Question:
My house has appreciated in value over the past 10 years. Do I need more homeowners insurance?
Answer:
It depends. In 2008-2009 we saw many property values drop. However, the replacement cost for the home didn’t drop. Likewise, few homes appreciated in value. If the land appreciates in value, you may want to consider the replacement value of the home should something happen to it.
Additionally, the coinsurance clause of your homeowner’s policy requires you to carry coverage of at least 80% of your home’s total value if you want to receive full replacement cost for any losses. Therefore, if you insure less than 80% of your home’s value, and you suffer any damages, the insurance company will calculate your coverage by dividing your coverage limit by the value of your property, multiplied by 80% then multiplied by the amount of loss. For example, if you have a $200,000 home insured for $100,000 and you suffered $10,000 in damages, your insurance would pay $4,000 ($100,000/$200,000 x 80% x $10,000 = $4,000).
If your insurance agent calls to tell you your property value has increased as have the replacement costs on your home, they are not necessarily trying to upsell you on additional insurance. They may be working in your best interest.
We recommend carrying insurance equivalent to at least 80% of your home’s value.
Question:
I’ve been looking at Wex Inc. I know you’ve recommended MasterCard in the past, but I’m looking for a similar holding for my small-mid cap portfolio, and I came across Wex Inc. I’d like to get your opinions.
Answer:
Wex Inc. (NYSE: WEX) provides customers with fleet vehicle payment processing services specifically designed for the needs of commercial and government fleets. The company is expensive, trading at 24 times earnings. While this is less than what MasterCard, Inc. (NYSE: MA) is trading for, MasterCard is growing faster. The market for MasterCard is much larger; therefore if you are looking for a credit payment processing solutions company, we believe investors would be better off with MasterCard. We recommend avoiding Wex Inc.
Question:
Diebold went through a rough patch for a while there. I think you recommended it years ago. What do you think of it these days?
Answer:
We think Diebold, Inc. (NYSE: DBD) is still in a similar situation as it was when we sold it. The company was in the process of being bought out, but the deal fell through because the company’s financials were a bit off. We do not think the integrated self-service delivery and security systems to financial institutions—i.e., ATMs—is the business to be in with so many payments becoming electronic. There are fewer banks and Diebold may suffer.
At Henssler Financial we believe you should Live Ready, and that includes understanding you investments. If you have questions regarding your financial holdings the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
