HILO — Two words are giving some Puna residents who lost their homes to the ongoing Kilauea eruption more anxiety as they try to rebuild their lives — “lava exclusion.”
That language, or something similar, is in some home insurance policies issued within Lava Zone 1, leaving policy holders to wonder if they have any coverage.
That uncertainty was highlighted Thursday during an insurance forum for lava victims at the Hawaiian Shores Community Association building. More than 200 people attended, with some having to stand outside and listen through open windows.
Concerns mostly involved policies provided through Lloyd’s of London.
About a third present raised their hands when asked if they have a policy with Lloyd’s, one of the few companies willing to insure in that area, and a fraction of that said their policy includes language excluding losses due to lava.
One of the speakers at the forum, Robert Joslin of Hawaii Public Adjusters, said he is aware of those concerns.
But he couldn’t provide further clarity without looking at an entire agreement. Joslin said one section of a policy can take coverage away, and another can give it back, which is why people need to “drill down” into the details.
“I would look at the definition of lava,” he said. “I want to see how that’s defined.”
Judy Moa, an insurance broker who was in the audience, was more definitive.
“If you have a home in Lava Zone 1, you have that opportunity to buy a policy that excludes lava, and I’m sorry to say it so frankly, you have no coverage,” she said.
The state Insurance Division has said that generally the loss will be covered as a fire peril if molten rock ignites the structure.
“However, each company’s policy is different,” the office said in a statement. “Homeowners should contact insurers immediately to review their coverage.”
Kathy Urso, who lost her home in Leilani Estates, expressed frustration with trying to get payments through her policy.
“They’re trying not to pay me anything, not for any loss of use or contents,” she said. “They’re trying to take a $90,000 depreciation on a home I owned for a year.”
Urso said she complained to the governor’s office about that issue.
She told the Tribune-Herald that she lost a “life’s worth of collections.”
“I’m still in shock,” Urso said. “I feel like I’m talking about someone else.”
William Nhieu, Insurance Division spokesman, said the office has received 47 inquiries and three formal complaints related to the lava flow. He couldn’t specify which companies they involve.
Nhieu said complaints are forwarded to the office’s investigators, who will see if the denial is legitimate.
“Unfortunately, it is very common,” he said, regarding insurance complaints following a disaster. “Our investigators will look to see if they denied something (legitimately) or if it’s a blanket denial.”
Lloyd’s is a “non-admitted insurer,” which means it’s not licensed to do business in the state but can write coverage through an excess or surplus line broker licensed in Hawaii, Nhieu said.
“Unlike licensed insurance companies, surplus lines insurers do not have guaranty fund protection that helps to pay claims if an insurer becomes insolvent,” he said.
A major insurer in the area is the Hawaii Property Insurance Association, which the state crafted in the early 1990s after lava inundated Kalapana.
Residents, including those without insurance, could receive aid through an individual assistance program ran by the Federal Emergency Management Agency once that funding program has been approved for use for this disaster.
Dana Nelson, a FEMA assistant external affairs officer, said that authorization hasn’t occurred yet. He said the county and state need to apply and there’s no damage threshold to be met.
Diane Ley, county research and development director, said the county is collecting data for the application, which she expects will be sent to the state for processing within the next week or two.
Nelson said the grant program won’t make “people whole” and is meant to be a “ray of hope.” He said the program can’t duplicate benefits, such as payments from an insurance company.
During the insurance forum, speakers advised residents to submit a claim promptly and don’t take no over the phone for an answer.
Joslin said insurers owe them a written explanation as to why they are denying a claim and they also must provide a certified copy of the policy when asked. He advised those in attendance to do as much in writing as possible.
Sandy Watts, a representative from United Policyholders, said residents should take a “systematic approach.”
“It’s super overwhelming,” she acknowledged. “It’s a long process; it’s a marathon, not a sprint.” The nonprofit organization represents disaster victims.
Watts also advised those in attendance to not be afraid to be persistent.
“Be specific on what you need,” she said. “They have to keep working on it.”
Urso said she found the forum helpful.
“I’ve been waiting for this,” she said.
Email Tom Callis at tcallis@hawaiitribune-herald.com.
While I understand the feelings of these folks its worth remembering that they knew where they lived. Sure, its some of the least expensive land on the island but its cheap for a reason.
To a person they will tell you that they knew the risks but figured “Not in my lifetime”.
It’s amazing to me that they expect their insurance company to do anything beyond what is in the policy they bought, or that they assume the government will bail them out.
The only thing more silly than those insurance commercials on TV that promise to make everything right again is these unlucky folks who took a big risk to buy cheap real estate in the lava zones & expect someone to “Make them whole again”.
Sure agreed on the known “risk”, yet what about the contradictory insurance clauses referenced? Insurance companies are, well in many cases unscrupulous.
These insurance companies insured in lava zones 1 and 2 and charged high premiums to compensate for the increased risk. These policies are very ambiguous as to what they do and do not cover but it is clear to me the high premiums were charged to cover one specific risk, LAVA. We will see if these insurance companies fare any better than they did with juries in New Orleans. I don’t believe these Hawaiian Juries will be too sympathetic to the multi billion dollar insurance companies denying claims. A house destroyed by lava almost always burns first.
“A house destroyed by lava almost always burns first.” True? (I don’t know, honest question.) If so, then maybe that’ll help their case… because I wondering if the burden of proof would fall on the homeowners to show that their house burned before it was overrun. And short of having video of that, not sure how they could.
Some areas hit have not had lava near their property in over 600 years. I’d say that’s a much better “bet” than those who buy in a known hurricane or flood area that realizes it’s fate every few years. As far as the legend of the land being “cheap” don’t believe every thing you’ve been told.
I would think that it would be a major risk to sell insurance in Lava Zone 1 or 2 here in Hawaii. These slimy insurance companies that use fine print to exclude risks may find out that the legal system in Hawaii works in a different way. It will be interesting to see how this goes. Socialism has a few advantages.
“Socialism has a few advantages.”
Not according to the approx. 100 Million people it’s killed.
I do see you recognize that Hawaii has close ties to it though.
I have news for anyone that thinks a Hawaiian jury or judge is going to rule in favor of these multi billion dollar insurance companies that knowingly insured, at high premiums in Puna and against these homeowners that lost everything. Hell, the Mayor’s house burned down.
True True True
When the buyer signs the insurance policy agreement, by law he has to abide by it. It is only left-wing, Anti-Middle-Class, grief-sympathizing rabble-rousers who induce the buyer to break civil codes and ordinary business law. Besides, according to the centuries-old Roman commercial codex: “Caveat Emptor,” meaning “Let the buyer beware.”