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Insurance Blind Spots: 5 Coverage Gaps That Could Cost You

You might think you have airtight insurance protection against storms, car accidents and other mishaps. But you’d hate to discover hidden cracks in your coverage once it’s too late.

Here are five insurance problems you might not be as prepared for as you think — and how to plug the coverage gap.

1. No flood insurance

Flooding has occurred in every state in the country over the past five years, according to the Federal Emergency Management Agency. Yet only 12% of homeowners nationwide carry flood coverage, an Insurance Information Institute poll found.

Homeowners insurance doesn’t cover flooding; you’ll need a separate policy. You can find local agents through the National Flood Insurance Program. You can also ask your home insurer for help starting a policy through the federal program, or whether there are companies in your state that offer private flood insurance.

There’s a 30-day waiting period before coverage kicks in, so get your flood insurance squared away well ahead of coming storms.

2. No way to pay off a totaled car

Gap insurance helps you avoid owing money on a car loan or lease if your vehicle has been totaled or stolen. Along with comprehensive and collision coverage, gap insurance is a smart addition if you lease or finance a car.

Say you lease a $20,000 car at payments of $400 a month. Five months later, your car is totaled in an accident. If the car’s value has dropped to $15,000, that’s the amount your collision claim check will be, minus your deductible. That won’t be enough to cover the $18,000 left on your lease.

This is where gap insurance kicks in. It makes up the difference between what your car is worth when it’s stolen or totaled and how much you owe on a car loan or lease.

You can buy gap insurance from the car dealership or your lender. Or you can go through your car insurance company, which is typically cheaper unless you want gap coverage for several years.

» COMPARE: Car insurance quotes

3. No plan for sewage backups

You may not realize that you’re responsible for the sewer line that runs from the main pipeline in the street to your house. Yet standard home insurance typically doesn’t cover backups in this part of the line. Enter sewer backup coverage. It pays for cleanup and repairs from spewed sewage in your house.

Sewer backup coverage is relatively affordable — $40 to $50 a year, according to the Insurance Information Institute. Talk to your home insurer about adding this kind of coverage.

4. No income after a disability

Among 20-year-olds, more than 1 in 4 will suffer a disability before retirement age, according to the Social Security Administration. If you can’t work because of an illness or accident, you need a plan to pay your bills.

Social Security disability insurance is available only to people with long-term disabilities lasting at least one year. Just 38% of workers have access to short-term disability insurance through their employers, according to the Bureau of Labor Statistics.

You don’t have to rely on your workplace for coverage. Individual disability insurance is available from several insurers, including State Farm, MetLife and Mutual of Omaha. If your employer doesn’t offer short-term disability insurance, or your current benefits fall far short of replacing your full income, look into getting a policy elsewhere.

4. No financial safety net for earthquakes

Most homeowners, even those who live in high-risk areas, go without earthquake insurance. They risk financial ruin if their homes and belongings are destroyed. Only 10% of California residents have earthquake insurance, and 14% of people in Western states, according to the Insurance Information Institute.

Standard homeowners insurance won’t pay to fix damage caused by earthquakes. Home insurers might offer earthquake coverage as a policy add-on for an extra cost — and in California they have to. Or you might need to look for stand-alone earthquake insurance.

Californians can shop for a policy through the California Earthquake Authority. For those living in other states, ask your home insurer or agent for help finding companies that sell earthquake coverage or check your state’s department of insurance website.

Alex Glenn is a staff writer at NerdWallet, a personal finance website. Email: aglenn@nerdwallet.com.

This article was written by NerdWallet and was first published by The Associated Press.

Trump calls for canceling Boeing's Air Force One contract in morning tweet

President-elect Donald Trump slammed the cost of a new Air Force One and used Twitter to call for canceling the new aircraft fleet Tuesday, raising questions about the future of the program managed at Wright-Patterson Air Force Base.

>> Read more trending stories

In a tweet sent at 8:52 a.m., the president-elect wrote: "Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!"

Boeing spokesman Todd Blecher declined comment and referred all questions to the Air Force, which did not immediately release a response.

The Air Force is planning to replace two aging Boeing 747-200s that serve as Air Force One when the president is aboard with two newer and highly modified Boeing 747-8 airliners. The jets were expected to join the fleet by 2024, replacing a current fleet that will be more than three decades old at the time.

A program official at Wright-Patterson has said the White House has urgently asked for the jets because of reliability concerns as the planes age, among other concerns.

Richard Aboulafia, a senior aviation analyst with the Virginia-based Teal Group, said in an email the tweet was "complete nonsense. But making program management and military requirements decisions via tweet is just very wrong."

In an interview, he said the president-elect's position on the Air Force One replacement was "very concerning."

"This is not from the standpoint of the contract, but just from deeper lack of understanding for what the president does," he said. "It's very important for the president to travel, visit other places in the country, and other countries and be able to manage national emergencies while he travels. You can't do that without Air Force One.

"Now the alternative is he thinks a 50-year-old Air Force One will do the job," Aboulafia said. "Hopefully, nobody can be that completely misinformed."

A message seeking comment was sent to Trump spokespersons this morning.

Todd Harrison, director of the aerospace project at the Center for Strategic and International Studies in Washington, D.C., said it's a tradition for an outgoing president to request a new Air Force One "so that it would not be seen as being for personal benefit." President George H.W. Bush's administration OK'd the purchase of the current fleet, he noted.

"If Trump cancels the program now, it could be another eight years before a new replacement program is started, so that aircraft would be pushing 40 years old by then," Harrison wrote.

The production of the iconic Boeing 747 jumbo jet could come to an end "so it's not clear that the Air Force would be able to buy a commercial derivative plane like the 747 from a U.S. company in the future."

Neither Boeing nor the Air Force has released the latest figures on the program.

Aboulafia said the more than $4 billion Trump cited was "about right over 10 years."

"It's incredibly expensive to be able to manage a country and fight a war from the air, and build two planes that can do that," he said. But he rejected the claim the costs were "out of control."

Loren B. Thompson, a senior defense analyst at the Virginia-based Lexington Institute and a defense industry consultant, said in an email the president-elect "probably overstates" the cost of the two new jets.

"Boeing thinks the program will cost less, but it is hard to say precisely how much because the Air Force hasn't finalized the requirements for the program.

"This is a plane that might need to remain airborne for days during a nuclear war," Thompson wrote. "It must be able to carry out functions no other plane in the world would need to accomplish."

The jet's cost is driven by its mission with self-protection measures such as shielding against electromagnetic pulse in a nuclear explosion and specialized communication gear to command a nuclear strike "which is why it is so much more expensive than the planes Trump is used to buying," Harrison wrote.

The National Museum of the U.S. Air Force hopes to land one of the current Air Force Ones when the plane was expected to be retired in the next decade to add to its collection of 10 presidential aircraft.

Jumbo Loans Require More Payments In Reserve

MoneyTips

Taking out any home loan is a big decision, but for consumers considering the larger "jumbo" option, there's even more at stake. The size of these mortgages can often increase the financial stress on a household. While many places consider $417,000 or more a jumbo loan, but in places where house values are higher, such a loan's qualification may be $625,000 or more. Either way, applicants must ensure that they have at least six months' worth of repayments in reserve. Unlike conforming mortgage loans, lenders of jumbo loans set their own underwriting rules. It means that the guidelines on minimum credit scores and cash reserves will vary from lender to lender. Signing up for a larger than average debt shouldn't be something any homebuyer takes lightly. This is why many lenders demand a large reserve of payments to be held to ensure that borrowers have the right financial footing to afford their mortgage. In general, conforming mortgages need borrowers to have enough savings to meet a couple of repayments. Quicken Loans Vice President Bill Banfield says larger borrowing requires bigger reserves, as lenders "are trying to make sure the client is in a better situation," explains Banfield. As a result, says PNC Bank Mortgage Loan Officer Tyler Case, standard reserves vary between six and twelve months' worth of repayments. At PNC, jumbo loan applicants must have six months of reserves to cover down payments, closing costs, interest, taxes and insurance. With higher home values, some consumers may have no other option than to go for a jumbo loan. Before applying, though, make sure you are financially prepared for such a large debt. Photo ©iStockphoto.com/ARSELA

Originally Posted at: http://www.moneytips.com/jumbo-loans-require-more-payments-in-reserve

Jumbo Mortgages Increase

Jumbo Mortgages Are Still On The Rise

How To Get A Jumbo Loan Without Putting Down 20%

Jumbo Loans Require More Payments In Reserve

MoneyTips

Taking out any home loan is a big decision, but for consumers considering the larger "jumbo" option, there's even more at stake. The size of these mortgages can often increase the financial stress on a household. While many places consider $417,000 or more a jumbo loan, but in places where house values are higher, such a loan's qualification may be $625,000 or more. Either way, applicants must ensure that they have at least six months' worth of repayments in reserve. Unlike conforming mortgage loans, lenders of jumbo loans set their own underwriting rules. It means that the guidelines on minimum credit scores and cash reserves will vary from lender to lender. Signing up for a larger than average debt shouldn't be something any homebuyer takes lightly. This is why many lenders ...

Nordstrom Is Selling an $85 Rock

There is such a thing as an $85 rock, and you can buy it at Nordstrom.

This is not the stone of 1975 Pet Rock fame (which, for the record, you can get for less than $20 online). Back then the Pet Rock had a clear purpose: It was a joke. The Medium Leather Wrapped Stone, on the other hand, is somewhat of a mystery. Not even the writers at Nordstrom knew what to say about it, so they left it open to interpretation: “A paperweight? A conversation piece? A work of art? It’s up to you.”

To be fair, it seems like the focus of this thing is the leather pouch in which it sits, rather than the rock itself. Made Solid — the company behind the Medium Leather Wrapped Stone and its more affordable counterpart, Small Leather Wrapped Stone ($65) — sells handmade leather products.

But what is a leather-wrapped stone without the stone? An empty container that probably won’t hold much of anything. So, really, it’s about the rock. Considering its crucial role, you’d think they’d tell you a little more about the geological superstar, beyond the fact that it comes from the San Bernardino Mountains. But maybe that’s part of the mystery.

Screenshot: Nordstrom.com

And a mystery it is, because if the existence of an $85 rock doesn’t bewilder you, consider this: It’s a hot commodity. Two of the four versions of the Leather Wrapped Stones for sale on Made Solid are sold out. Who knows how long Nordstrom will have them in stock.

For all of you who’ve been wondering what hot holiday gift you should get for your loved ones, you have an answer: A one-of-a-kind, made-in-the-USA rock. (Made Solid did not immediately respond to a request for comment on what makes its Leather Wrapped Stone worth spending $85 on.)

Sure, it might seem a tad expensive. But by all means, if you have $85 to spend and know the Leather Wrapped Stone would add a level of class to your sister’s desk that her one-a-day calendar just doesn’t deliver, go for it. But as tempted as you might be to put it on the old credit card and worry about it later, be careful: It’d be a shame to resent that fancy desk rock come January when it’s the reason you have to cut corners to stay on budget or pay off your credit card bill. (You can see how your credit card balances may be affecting your credit by viewing two of your credit scores, updated every 14 days, for free on Credit.com)

Oh, the things we have to do without to stay out of debt.

 

Related Articles

This article originally appeared on Credit.com.

Mortgage Rates Today, Tuesday, Dec. 6: Postelection Rate Surge Cuts Potential Refinance Population in Half

Thirty-year fixed rates held steady, while 15-year fixed and 5/1 ARM rates eased slightly lower Tuesday, according to a NerdWallet survey of mortgage rates published by national lenders this morning.

The mortgage rate runup since the election has pinned rates near two-year highs, with little on the horizon to ease the upward pressure. The Federal Reserve is expected to raise short-term interest rates at its meeting next week. While not a direct influence on mortgage rates, a Fed hike would give little room for long-term rates to decline.

Mortgage Rates Today, Tuesday, Dec. 6 (Change from 12/5) 30-year fixed: 4.34% APR (NC) 15-year fixed: 3.71% APR (-0.02) 5/1 ARM: 3.78% APR (-0.01) 4.3 million potential refinance candidates lost since election

The dramatic increase in mortgage rates since the presidential election has taken its toll on the number of potential refinance candidates. In a new report, real estate research firm Black Knight estimates 4.3 million homeowners have been removed from the pool of borrowers likely to refinance their home loan.

“From the 8.3 million borrowers who could both likely qualify for and had interest rate incentive to refinance immediately prior to the election, we’re now looking at a population of just 4 million total, matching a 24-month low set back in July 2015,” Ben Graboske, Black Knight executive vice president, said in a release.

» MORE: The pros and cons of home equity lines of credit

However, Graboske notes there are still 2 million borrowers who could save $200 or more per month by refinancing. He also says affordability has taken a hit — with the rapid increase in mortgage rates equivalent to a rise in the average home price of over $16,400.

“It now takes 21.6% of the median income to purchase the median home nationally,” he said. “That’s the highest share of median income needed to buy the median home since June 2010, when rates were at 4.75% but the average home was worth nearly 20% less than it is today.”

Homeowners looking to lower their mortgage rate can shop for refinance lenders here.

NerdWallet daily mortgage rates are an average of the published APR with the lowest points for each loan term offered by a sampling of major national lenders. Annual percentage rate quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.

Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email: hal@nerdwallet.com. Twitter: @halmbundrick.

Do Some Toys Threaten Your Child's Privacy?

Is Santa spying on your kids?

A set of consumer groups think so and are petitioning the Federal Trade Commission to step in on Tuesday.

In a broader report accompanying the complaint, consumer groups are warning that a coming “Internet of Toys” could have long-term implications for child safety.

“Product safety is no longer just about a small toy that you are afraid your kid will choke on,” said Jeffrey Chester, executive director of the Center for Digital Democracy. “It’s about how the products are designed and what they might be doing with your children’s information.”

Two hot new internet-connected toys “subject young children to ongoing surveillance … and pose an imminent and immediate threat to the safety and security of children,” the complaint alleges.

The two toys — one doll named My Friend Cayla, marketed to girls, and i-Que, which targets boys — are made by a Chinese company, Genesis Toys, which has a Los Angeles-based affiliate named Genesis.

iQue and Cayla engage in simulated conversations with children. They use Bluetooth to connect to smartphones and gain access to the internet.

“A child’s statements are converted into text, which is then used by the application to retrieve answers using Google Search, Wikipedia and Weather Underground,” the complaint says.

The toys are available from many U.S. retailers. On one product page, they are described as being appropriate for children ages 3 to 12.

“Via speech-recognition technology, Cayla can understand and respond to your child in real time about almost anything,” the page says. “She can tell stories, play games, share photos from her photo album, and can sing too. She can even help your child with their homework questions.”

The consumer groups — including the Electronic Privacy Information Center, The Campaign for a Commercial Free Childhood and Consumers Union — claim that the devices record children’s conversations “without any limitations on collection, use or disclosure” of personal information. They say the Genesis toys violate the Child Online Protection Act, and that the Federal Trade Commission should step in immediately.

Genesis Toys claims that My Friend Cayla has amassed over 1 million fans worldwide, according to the complaint.

Attempts to reach Genesis for comment were unsuccessful.

Massachusetts-based Nuance Communications, which provides voice-recognition services for the toys, according to the complaint, was also named. Emails and phone calls to the firm were not immediately returned.

Too Much Personal Information? 

The complaint alleges that the toys ask for personal information, such as parents’ names, favorite TV show, school name and home city. The Genesis privacy policy — only available as a pop-up when downloading an app — says all data can be stored and shared with certain third parties, according to the complaint.

The consumer groups also say the toys don’t employ basic Bluetooth security, such as requiring a pairing code.

“As a result, when the Cayla and i-Que dolls are powered on and not already paired with another device, any smartphone or tablet within a 50-foot range can establish a Bluetooth connection with the dolls,” it says. That opens the door to strangers in close proximity being able to use the doll to connect with the child who’s using it, the groups allege.

Last year, Mattel’s release of the Hello Barbie talking toy raised similar concerns, particularly after researchers were able to hack it. Mattel addressed that concern by offering a bug bounty program with its voice-processing partner, ToyTalk.

In a report named Toyfail by European consumer group Norwegian Consumer Council timed to coincide with the U.S. FTC complaint, Mattel scored well in terms of privacy policy disclosures and minimization of data collection. Hello Barbie doesn’t connect to the internet to supply conversation; it relies on pre-programmed dialogue. But recordings of conversations are sent to ToyTalk.

ToyTalk’s privacy policy says those recordings are used to refine its voice-processing service and are not used to contact or market to children.

Still, Josh Golin of Commercial Free Childhood told Credit.com that parents need to be aware of these new kinds of toys.

“These are becoming must-have toys,” he said. “And these problems are ongoing. Sure, there was a splash made when someone hacked the toy, but then it goes away. This issue needs to be front and center for parents.”

The report from the EU group noted that while Hello Barbie’s terms and conditions were written in clear language and are available online — in contrast to Genesis toys — it was critical of Mattel for not explaining how changes to the privacy policy would be announced and for not being clear about what third parties might receive collected data.

“Hello Barbie and ToyTalk only state that they can share data with ‘vendors, consultants and other service providers’ without specifying or giving examples of what this entails,” the report says.

Marissa Beck, a spokeswoman for Mattel, objected to the European group’s criticism of its third-party data sharing notice. “We have an entire section (in our privacy policy) that details this, called “What Information Do We Share With Third Parties?,” she said, pointing to the Hello Barbie policy on ToyTalk.com’s website. She also said the firm is clear about updates to the policy.

In an email, Jade McNorton, a spokesperson for ToyTalk maker, San Francisco-based Pullstring Inc., said “we feel this is clearly communicated” when asked about updates to the firm’s privacy policy, and pointed to this section of it:

If we make changes, we will notify you by revising the date at the top of the Privacy Policy and, in some cases (such as for material changes), we will provide you with additional notice (such as adding a statement to our web site’s homepage or sending you a notification) and/or obtain your prior verifiable consent.

She added that third-party firms which might receive data are detailed in the privacy policy also.

Should Parents Be Concerned?

Fundamentally, these types of toys are “not great to begin with,” Golin said. (Real friends are superior to talking dolls that can mimic friendly conversations). But parents should be concerned that while kids are being trained to “connect with toys, and really confide in them,” there are longer-term concerns, Golin said.

“I think what happens is there is a rush to get things into the marketplace before the technology and policy and ethical considerations have all been worked out …There’s this misguided idea that connecting anything to the Internet makes it better. With toys, there’s all sorts of reasons you don’t want to do that,” Golin said. “The issues are really sensitive. The recordings of children’s conversations are really sensitive. And the fact that these companies can’t explicitly say, ‘This is exactly what we are doing with these recordings,’ should be very concerning to parents.”

“These discoveries are another sign that emerging IoT-technologies may not be well suited for children’s products,” the Norwegian Consumer Council concludes. “Unless the manufacturers and service providers are willing to take these issues seriously, the NCC are concerned that the area of connected toys is rife with potential risks for children’s safety and well-being, as they play and interact with these products.”

Remember, you can keep an eye out for identity theft by monitoring your credit. (You can pull your credit reports for free each year at AnnualCreditReport.com and view two of your scores, updated every 14 weeks, for free on Credit.com.) Parents can request a credit history for their minor children from the three credit reporting agencies with documentation proving they are the parent or legal guardian to keep an eye out for child identity theft as well.

Related Articles

This article originally appeared on Credit.com.

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