The photos and videos of Hawaii’s Kilauea volcano eruption have been mesmerizing and terrifying. Lava flows with unstoppable power devour homes, cars and anything else in their path. Bright red lava pools churn and bubble and launch scorching hot lava “bombs” high into the air. Towers of ash are propelled miles into the sky.
The Kilauea volcano began its most recent eruption on May 3, 2018. Since then a series of earthquakes have jolted the island, triggered by the subsurface magma activity, including a 5.5 magnitude earthquake on June 3, 2018. More than 20 fissures have opened in the earth, and the lava has spread to cover over 7 square miles. Over 400 homes and other buildings have been destroyed. Many more are no longer accessible or have been evacuated. Thousands of residents have been displaced.
Still, the lava marches inexorably on, with a geothermal power plant now among the structures that have been compromised. Entire subdivisions remain under siege and imperiled. There are signs that the lava has recently become even hotter and faster on the ground, compounding the danger.
Lately, exotic new hazards have emerged. Hot lava has reached the Pacific Ocean causing “laze” (a combination of “lava” and “haze”), comprised of steam, tiny bits of glass, and potentially toxic gas. In general, dangerous gases and ash can pose an even bigger threat to health than the lava itself. Blue flames have been seen flickering from fissures in the ground, indicating the presence of methane gas under the surface that can lead to explosions, scientists say.
The eruption of the Kilauea volcano is a geological marvel and a public safety menace, but what are the property insurance implications? Volcanos spawn a plethora of dangers to property, including earthquakes, lava flow, mud flow, and ash. And the magnitude of property damage is potentially staggering. As is often the case with property insurance, coverage for property damage related to a volcanic eruption often turns on the precise cause of loss.
All-risk homeowners and commercial property policies often afford coverage for property damage caused by air-borne forces from volcanos like ash and volcanic shockwaves (although all-risk coverage may be difficult to obtain in the highest risk volcano zones). Damage from fires or explosions caused by a volcanic eruption are also likely covered. Other kinds of damage, however, may come within the earth movement exclusion contained in most property insurance policies. Damage caused by earthquakes, tremors and other earth movement is typically excluded, unless the insured purchased a specific endorsement providing coverage. So is damage due to landslides, lava flow or mud flow caused by volcanos.
The type of property that is damaged matters too, as it does in most property insurance contexts. Property insurance covers buildings and personal property; damage to land itself, and damage to trees and other plants on the land, is typically not covered. The threshold requirement that covered property sustain physical loss or damage in order to trigger coverage also comes into play. For example, the cost to remove ash from property is generally not covered unless the ash first causes physical loss or damage to covered property.
At the end of the day, familiar property insurance concepts apply equally to extraordinary volcanic activity as to more garden-variety losses.
Posted by Jeffrey Gordon
