More bad new for those who live in or near the areas damaged by lava. Insurance companies have stopped issuing any new polices for those residents until the lava threat is over.
People who already have insurance are covered. But those who want to open a new policy, whether for their home or even for their cars, that will be hard to find.
We got a call from a Pahoa resident who just bought a new car and was told by her insurance company that it could not issue her a policy because of where she lives.
We called the insurance companies and the insurance commission and learned that this is standard industry practice. The companies say they will not issue any new policies at this time because they will be taking on too much risk.
“The reason for this is the auto insurer doesn’t want to get into a situation where they collect one month or two months premium and end up being on the hook for tens of thousands of dollars,” said Michael Barry, spokesman for the Insurance Information Institute, which represents the major insurance companies.
“Insurance is really to insure against future risks and now that the risk has come and it’s here it would be a little unfair to put that burden on the insurance company to take on this risk after it’s already occurred,” said Jerry Bump, chief Deputy Insurance Commissioner for the state.
The state says it’s a good idea to keep checking with other agents to see if there are other insurance companies that might still be offering new polices.
If not, there is the Hawaii Joint Underwriting Plan, which is run by the state. It usually costs more but the state says if you have a clean driving record, the price will be comparable.
The last time the insurance industry issued a moratorium was in 2014, when there was a lava spill, also in Pahoa. it was lifted after the threat was gone in 2015.