. These policies are less expensive, but do not cover many types of losses that a homeowner may face. At the other end of the spectrum, modern home insurance contracts have a "deluxe" version that will cover anything that happens, with a few key exclusions.

To be clear on what your policy does or does not cover you should have a knowledgeable agent review the policy in detail. Most consumers focus on the amount of coverage offered, which is a good beginning, however savvy consumers should be aware of the exclusions and internal limits that each contract carriers which vary considerably from company to company. A knowledgeable broker will be aware of these issues and can efficiently point them out, saving the consumer time and money. More importantly, brokers represent multiple companies and are often familiar with a broader range of products than agents who only represent a single company. Brokers are a great source of information, which usually doesn't cost any extra to take advantage of.

What type of insurance do you or your company most often recommend and why?

For home insurance, we recommend coverage from a well-capitalized insurer that offers the broadest coverage possible. We've been recommending Safeco Insurance Company a lot recently, due to their broad coverage and exceptional pricing structure, they are really offering a tremendous value at this point in the market cycle. If available, ask for an HO-5 homeowners policy. It offers the broadest coverage and not all companies offer it. The HO-5 policy will cost about 10% more than a standard HO-3 homeowners policy (the majority of policies are HO-3) but having less exclusions in the contract may be absolutely worth the additional premium if you would prefer to have a smooth claims process. The more you specify up front, the less you will be disappointed when you turn in a claim.

For someone with low income, what do you suggest they do in regard to their home insurance? Are there government programs that can help or private deals that are available?

Unfortunately, there is no government program to help homeowners pay for home insurance. The risk pool offered by the State of California primarily exists to offer fire coverage for uninsurable houses, it is not a good value or a low-cost option. For those who find themselves struggling financially, there are some steps you can take to help lower your insurance costs. The most obvious one first, you can raise your deductible. Many home insurance policies have $500 deductibles which by today's standards are low. Insurance companies offer up to a 10% credit for raising the deductible to $2500. The other lesser known strategy is to ask your company if you can lower your coverage C (personal property) to 50% of the dwelling amount. Most policies automatically give you 75% of the dwelling amount as your personal property limit, but what many may not know is that if you are able to lower it to 50% there can be up to an 10% price decrease for doing so. You will still have lots of coverage for your personal items and lower your insurance premium.

What's the best way for people to get in contact with you and your company?

To contact us, you can call the office at 925-361-1320 and ask to speak to Justin Fowler, Owner and Broker of Fowler & Associates Insurance Services. You can also go to our website at www.FowlerInsure.com

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