Business

3 coverage gaps to know

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Many homeowners have a big gap in their insurance coverage — and they likely don’t know it, according to insurance experts.
That leaves policyholders financially exposed to damage, including from natural disasters that are becoming more frequent or costly, such as wildfires, hurricanes and flooding — potentially putting their biggest financial asset at risk, experts said.
Costs for consumers to keep their coverage have risen substantially in recent years amid soaring insurance premiums.
“A supermajority of homeowners want to fully and adequately insure their homes, are willing to pay for it, and think they have it,” Kenneth Klein, a law professor at California Western School of Law, wrote this year in a Lewis & Clark Law Review article. “But most of them are wrong and are short by a lot.”
A ‘crisis of underinsurance’
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About 90% of owner-occupied homes in the U.S. are insured, Klein wrote.
The typical homeowners insurance policy puts financial limits on coverage in a variety of ways — for example, by excluding certain types of disasters or capping payouts for certain items or types of damage.
Klein conducted an analysis of California Department of Insurance data on 74,000 fire-related claims of any size — from wildfires to house fires — from 2018 to 2023. Among those claims, more than 70% of homeowners with insurance were underinsured by an average of roughly 20%, Klein wrote.
The problem is not limited to California, he said.
“This data shows that there is a barely hidden nationwide crisis of underinsurance,” Klein wrote. The dynamic “persistently and inevitably robs homeowners of any chance to fully recover what they have lost,” he wrote.
There are many reasons why homeowners are underinsured, experts said.
Some consumers may intentionally choose a lesser coverage amount just to afford any coverage at all, Amy Bach, co-founder of United Policyholders, a consumer advocacy group, wrote in an e-mail.
However, many consumers are unaware of the gap, experts said.
On one hand, a “broad swath” of Americans don’t understand what they’re buying due to confusing language in their insurance contracts, according to research published in May in Virginia Law Review.
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Additionally, insurers continue to exclude more things from coverage and cap the dollar amounts for the things they do cover, Bach wrote.
Consumers also generally underestimate how much it would cost them to rebuild their homes, experts said.
Unfortunately, “coverage gaps are often discovered at the time of the loss — which is when you don’t want to discover them,” said Lareesa Klingler, director of national claims for the private risk solutions group of Lockton, an insurance brokerage.
Here are some of consumers’ biggest insurance gaps, according to experts.
1. Flooding
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The typical homeowners insurance policy excludes or limits coverage for damage from certain disasters, such as earthquakes, landslides and floods, according to insurance experts.
But consumers most often get tripped up by the latter — and it can be costly, according to insurance experts.
Homeowners need separate insurance to cover physical damage caused by a flood, defined as water entering a home from the ground up. That may occur due to storm surge, heavy rainfall or an overflowed body of water such as a lake or river.
Flooding is the most common and costly natural disaster in the U.S., according to the Insurance Information Institute.
Just one inch of water can cause about $25,000 of damage to a homeowner’s property, according to the Federal Emergency Management Agency. Between 2020 and 2024, the average payment for all flood claims was $82,614, according to FEMA.
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And flood insurance isn’t just for those who live near the water: About 99% of U.S. counties have experienced a flood in the past 20 years, according to FEMA’s floodsmart.gov.
But a 2025 blog post from the agency indicates less than 4% of U.S. households have bought a policy from the National Flood Insurance Program.
NFIP is the primary source of flood insurance coverage for residential properties.
A standard homeowners insurance policy does cover certain water damage: For example, in instances of “wind-driven rain,” essentially when water gets into the house from the top down, experts said.
This might happen if a hurricane damages a roof, and rain gets inside and soaks the entire house or several rooms, experts said.
Insurers may exclude or cap benefits for mold damage, though, Bach said. They may also cap payouts for water damage at perhaps $5,000, $10,000 or $15,000 per loss, she said.
California Insurance Commissioner Ricardo Lara this week urged consumers to review their coverage and consider flood insurance ahead of a likely historic El Niño. People shouldn’t wait until a disaster is approaching, Lara said: Flood insurance generally takes effect 30 days after purchase.
Even with flood insurance, there are caveats. For example, traditional policies typically restrict coverage for basements.
2. Rebuilding costs
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Underestimating the cost of rebuilding is another big source of underinsurance, said Peter Kochenburger, visiting law professor at Southern University Law Center and managing fellow of its Insurance Law and Policy Institute.
“The cost of building and repairing has gone way up,” Kochenburger said. “If you lose the house and the limits of your homeowners policy aren’t sufficient to rebuild, you’re sort of stuck unless you have your own financial assets — which many people don’t.”
Replacement costs for property-and-casualty-related losses increased by 45% between 2020 and 2023, on average, according to a Treasury Department report published last year. Homeowners insurance is a type of property and casualty insurance, as are renters insurance and auto insurance.
A supermajority of homeowners want to fully and adequately insure their homes, are willing to pay for it, and think they have it. But most of them are wrong and are short by a lot.
Kenneth Klein
law professor at California Western School of Law
Labor costs have increased, too. The cost of employing workers building single-family homes jumped 37% between 2018 and 2022 and 45% from 2014 to 2023, the report said.
Consumers can consider buying “extended replacement cost” coverage, an add-on to a traditional insurance policy, said Klingler, of Lockton.
This generally tacks on an additional 10% to 50% above a consumer’s limit for dwelling coverage, which is the maximum a policy pays to rebuild a home from the ground up, according to Policygenius, an insurance comparison site.
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Consumers — especially those with older homes — can also consider buying something called “ordinance or law coverage,” Klingler said.
This protects against higher costs that arise from the need to bring a home up to current building code — such as upgrades to wiring, plumbing or insulation — when rebuilding.
3. Limits on specific items
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Insurers commonly limit the amount of money they pay for many categories of specific contents, which may include artwork, collectibles, rugs, furs and other expensive items, experts said.
However, consumers can purchase add-ons to a traditional policy to raise the dollar limits for those individual items.
“If people have antiques or guns or electronics or jewelry or those kinds of special items, they need to verify how those are covered, and whether [they] need additional coverage for those items,” said Brenda Cude, professor emeritus of financial planning, housing and consumer economics at the University of Georgia and a consumer representative at the National Association of Insurance Commissioners.

Business

AMD will acquire Fei-Fei Li’s World Labs for $8.2 billion

AMD is acquiring World Labs, one of the leading developers of deep learning models intended to understand physical reality, in a $8.2 billion deal, the two companies said today.
World Labs justified the deal in a statement saying that AI development required “close collaboration across model research, systems and compute.” AMD, in turn, says that understanding frontier workloads, like those created at World Labs, will shape its chip-making roadmap.
The acquisition will see World Labs founder Fei-Fei Li join AMD as executive vice president and chief scientist. AMD and World Labs formed an inference optimization-and-training partnership last year, and ties have remained close. Notably, Li was a guest at AMD’s CES presentation earlier this year.
Li, a Stanford computer science professor, is considered a pioneer in AI, particularly computer vision, for her work building the ImageNet database and the AI competitions it inspired. In 2024, Li founded World Labs to develop deep learning models with a more robust understanding of the physical world, arguing that true general intelligence required a grounding in physics and the ability to understand and reason about data beyond text.
In a post announcing the deal, Li described the partnership as the result of a desire to scale World Labs’ technical breakthroughs beyond the lab. “Now that we have tangible proof of the possibilities, we want to do everything we can to accelerate the future,” Li wrote in the post. “To do this requires scaling our efforts, widening our reach, and getting closer to the hardware.”
“World model” remains a loosely defined term, encompassing everything from language models trained to understand visual inputs, to models capable of generating and sustaining a high-fidelity simulation of reality. World Labs’ first product, Marble, is pitched as a tool for creating entertainment experiences, but also for creating simulated environments for robot training.
The acquisition is likely to help AMD compete with long-standing rival Nvidia in creating an ecosystem for AI-specific chips. While Nvidia already has a suite of open-weight world models like Cosmos, AMD has only offered text- and video-based models to the public.
World models are seen as vital in efforts to deploy generative AI models on robotic platforms, from autonomous vehicles to industrial robots and general-purpose humanoids. In particular, the dearth of useful real-world data to train general purpose robots means that synthetic data from world models will be key to realizing the vision put forward by companies like Tesla and Figure.
The acqusition is expected to close before the end of the year, subject to regulatory approval.

Business

Boeing 737 Max 10 certification delayed by software issue

The head of the Federal Aviation Administration said a software problem will delay its certification of the Boeing 737 Max 10 as the agency assesses whether it poses a safety issue, a potential setback for the manufacturer as it seeks to complete government approval of its best-selling family of aircraft.
Boeing had expected to receive a green light from its regulator on the years-delayed planes “very soon,” CEO Kelly Ortberg told investors earlier this month. But Boeing said Saturday that last month it flagged a software glitch on some 737 Max aircraft that could affect certain landing procedures.
“We haven’t concluded whether this is a safety-of-flight issue or not, but we will be delaying the 10 … until we’re satisfied that we don’t have an issue here,” FAA Administrator Bryan Bedford said at a press conference on air traffic modernization in Washington, D.C., on Monday.
The FAA said in a statement that “safety dictates the certification timeline.” It added that the agency was “following our safety review process to investigate this software glitch and won’t hesitate to take action if needed.”
Boeing shares extended earlier losses after Bedford’s comments, shedding nearly 7% Monday, as investors assessed another delay after years of setbacks for the aircraft.
“We continue to follow the lead of the FAA as we work through the certification process,” Boeing said in a statement.
Boeing said over the weekend that the issue could occur with a vertical navigation system after an aircraft misses an approach and has to go around and line up to land again, such as in situations when there is an obstruction on the runway, for example. Both the company and Bedford said pilots are trained for those circumstances.
“The pilots remain in control of the airliner, train for these scenarios,” Bedford said Monday. “The issue that we’re looking at right now is the workload component.”
The FAA certified the Max 7, the smallest of the family, last month. Those planes have the most updated version of the software, which the FAA is evaluating. It isn’t clear how that could affect deliveries of those planes to customers like Southwest Airlines .
U.S. airlines said they don’t have any Max aircraft with the issue, in part because they are allowed to revert to older software on those models, if needed, not the newer version that has the potential issue.
Bedford said Boeing had fixed a previous bug in the system but “unexpectedly … introduced a new bug.”
Boeing has been trying to move on from years of safety crises, including two crashes of the Max 8 in 2018 and 2019. A flight control system was implicated in those crashes.
Bedford added on Monday that unlike that system, this “doesn’t take control away from the pilots.”
The company had originally planned to start delivering the Max 10 in 2020 before those safety concerns and other problems delayed the plane. It is the last of the Max family waiting to be certified.

Business

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Business

Anthropic releases Sonnet 5.5, which it calls a significantly cheaper, faster work partner

As the AI model wars continue, Anthropic has released the newest version of Sonnet, the company’s mid-tier model, which it says will work much faster (and for significantly less) than its predecessor.
The lab describes Sonnet 5.5 as an ideal assistant for everyday tasks — including coding and creating office documents.
5.5’s predecessor, Sonnet 5, was announced about three months ago. At the time, the model’s selling point was efficient agentic deployment — the ability to run agents at a lower cost than competitors.
The big selling point with 5.5, meanwhile, is speed. Anthropic claims that Sonnet 5.5 is 30 percent faster than its predecessor, and that its rate of token burn is significantly slower.
In the Anthropic hierarchy of models, Sonnet is less powerful than the Opus model, but can be more useful in certain circumstances because its agility. In particular, Anthropic’s benchmarks show Sonnet 5.5 performing better than Opus 5.5 on agentic coding, likely because of its ability to spawn multiple agents without exceeding cost limits.
Sonnet 5.5 is also said to have significant cyber capabilities, with the company claiming that it has “comparable” cyber capabilities to Opus 5. As a result, Anthropic says that 5.5 is the first Sonnet model that will be subject the same cyber safeguards that apply to Fable and Opus.
The company also plans to release a new version of Haiku — its smallest model — in the coming weeks, although it didn’t give a firm date as to when that would happen.

Business

Bank of America report says ‘funflation’ is hitting hobby spending

A new report from the Bank of America Institute finds that American consumers are spending more on their hobbies but are facing higher prices for their enjoyment.
The report notes that Bank of America card data suggests consumers are facing “funflation” in the prices they pay for their hobbies at arts and crafts stores, hobby shops, outdoor recreation service providers and retailers that specialize in activities including hiking, camping, skiing and scuba diving.
Using that definition, card data shows spending on hobbies rose 7.9% year over year in August, which was twice as fast as the 3.4% growth in transactions. That trend is the opposite of what was observed in August 2025, when transactions outpaced spending by nearly a percentage point. Spending growth on hobbies outpaced transactions during the pandemic, per the report.
“In our view, it’s likely that people splurged on hobbies amid social distancing during the pandemic, then gravitated back toward pricier alternatives like travel throughout 2022 and 2023. However, last year there may have been some rotation back to less expensive leisure like hobbies as after-tax wage growth slowed considerably,” the Bank of America Institute wrote.
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Bank of America’s card data also suggests there’s been an acceleration in hobby spending in recent months, which the report said may be occurring as “some consumers balance shift away from travel due to higher prices from rising fuel costs.”
The report noted a generational divide in spending on hobbies, with older millennials spending the most, followed closely by baby boomers and Gen X. Those cohorts are spending significantly more on hobbies than their Gen Z counterparts, while younger millennials’ spending is roughly in the middle of their older and younger peers.
“Older Millennials also boast the largest share of their population with hobby spending. In our view, it’s likely because this group is most likely to have young children. Which may mean older Millennials not only spend on their own hobbies but on their kids’ as well,” the Bank of America Institute said.
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It noted that data from the Census Bureau’s American Time Use Survey suggests that older millennials have the least amount of leisure time per day on average at a little more than four hours per day, which suggests that their hobby spending may be for their kids and themselves.
“On the other hand, younger Millennials and Gen Z have the lowest average spending, but a higher share of their population with hobby outlays. To us, this suggests that these generations are likely gravitating most of their spending toward less expensive hobbies like arts, crafts and board games,” the Bank of America Institute noted.
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The report found that younger and older millennials, as well as Gen X, appear to be ramping up hobby spending while baby boomers and Gen Z are slowing theirs. Gen Z’s hobby spending showed near zero transaction growth in August compared with nearly 16% year over year the prior year, according to Bank of America’s card data.
The slowdown was “driven by a significant decrease in spending on outdoor recreation, offsetting increases in arts and crafts retailers and hobby shops,” with the report noting that last year’s spending may have been driven by purchases like hiking boots that last longer.
“It’s also possible that this reflects a shift to more ‘granny core’ activities like knitting, sewing or baking (arts and crafts),” the report said.
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The Bank of America Institute also noted that Gen Z is spending the most on gaming, including board games and tabletop role-playing games that may require less frequent purchases.
Gen Z also spends about 20% to 25% of their leisure time playing games or using a computer, according to the Census Bureau’s time use survey.