Late last June, a stream of lava flow from the Kilauea volcano began to flow on Hawaii’s Big Island. By late October, the lava was threatening to destroy homes. Now residents of the Big Island are fighting back and asking for the State of Hawaii’s help because their homeowners insurance coverage has been canceled. The reason listed: the Puna Lava flow.
The lava flow near Pahoa on Hawaii, seen on November 2, 2014 as it approaches the town.
A hearing will be held on Tuesday, February 11, 2015, but this seems to be a hotly debated issue. Some argue that the carriers are bailing out after collecting premiums for decades at a time when the residents actually need to have the insurance. This also leaves owners with mortgages in a lurch because the banks will require expensive, limited forced placed policies of insurance. Others have noted that homeowners assumed this risk when they built within the shadow of the volcano and coverage for these risky homes passes high premiums on to other residents.
Normally, we urge insureds to read their policies to look for coverage. Many residential policies limit recovery for landslides and earth movement but will cover ash, dust, and lava flow. But these Hawaii homeowners are being non-renewed by the carrier and are left with no policies to read.
If the residents paid for and have flood insurance, the NFIP covers damage due to floods, mudslides, and mudflows, but we know that the limitations and exclusions on the extent of coverage may make for quiet the legal battle.
It will be interesting to see how lawmakers handle this issue at the upcoming hearing on February 11th, and whether coverage will be re-instated by carriers, or if the state has another plan.
Here is video of the testimony heard earlier this month on the property insurance bills.