Tsunami, Earthquake, and Flood Coverage in Hawaii

Hawaii faces multiple natural disaster risks that require coordination of coverage across several policies. Understanding these perils and appropriate insurance is critical for Hawaii producers.

Tsunami Risk in Hawaii

Tsunamis are large ocean waves generated by underwater earthquakes, volcanic eruptions, or landslides. All Hawaiian islands are vulnerable.

Hawaii Tsunami Threat

Sources of Tsunamis:

1. Distant Tsunamis: Generated by earthquakes in Japan, Alaska, South America (3-6+ hour warning)
2. Local Tsunamis: Generated by Hawaii earthquakes or landslides (minutes warning)
3. Volcanic Tsunamis: Generated by volcanic activity or landslides into ocean

Historic Hawaii Tsunamis:

Tsunami Evacuation Zones

Hawaii has mapped tsunami evacuation zones based on elevation and modeling:

Zone Classifications:

• Extreme Evacuation Zone: Areas likely flooded by worst-case tsunamis
• Flood Hazard Zone: Areas with less severe tsunami risk
• Safe Zone: Higher elevation areas above tsunami reach

Property Insurance Implications:

• Properties in evacuation zones require flood insurance
• Lenders require flood insurance for tsunami zones
• Higher flood insurance premiums in high-risk zones
• Disclosure of tsunami zone required in real estate transactions

Tsunami Coverage

Standard Homeowners Policy

Tsunami damage is NOT covered under standard homeowners policies:

• Tsunamis classified as "flood" or "water damage from external sources"
• Excluded under typical flood exclusion
• No coverage for tsunami damage to dwelling, contents, or other structures

Flood Insurance for Tsunami Coverage

Tsunami coverage requires National Flood Insurance Program (NFIP) policy:

NFIP Coverage for Tsunamis:

• Covers tsunami damage to buildings and contents
• Same limits and deductibles as other flood coverage
• No waiting period for tsunami claims (if policy in force)
• Covers both wave impact and water damage

NFIP Policy Limits:

• Residential Building Coverage: Up to $250,000
• Residential Contents Coverage: Up to $100,000
• Deductibles: Separate building and contents deductibles (typically $1,000-5,000)

Coastal Properties:

• Flood insurance ESSENTIAL for all coastal properties
• Tsunami zones overlap with flood zones
• Lenders require flood insurance in Special Flood Hazard Areas (SFHA)
• Premiums vary by zone and elevation

Exam Tip: Tsunami damage is covered by flood insurance (NFIP), NOT standard homeowners policies. All Hawaiian coastal properties should have NFIP coverage due to tsunami risk.

Excess Flood Insurance

For properties exceeding NFIP limits:

Private Excess Flood Insurance:

• Provides coverage above NFIP limits
• Available from surplus lines and some admitted insurers
• Higher limits: $1M-10M+ available
• Coordinates with NFIP primary policy
• More expensive than NFIP base coverage

Earthquake Risk and Coverage

Hawaii has significant earthquake risk due to active volcanoes and tectonic activity.

Hawaii Earthquake Activity

Seismic Activity:

• Big Island experiences thousands of small earthquakes annually
• Volcanic earthquakes from Kilauea and Mauna Loa activity
• Tectonic earthquakes from Pacific Plate movement
• Large earthquakes (6.0+) occur every few years

Notable Hawaii Earthquakes:

Earthquake Coverage

Standard Homeowners Policy:

• Earthquake damage EXCLUDED from standard HO-3 policies
• Earth movement exclusion applies to earthquakes
• Separate earthquake coverage required

Earthquake Insurance Options:

Option 1: Earthquake Endorsement

• Endorsement added to homeowners policy
• Covers earthquake damage to dwelling, other structures, and contents
• Typical deductibles: 10%-20% of Coverage A (dwelling limit)
• Example: $500,000 home with 10% deductible = $50,000 earthquake deductible

Option 2: Separate Earthquake Policy

• Standalone earthquake policy
• Similar coverage to endorsement
• May offer more flexible terms
• Available from specialized earthquake insurers

Earthquake Coverage Includes:

• Structural damage from shaking
• Foundation and framing damage
• Brick, masonry, and chimney collapse
• Broken glass and contents damage
• Additional living expenses during repairs

Earthquake Coverage Excluses:

• Tsunami (covered by flood insurance)
• Landslide or mudflow (may require separate coverage)
• Earth movement from excavation or grading
• Sinkholes and settling (separate coverage)

Earthquake Insurance Costs

Premium Factors:

• Location and seismic zone
• Construction type (wood frame cheaper than masonry)
• Age of building (newer buildings cheaper)
• Foundation type (slab vs. pier-and-post)
• Retrofit improvements (discounts available)
• Deductible selection (higher deductible = lower premium)

Typical Premiums:

• Big Island: $800-2,000+ annually (high seismic activity)
• Other Islands: $400-1,200+ annually (moderate activity)
• Depends heavily on property value and construction

Exam Tip: Earthquake insurance in Hawaii typically has 10-20% deductibles of Coverage A (dwelling limit). These are percentage deductibles, not flat amounts, resulting in large out-of-pocket costs for any claim.

Volcanic Earthquakes vs. Volcanic Eruptions

Important Distinction:

Earthquake Coverage:

• Covers damage from shaking and ground movement
• Includes volcanic earthquakes (shaking from magma movement)
• Does NOT cover lava flows or volcanic eruption damage

Volcanic Eruption Coverage:

• Covers damage from lava flows, ash, and gases
• Requires separate volcanic eruption endorsement
• Does NOT cover earthquake shaking damage

Example Scenario:

• Volcanic eruption occurs with associated earthquakes
• Earthquake coverage pays for: Shaking damage to structure
• Volcanic endorsement pays for: Lava flow destroying property
• Both coverages may be needed for complete protection

Flood Insurance (NFIP)

Flood insurance is critical in Hawaii due to heavy rainfall, flash flooding, and tsunami risk.

Flood Hazards in Hawaii

Types of Flooding:

1. Coastal Flooding: Storm surge, high surf, tsunamis
2. Flash Flooding: Intense tropical rainfall in valleys and streams
3. River Flooding: Overflowing streams and rivers after heavy rain
4. Urban Flooding: Poor drainage in developed areas

High-Risk Areas:

• All coastal properties
• Valleys and stream corridors
• Low-elevation areas near ocean
• Areas with poor drainage
• Tsunami evacuation zones

NFIP Coverage in Hawaii

Building Coverage:

• Covers structure of home
• Foundation, walls, roof, essential systems
• Permanently installed items (HVAC, water heater)
• Maximum: $250,000 for residential

Contents Coverage:

• Personal property inside home
• Furniture, clothing, electronics, appliances
• Must be purchased separately from building coverage
• Maximum: $100,000 for residential

What NFIP Does NOT Cover:

• Basements and below-grade areas (limited coverage only)
• Contents in basements
• Landscaping and pools
• Detached structures (limited coverage)
• Additional living expenses (no ALE in NFIP)
• Vehicles

NFIP Requirements and Costs

Who Needs Flood Insurance:

• Required by lenders for properties in Special Flood Hazard Areas (SFHA)
• Recommended for all coastal and low-elevation Hawaii properties
• Tsunami zones typically overlap with flood zones

Waiting Period:

• 30-day waiting period for new policies
• No waiting period for purchase/refinance closings
• No waiting period for tsunami (if policy already in force)

Premium Factors:

• Flood zone designation (X, A, V, etc.)
• Elevation relative to Base Flood Elevation (BFE)
• Building occupancy and construction type
• Coverage amounts and deductibles

Typical Premiums:

• Low-risk Zone X: $400-800 annually
• Moderate-risk Zone X (shaded): $800-1,500 annually
• High-risk Zone A: $1,500-4,000+ annually
• Coastal Zone V: $2,000-8,000+ annually

Other Hawaii Property Risks

Saltwater Corrosion

Challenge:

• Salt spray accelerates corrosion of metal, concrete, and painted surfaces
• Coastal properties especially affected
• Increases maintenance costs and reduces building lifespan

Insurance Implications:

• Standard policies cover sudden corrosion damage
• Gradual/maintenance corrosion excluded
• Higher replacement costs due to corrosion resistance requirements
• Underwriters may require inspection for coastal properties

Extreme UV and Sun Damage

Challenge:

• Hawaii's tropical location means intense UV radiation
• Degrades roofing, siding, and painted surfaces faster
• Increases property maintenance needs

Insurance Implications:

• Wear-and-tear exclusions apply
• Sudden sun damage (e.g., focused sun through glass) may be covered
• Replacement cost valuations account for UV-resistant materials

Tropical Storms and Heavy Rainfall

Challenge:

• Heavy tropical rainfall causes flash flooding, landslides, and water intrusion
• Not classified as hurricanes but still damaging
• Sudden intense rainfall can overwhelm drainage systems

Insurance Coverage:

• Wind damage from tropical storms: Covered by homeowners policy
• Flood damage: Requires NFIP coverage
• Landslide/mudflow: May require separate earth movement coverage

Coordinating Multiple Policies

Hawaii properties often need multiple policies for complete protection:

Typical Coverage Stack

Producer Coordination Responsibilities

Coverage Review:

1. Identify all natural disaster exposures
2. Explain standard homeowners exclusions
3. Recommend appropriate additional coverages
4. Coordinate policy effective dates
5. Ensure no coverage gaps

Documentation:

• Written summary of recommended coverages
• Explanation of any coverage declined by client
• Acknowledgment of exclusions and limitations
• Contact information for specialized coverage (NFIP, earthquake)