Many Lahaina homeowners lack adequate insurance coverage to rebuild

HONOLULU (HawaiiNewsNow) - In another emerging barrier to recovery in Lahaina, many homeowners are discovering they don’t have enough insurance coverage to rebuild.

The problem is so widespread even the state senator who wrote the insurance laws may also come up short of what she needs to rebuild her home.

Condominium owners in Lahaina have the most complicated insurance situation. Most have one policy on the contents of their apartment and another policy, held by the association, on the whole building. But some of those associations don’t have enough coverage.

One of those impacted was the 189-unit Aina Nalu.

It was obliterated by the fire. From the air, you can see its building’s double-x layout silhouetted in ash. The complex of two-bedroom units was home for retired state Sen. Roz Baker.

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“We’d have people over. We’d have potlucks and all sorts of things,” Baker said. “It was a nice place to live. I was really heartbroken when it burned down.”

For years, Baker chaired the powerful state Senate Consumer Protection Committee, which handled condo and insurance laws. One of those laws requires condos to carry enough insurance to rebuild. But at the time of the fire, her own apartment building didn’t have enough.

“Many of us probably relied on the board of directors, and Hawaiiana management to help make sure that we had appropriate insurance, but nobody expected a fire either,” Baker said.

“So it’s a sad lesson that we learned.”

The president of the Aina Nalu Homeowners Association, Jim Blaha, said the board was aware it needed more coverage. “We were in discussions with our insurance agent to improve our insurance coverages,” Blaha said. “Unfortunately, our timing was really bad.”

Blaha owns two rental units in the complex, which supplemented his retirement income.

The association is now looking for millions more needed to rebuild. “We have filed a lawsuit against the state of Hawaii, Maui County and a Hawaiian Electric. Plus, I don’t even know who else to be honest, it’s a long list, trying to recapture enough funds to fill the gap,” he said.

Many Aina Nalu owners have the advantage of permits to operate as short-term vacation rentals.

The ability to collect significant revenue may enable them to borrow enough to overcome the insurance deficit, although that’s likely not true for Baker.

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Blaha’s next challenge will be getting owners with various economic circumstances to agree on a plan. “Everyone is scared,” Blaha said. “And when you’re scared, people get irrational.”

Underinsurance is a problem for single-family homeowners, renters and businesses as well.

State Sen Angus McKelvey, who lost his rental apartment in the Aug. 8 wildfire, got this assessment from national experts: “(They) looked at Lahaina and West Maui and they say this is one of the most severely underinsured areas I think they’ve ever seen.”

State Sen. Jarrett Keohokalole held a recent hearing of the Senate Consumer Protection Committee on Maui to look into insurance issues and said recovery will be complicated. “It’s a disaster for people who are covered,” he said. “Its a catastrophe for people who are not.”

Genesis Gil, director of Latino Community Organizing for the newly formed Roots Reborn advocacy group, attended the hearing and expressed concern about how working class and minority communities were impacted. She said many Filipino and Hispanic renters were uninsured.

“It’s just not part of our customs to have renters’ insurance,” she said.

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To address that gap, the Maui Filipino Chamber of Commerce organized a resource fair for the Filipino community at the Disaster Assistance Center in Lahaina in September.

It was a way introduce the community — all in one place — to the multiple federal, state and non-profit agencies vailable for advice and direction to potential disaster aid.

U.S. Rep. Jill Tokuda, who represents Maui in Congress, was there and said many don’t feel they have the financial resources to hold on. “So many of them, they’ve expressed to me just their fear. And where do we go from here? Is it better for me to cash out and go somewhere else?” she said.

Tokuda encouraged people to seek help to negotiate insurance settlements and find federal disaster aid that could bridge the gap. “If we do not make sure people understand all the options to them, programs available to them, see a path forward for themselves, you’re gonna see a significant outmigration of Lahaina residents,” Tokuda warned.

Meanwhile, Baker remains hopeful.

“I’m still an optimist. And I believe that those of us that want to be a part of the rebuild, there’s there must be a way that we can do that,” she said.

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