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Flood Damage Insurance – How to Get the Right Policy

by Neal Frankle, CFP ®, The article represents the author's opinion. This post may contain affiliate links. Please read our disclosure for more info.

Flood damage insurance is a tricky subject. Most homeowner’s insurance policies do not cover damage from floods. And people often opt out of the coverage. That could be a big problem for you. It’s certainly not the best way to save on homeowner’s insurance.

One way to solve the problem is to buy flood insurance. But if you buy the wrong flood insurance, you could be up a creek without a paddle.

 

 

Let me explain. Flood insurance is overseen by a division of the Federal Emergency Management Agency called NFIP. Some people buy coverage directly from NFIP, and therein lies the problem.

I say this because the coverage is limited to$250,000 for a home and an extra $100,000 for the contents if you buy the policy through NFIP. That might not be enough coverage. What to do?

You could buy an add-on policy from a private insurer. These benefits would kick in after the NFIP limits are reached. But you’ll probably save money if you buy one policy from a private insurer rather than purchasing two.

Keep in mind that some companies will only sell you flood insurance if you buy your homeowner’s policy from them too. Private policies can cost more than the NFIP so if you go this route, ask your agent to explain the differences and justify the added cost.

I was reading an article about this subject in the Investor’s Business Daily. In it, they explained that the basic NFIP policy doesn’t cover many items that you may really need coverage for.

Also, according to that article, NFIP policies only pay off if two or more adjacent homes get hit by a flood. Some private policies pay even if your home was the only one damaged. On top of that, private policies often pay for living expenses while your house is being repaired. NFIP typically doesn’t.

In my opinion, this is yet another example of the cheapest not being the best for at least some of us.

In summary, here are the three tips for the right flood insurance policy:

1. Understand that the NFIP policy has very limited coverage. You might even get hit by a flood but not collect from this policy.

2. Consider getting an add-on policy or just one all-inclusive policy from a private insurer.

3. Understand the risks you face and the benefits of the policy.

Bottom line, talk to lots of companies. Get lots of quotes. This is the best way to educate yourself. Do you have flood insurance? Have you ever made a claim? What was your experience?

 

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Who is Neal Frankle

Neal Frankle

I'm a CERTIFIED FINANCIAL PLANNER™ Professional with more than 25 years of experience. I feel very blessed and hope to share my personal financial experience and professional wisdom with readers of WealthPilgrim.
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Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement.  We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement. We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

YouTube Video UCoU0buhwVplzXrsyf342nOg

Retirement Crusaders

June 10, 2022 1:19 PM

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Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement.  We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement. We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

YouTube Video UCoU0buhwVplzXrsyf342nOg

Retirement Crusaders

June 10, 2022 1:19 PM

Subscribe
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Wealth Pilgrim is not responsible for and does not endorse any advertising, products or resource available from advertisements on this website. Wealth Pilgrim receives compensation from Google for advertising space on this website, but does not control the advertising selection or content. Please do the appropriate research before participating in any third party offers. The information contained in WealthPilgrim.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation. Wealth Pilgrim does not provide investment advisory services and is not a registered investment adviser. Neal may provide advisory services through Wealth Resources Group, a registered investment adviser. Wealth Pilgrim and Wealth Resources Group are affiliated companies. In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving payments,access to free products and services for product and service reviews and giveaways. Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.


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