KILAUAE ERUPTION AND LAVA FLOW FACT SHEET
On May 3, 2018, Kilauae volcano erupted, setting in motion a lava flow that continues unabated. According to the July 14, 2018 advisory from the United States Geological Survey (USGS):
“Fissure 8 continues to erupt lava into the perched channel leading northeastward from the vent. Lava levels in the upper channel increased for several hours after the summit collapse-explosion event yesterday at 7:08 p.m. and returned to lower levels this morning. A short-lived overflow of the channel near the vent spread east-southeast, but did not advance beyond the existing flow field. The channelized ʻaʻā flow west of Kapoho Crater continues to be the main ocean entry at the southern edge of the flow front this morning. The southern margin of the flow was about 1 km (0.6 mi) from Isaac Hale Park this morning. Despite no visible surface connection to the fissure 8 channel, lava continues to ooze out at several points on the 6 km (3.7 mi) wide flow front into the ocean.”
Concerning property damage, in his July 2, 2018 Third Supplementary Emergency Proclamation, Hawai’i County Mayor Harry Kim declared that “the eruption has inundated over 6,000 acres of land and destroyed over 600 structures.”
WHAT ARE YOUR RIGHTS AS AN INSURED UNDER A HOME INSURANCE POLICY?
Your rights will be guided by the terms of your home insurance policy. However, disputes may arise with your insurance company concerning interpretation of the terms, the compensable value of your loss, or the handling of your claim. In every event, you have the right to be free of any unfair or deceptive insurance practices in the marketing, purchase, and the handling of any claim covered by your home insurance policy.
DID YOU HAVE HOME INSURANCE COVERAGE ON MAY 3, 2018?
If you had a home insurance policy in effect on May 3, 2018, you may have a claim for any damage to your home relating to the volcano eruption and subsequent lava flow, subject to any expressed unambiguous exclusions contained in the policy and applicable law.
ARE YOU A PERSON SUBJECT TO ADDITIONAL PROTECTIONS UNDER HAWAII LAW?
As a matter of policy, the State of Hawai’i has set apart certain categories of residents for additional protections. These may include “vulnerable persons,” and military personnel. Further, proclamations issued by the Governor and the Mayor of Hawai’i may also offer additional relief.
WHAT IS THE INSURANCE CLAIMS PROCESS?
The State of Hawaii empowers the Department of Commerce and Consumer Affairs with regulating the insurance business. Aside from regulating the licensure of insurance companies, agents, and adjusters, the Department also enforces how insurance companies interact with consumers. For instance, starting with the purchase of a home insurance policy, the insurance company may not misrepresent any material terms of the policy upon which you reasonably relied in purchasing the policy. Later, should the need arise, as it may have with the continuing lava flow, an insured may start a claim for any damages resulting from an event covered by the policy by contacting the company. At this point, the company assigns an adjuster, who may be in-house or an independent one, to investigate the facts giving rise to the claim. At the conclusion of the investigation, the company will either agree to pay the claim or deny the claim based upon the language in the policy. If it agrees, it will make a financial offer in exchange for the release of the claim. If it denies, you may have rights under the terms of the policy. However, if you do not agree with the final offer from the company, you may have the right to sue in a court of law based upon the particular facts in your situation.
DO I NEED AN ATTORNEY?
Maybe. Many variables inform the decision to hire an attorney, including but not limited to, that attorney’s experience with insurance claims. Oftentimes, the decision comes down to feeling comfortable with the attorney or attorneys who will work on your case. That’s your decision to make independently of any pressure. However, even if you decide not to hire a particular attorney, be mindful that the insurance company has attorneys and adjusters on its staff who faithfully defend the company’s position on every claim, and it may be prudent to hire an attorney. The best approach is always to be as informed as possible before deciding to accept an offer. In this regard, a competent attorney would be your best ally in trying to reverse a denial or maximizing a claim’s financial value.
WHAT RULES MUST THE INSURANCE COMPANY FOLLOW IN HANDLING A CLAIM?
The State of Hawaii delineates specific steps an insurance adjuster must follow in handling or settling a claim. An insurance company’s failure to adhere to these standards may result in a State enforcement action and/or a private cause of action filed by an insured based upon an implied breach of a covenant of good faith and fair dealing or a private statutory cause of action based upon allegations of the insurance company’s deceptive business practices. Notably, the company’s behavior must go beyond a mere, but arguable, denial. The following are some questions patterned on statutorily proscribed behavior that may give rise to State enforcement or private litigation:
(A) Did an authorized agent of your home insurance company misrepresent pertinent facts or insurance policy provisions relating to coverages at issue? For each instance, please provide the approximate date, who was present, and by what means you communicated with the agent? Did the representation regarding the pertinent fact or insurance policy provision induce you to purchase the policy?
(B) On what date did you make a claim under your home insurance? By what means did you make such a claim? Did the insurance company respond with reasonable promptness no more than fifteen (15) working days from your communication with them? If the company replied within fifteen (15) days, did their communication merely acknowledge receipt or did it adequately address the concerns stated in your communication?
(C) Did the insurance company refuse to pay claims without conducting a reasonable investigation based upon all available information?
(D) Did the insurance company fail to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed?
(E) Did the insurance company fail to offer payment within thirty (30) calendar days of affirmation of liability, if the amount of the claim has been determined and is not in dispute?
(F) Did the insurance company fail to provide you, or when applicable your insurance beneficiary, with a reasonable written explanation for any delay, on every claim remaining unresolved for thirty (30) calendar days from the date it was reported?
(G) Did the insurance company not attempt in good faith to effectuate a prompt, fair, and equitable settlement of claims in which liability has become reasonably clear?
(H) Did the insurance company attempt to settle a claim for less than the amount to which a reasonable person would have believed the person was entitled by reference to written or printed advertising material accompanying or made part of an application?
(I) Did the insurance company fail to promptly settle a claim, where liability had become reasonably clear, under one portion of the insurance policy coverage to influence settlements under other portions of the insurance policy coverage?
(J) Did the insurance company fail to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement?
HURRICANE KATRINA OFFERS A POSSIBLE GLIMPSE INTO THE FUTURE. CAN IT HAPPEN HERE?
On August 29, 2005, Hurricane Katrina, a Category 3 storm, slammed into Louisiana, killing over 1,800 persons and causing $41.1 billion dollars in insured losses out of a total of $61.9 billion dollars in total losses. These losses were spread among Louisiana and five other affected states. That storm still remains the costliest natural catastrophe to befall the United States. Regrettably, following the hurricane, many insurance companies opted to characterize the primary cause of the loss to flooding, an excepted condition under the policies, instead of wind, a covered condition. They denied many claims. As a result, teams of attorneys helped insured’s battle the companies in courts of law throughout these states, arguing that the companies had acted in “bad faith” in denying their claims resulting from wind damage. Ultimately each lawsuit turned on the specific facts of that losses claimed and the comportment of the company with regard to the claim, but overall many claimants successfully proved or otherwise settled their claims.
The experience in Katrina offers a glimpse of an approach that may be repeated by insurance companies in their handling of claims following this eruption. Here, they may argue that lava or earth tremors, excluded conditions, primarily caused losses to insureds’ homes instead of the more likely scenario that fire caused the damage instead of those excluded conditions. Should this approach be taken by the insurance companies, an attorney would offer the best opportunity at uncovering direct and circumstantial evidence supporting a claim that is covered by the terms of the policy.
In view of the particularities of these type of claims in the State of Hawaii, making allowances of course for the specific facts presented in your case, hiring an attorney to shepherd your claim from the beginning in view of the possibility of the insurance companies will act similarly to when Hurricane Katrina struck seems like the best approach. Then, should your company deny the claim, the attorney will have already marshalled the facts with documented communications to make your best case that the insurance company wronged you by denying your claim.
Mahalo, and I wish you the very best during this difficult period in your life.