Lava Zone Insurance
Lava zone insurance for zones 1 and 2 have fewer providers but are available for purchasing and refinancing Hawaii homes in lava zones 1 and 2. Quick lesson: lava zone 1 is where lava erupts from the ground, and, lava zone 2 in the area adjacent to, or downslope from, zone 1, where lava flows. Insurers take the risk factors when offering insurance coverage and this may be the most important factor to consider when buying a home.
For example, HPIA insures lava zone 2 upto $450,000 (previously $350,000). If you are buying a home in lava zone 2 for $600,000 your coverage is limited to $450,000. A mortgage lender requires 100% replacement value, so this must fall within the $450,000 limit. The insurance agent will calculate RCE (replacement cost estimate) so both you and the lender confirm your home is covered for all levels of mishap. For lava zone 2 insurance quotes in East Hawaii contact HPIA.
In West Hawaii, Ocean View and Captain Cook, lava zone insurance coverage limits are higher, upto $1,000,000. Since it’s been 50 years since lava on the Western slopes have caused any damage, the insurers evaluate this region differently than Pahoa and Kapoho. Again, if you are buying a primary home for $1,500,000 you are capped at $1,000,000 in replacement coverage, so get a quote when you are home shopping and seeking lava zone 2 financing. If you are buying a second home or investment, coverage is less. For lava zone 2 insurance quotes in West Hawaii contact Robin Munitake at Aloha Insurance robin@alohainsurance.com (808) 334-4083
Our company provides lava zone 2 financing on purchases and refinances in lava zone 2, and VA IRRLs in lava zone 1. Lava zone 2 Hawaii is in reach. Here’s some additional information about buying and living in lava zone 2 Hawaii: www.lavazone2mortgage.com
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(updated 2/8/23)
Sent: Friday, March 28, 2025 9:47 AM
To: Douglas Mallardi <doug@bigislandmortgages.com>
Subject: RE: Lava zone limits
Aloha Mr Mallardi,
Thank you for your email. As a mortgage loan professional I am sure you understand the many uncontrollable factors affecting insurance rates in Hawai‘i and around the world.
Hawai‘i’s property insurance market remains competitive, and we do not believe there are significant regulatory barriers preventing insurers from entering. However, the state faces unique challenges due to the concentration of major catastrophic risks—hurricanes, lava flows, floods, and now wildfires—within a relatively small geographic area.
Several legislative proposals were introduced during the 2025 session aimed at stabilizing the insurance market in high-risk areas. These include bills focused on providing risk mitigation incentives for homeowners and strengthening building requirements to enhance resiliency. Encouraging these efforts could make it more attractive for insurers to return to the market.
But lava peril presents a distinct challenge because it cannot be mitigated—unlike hurricanes, earthquakes, floods, or wildfires, where property owners can take steps to reduce risk. The inability to safeguard homes against lava flows makes it difficult for admitted insurance companies to offer new policies in these zones. As a result, any viable insurance solution must have substantial financial backing to ensure it can provide reliable coverage and the ability to rebuild homes after a loss. In Lava Zones 1 and 2, the risk of loss is perceived as exceptionally high, particularly due to frequent eruptions. Thus, most insurers are unwilling to issue policies at any price, making it difficult to attract private carriers back into these high-risk areas.
Given the lack of admitted insurers willing to issue policies in Lava Zones 1 and 2, the Insurance Division is prepared to expedite licensing applications and rate filing reviews for any insurer expressing interest in entering this market. However, while we support efforts to expand coverage options, affordability remains a challenge. Any rates charged must accurately reflect the level of risk to ensure that insurers remain financially solvent and capable of fulfilling claims obligations.
Again, thank you for reaching out. We do understand your concerns and will continue to work with insurers, legislators and the HPIA to provide additional capacity.
Sincerely,
Jerry Bump
Acting Insurance Commissioner
Insurance Division
State of Hawaii, Department of Commerce & Consumer Affairs
335 Merchant Street, Room 213
Honolulu, HI 96813
