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Homeowners Insurance in Puna

Getting homeowners insurance in Puna is not always a very easy task. The fact that Puna has an active volcano and is Hawaii’s most active earthquake zone sometimes makes it hard to get insurance at all and - if it is granted - it is usually quite expensive.

In some areas, the insurance companies are only covering up to a value of $250,000. Lava zones, flood zones (mainly from run-off after heavy rains) and earthquakes are seen as somewhat of a gamble for most local insurance companies.

Don’t waste your time dealing with mainland insurance companies, especially when you are planning on purchasing a property in a lava zone 1 or 2. They will not cover it. The only insurance company outside of Hawaii, that will insure anything, is probably Lloyd’s insurance company of London, with its slogan: “A relentless appetite for risk.”

If you intend to finance your property, lenders will require you to have homeowners insurance in Puna and depending on where the property is located, they might also require you to have flood and hurricane insurance.

Do all those insurance premiums sound like a rough deal? Well, of course it’s no bed of roses, but a lot of Puna residents say that the higher insurance costs are balanced out by the low property taxes, which are usually only around $50 to $100 per 6 months.

Be aware that most policies of homeowners insurance in Puna only insure you for damage caused by fire and not necessarily from lava, so make sure you study the policy to see what kind of disasters are actually covered.

The lava zone map that is currently being used to determine whether a property is in a hazard zone or not does have certain flaws. The map is based on historical flows, so there is no concrete evidence that an eruption is more likely to take place in the same areas again. History has actually shown a lot of different paths, but I guess this is all that the insurance companies have to go on at the moment.

RiskMeter.com is an online provider of Hawaii Lava flow and Tsunami reports. By simply typing in an address, an insurance agent will receive a detailed report on how much risk there is for a new or existing policy.

The local insurance companies are themselves insured by bigger insurance companies, which means that the local company only has to pay out its deductible and their insurance company will cover the balance of the benefits.

However, if a disaster lasts for more than 72 hours, as was the case in Kalapana Gardens in 1990, this can put enormous stress on the local companies, because after 72 hours they have to pay benefits up to their deductible again for the same disaster.

That’s why several local insurance companies stopped issuing new policies, because it was too risky for them. They will only keep the existing ones. So, that is why there are still many residents who live in lava zone 1 and are insured.

If you are a first time homebuyer and are interested in homeowners insurance in Puna, you may want to take a look at the homeowners insurance beginners guide.

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