Maui Fires and Climate Change: Will They Raise Insurance Rates in Hawai‘i?

This story is part of our HONOLULU series, “We Have Questions,” with our editorial team tackling questions being asked in the aftermath of the recent Maui fires.

The mass destruction from the Maui wildfires includes the loss of more than 2,000 structures in Lahaina alone. As property owners file insurance claims in hopes to rebuild, there are questions as to whether the tragedy will lead to higher homeowners insurance rates across Hawai‘i. People also are questioning the adequacy of their current policies as natural disasters escalated by climate change become more prevalent.

We asked Reid Hokama, vice president of Personal Lines and Marketing at Island Insurance, about these issues and how the Maui devastation might impact the industry.

Photo: Courtesy of EagleView Technologies

Will the Maui fires and the threats of climate change lead to higher insurance rates for Hawai‘i homeowners?

Hokama: First of all, our thoughts are with the Maui community during this difficult time. While we continue to grieve as a state, it has also been incredibly heartening to see Hawai‘i come together to support impacted residents.

Climate change is impacting weather patterns across the globe, leading to an increase in severity and frequency of natural disasters, as well as unusual weather events. We have seen the insurance industry adjusting property underwriting practices to account for these new realities. Some large mainland insurers have recently taken drastic steps like pulling out of writing homeowners insurance in select states on the mainland. Hawai‘i property insurance premiums have been rising over the past few years, and we are not immune to the impacts of climate change. Even with this as a backdrop, it’s too soon to say for sure how rates will be impacted.

But know Island Insurance is dedicated to Hawai‘i and has exclusively served the people and businesses here for more than 80 years, through natural disasters and more. Our heartfelt commitment to our customers and the local community remains steadfast.

SEE ALSO: What Other Areas of Hawai‘i Are at High Risk for Wildfires?

How can homeowners statewide prepare themselves in case of a fire?

Hokama: Review your homeowners insurance policy with your insurance agent to make sure you understand your current coverages and whether they adequately protect you in the event of a loss. Also, update your contact information regularly. Save digital copies of important documents like your insurance policies and mortgage statement. Take photos or videos of belongings, including furniture, appliances, jewelry and other items. Document both the exterior and interior of your home and car.

Upload the important documents and the inventories to a data cloud or email it to yourself. That will help make sure your information is saved and safeguarded, even if your hard copies and smartphone are destroyed. Having this information can simplify the process of filing an insurance claim if your home is damaged. If your home is impacted by a fire, your insurer may ask questions regarding the layout of your home. They may also ask for photos of your home and property.

Also, make sure to have a family emergency plan for various types of natural disasters, including fire. And minimize or clear your home and property of combustible materials, improperly stored flammable liquids, or overgrowth of dry vegetation.

Do homeowners need more than standard homeowners insurance to cover losses from wildfires? What kind of coverage will allow homeowners to recover after a devastating loss from a natural disaster such as this?

Hokama: Homeowners insurance generally covers your home and belongings, including adjacent structures like carports or garages, if they are damaged or destroyed from a fire. Keep in mind that your homeowners policy must be updated regularly to ensure adequate coverage that reflects changes, such as increases in property value, major life events (like marriage), the acquisition of valuable belongings, and renovations or additions like a patio, deck or pool.

As an island chain, Hawai‘i is susceptible to other natural disasters like hurricanes and tsunamis. It is important to know what homeowners insurance covers and what it doesn’t and to understand the difference between homeowners, hurricane and flood insurance.

Hurricane and flood insurance policies usually are separate policies that can be purchased in addition to your homeowners insurance. While a homeowners insurance policy covers damage resulting from fire, wind from a tropical storm and hail, it does not cover damage caused by hurricanes or floods. A hurricane insurance policy covers wind-related damage caused by hurricanes that a homeowners policy does not.

You may also need to obtain a separate flood insurance policy. Flood damage is typically not covered in standard homeowners polices, and hurricane insurance does not extend to flood-related losses. Even properties outside designated flood zones could be susceptible to flood damage during natural disasters.

Any tips you can offer people on how to make sure their Hawai‘i homeowners insurance coverage is adequate in this day and age of climate change?

Hokama: To safeguard your property and belongings effectively, it is important to have the right type and amount of insurance.

Work with your insurance agent to review and update your policies on a regular basis. Due to inflation and rising property values, insuring your home at the same value it was several years ago may not adequately cover your expenses if it is damaged by a fire or other covered natural disaster.