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Flood coverage not just for high-risk

By HELEN HUNTLEY
Published May 14, 2006

Images of hurricane-flooded homes apparently had an effect on Floridians. More than 2-million of us have flood insurance policies.

I recently bit the bullet myself, signing up for a policy even though I live in a three-story house in a nonevacuation zone.

Most years the number of flood policies in Florida grows between 1 and 2 percent. Last year the number climbed 6 percent, and it looks like we're on pace for a similar increase this year. That's hardly a tidal wave of interest, but it shows we've gained a greater appreciation for the damage a flood can do.

If you live in a high-risk area and have a mortgage, your lender will require you to buy flood insurance. But for the rest of us, purchase is voluntary. A homeowner's policy doesn't cover flood damage, so that leaves most of us taking our chances on a potentially devastating loss. That's what I was doing.

I really don't think my home will be flooded, and odds are that it won't be. But people on the Mississippi coast didn't expect the kind of devastation hurricane-driven waves brought them either. Between 20 and 25 percent of flood insurance claims come from outside the high-risk areas.

If you don't live in a high-risk zone, the cost of flood insurance is relatively modest: $233 a year buys $100,000 worth of coverage on the building and $40,000 on the contents. Maximum coverage is $317 for $250,000 on the building and $100,000 on the contents.

In high-risk areas, the price tag is considerably higher, but so are the odds that you'll use your policy.

A flood policy has a 30-day waiting period, so there's no time to waste with hurricane season arriving June 1. For information, contact an insurance agent, go to www.floodsmart.gov or call toll-free 1-800-427-2419

I am confused by the titles certified public accountant CPA, certified financial planner (CFP) and broker. I have recently been talking to a person who is a broker and CFP. He can provide me with a money market type account to work out of and do my investing. I was unhappy to find that his firm does not prepare taxes because I have need of a tax preparation department that can do trust taxes and personal taxes. Can you tell me what I should be looking for in a person or persons who could help me do a better job of investment and tax planning?

There's literally an alphabet soup of designations for financial professionals, not just the two you mention. Most of them require passing tests and meeting education and experience requirements.

However, credentials are not the place to start. First make a list of the services you need. Then ask any professionals you know, such as lawyers, bankers and accountants, who they would recommend to provide those services. Then contact those recommended to ask about their credentials, their areas of expertise and how they might be able to help you meet your goals.

If you want everything under one roof, you might look for a CFP who offers tax services or a CPA who offers financial planning and investment advice. Or you might find a firm that employs financial planners and tax preparers. CPAs have their own version of the CFP designation: PFS for personal financial specialist.

Compensation is important. Paying fees for advice is better than working with brokers whose compensation depends on getting you to buy or sell.

Can the IRS remove funds from a bank account without informing anyone?

No. The IRS can freeze funds by putting a levy on your bank account, but that normally comes after a demand for payment and notice of levy. Once an account is frozen, you have 21 days to negotiate a deal with the IRS or the bank will send the IRS the money.

Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to hhuntley@sptimes.com to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731, or log onto www.sptimes.com/blogs/money where you also can see other questions and answers.

[Last modified May 14, 2006, 06:59:03]