HPIA issues moratorium on insurance in lava zone

HPIA issues moratorium on insurance in lava zone
Published: Sep. 18, 2014 at 8:38 PM HST|Updated: Sep. 18, 2014 at 10:40 PM HST
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PUNA, HAWAII (HawaiiNewsNow) - Hawaii Property Insurance Association, the company set up by the state of Hawaii to provide insurance for homes in high-risk lava zones on the Big Island, has temporarily stopped issuing new insurance polices there.

Insurance industry experts said it's routine before an impending disaster such as a hurricane that insurance companies stop issuing new coverage until the threat passes.

Steve Dearing said his home in the Hawaiian Shores subdivision in Puna has about $169,000 worth of home owners' insurance but he claimed the home is worth $350,000, so he wanted to increase his insurance.

"I was told there's a moratorium and even though I've had insurance for 22 years on this home, I can't do anything, and we can't get our policy upped," Dearing said.

Dearing has coverage through HPIA, which the state created in 1992 to insure homes in the highest-risk lava zones of Hawaii island.

About one week ago, as the lava churned toward developed areas, HPIA declared a moratorium on new insurance policies there and stopped increasing coverage on existing policies while the lava threat becomes more immediate, according to insurance agents.

A spokeswoman said an HPIA representative was not available Thursday to answer basic questions about why HPIA issued the moratorium or how many policy holders the company has on the Big Island.

"HPIA's Plan of Operation permits moratoriums when the property to be insured is within any area that a civil authority has determined to be endangered by an active lava flow," said Lindsay Chambers, a spokeswoman for the state insurance commissioner, who regulates insurance companies. "Just like with hurricanes, moratoriums are put into place if there is a pending disaster."

State Insurance Commissioner Gordon Ito said the state has not received any formal complaints that insurance companies have improperly canceled policies in areas threatened by the lava, which would be against the law.

"We will continue to closely monitor the situation to make sure insurance companies follow the law," Ito said in a statement.

Ito said companies are allowed not to renew insurance policies once they expire, but must keep them in place as long as the customer is current with his or her premiums.

"The insurance division is contacting insurers serving the Puna area and asking them to carefully consider their decision on non-renewals," Ito said. "We urge these companies to be good corporate citizens, and do the right things for the people in this area and the state."

Meanwhile, Dearing said he's upset.

"It's very frustrating. We have paid insurance through HPIA for a very long time. I've been a resident out here for over 35 years. I've had insurance the whole time. No claims, no problems," Dearing said.

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