I was just watching Weather Channel program featuring the big island (Hawaii),the eruption of Kilauea and the destruction of homes.
Can homeowners living close to volcanoes even get insurance?
I can’t speak specifically for Hawaii, but on the mainland, most standard homeowner’s policies cover volcanic eruption for loss to both the dwelling and personal property.
The Big Island is divided into “flow zones” that represent the estimated likelihood of a lava flow in the area, with 9 being little risk and 1 being the highest.
This website talks about how the flow zone affects your options, property-insurance wise.
It tends to be a trade-off. People who lost their properties in the 2018 eruption had purchased their land dirt cheap because it was in flow zone 1 or 2. They probably couldn’t get much in the way of private insurance, but they also spent a helluva lot less on buying their property in the first place.
Seems analogous to the risk of a flood in assorted areas of the mainland here. If you build in an area where flooding is likely, you will pay more for flood insurance and it is often an extra that you can choose to add on - at a hefty price. I assume at a certain point the extra becomes cost-prohibitive?
Flood insurance is also often government-subsidized, because people wouldn’t be able to pay the extremely high price that it would have if set wholly by the free market (or to put it another way, the insurance company wouldn’t be able to afford to pay it, based on the premiums that people would be willing to pay).
I wouldn’t be surprised if volcano insurance worked the same way, in Hawaii or other places with active volcanism.
There are pretty low limits on the subsidized FEMA flood insurance policies. I had to get a regular policy (from Lloyd’s of London) and you’re right, it is very expensive.
Here in California, earthquake insurance is subsidized, because otherwise it’d be completely unaffordable. Now it’s only mostly unaffordable.