Unmarketable property titles in Lava Zones 1&2 (Captain Cook: insurance, loan)

[pbmaise]

Despite the fact that the lava flow near the town of Puna barely touched it,

legislation has moved forward to effectively end all insurance from the last carrier available to residents. That carrier is the association of insurance companies that are doing business in Hawaii.

This association known as the Hawaii Property Insurance Association (HPIA) will now be legally able to decline properties in all of Lava Zone 1&2.

This renders tens of thousands of property titles far and wide in Hawaii County as unmarketable.

If anyone has not been following the destruction of marketable property titles in all of Lava Zone 1&2 see Punaweb at

Punatalk - Lava & insurance testimony needed

Yes you can still sell property with unmarketable title. However, finding buyers will be difficult.

This is pure and simply red-lining of Hawaii's poorest areas including

Puna, Kau, and Captain Cook.

[hotzcatz]

Why would they be unmarketable? All lack of insurance does is make it so you can't get a bank loan to buy them. There's still other options to buy and sell property. For the folks who can do owner finance, they will get all the interest instead of the interest going to a bank, so that's a good thing.

It will also drop the values of the properties so that can be good if you're a buyer.

[Mark.ca]

That is the term they are using to describe this type of title and it mainly refers to the ability of getting the property insured after the purchase. You can buy it or sell it as many times you want but you have to find someone with cash and not to care about future resale....difficult.

[Green_Mountain]

Do banks even finance properties in lava zones 1 and 2? One of the first things I was told when looking at properties on the big island is that the banks won't touch anything in zones 1 and 2. Has to be zone 3 or higher. The subject had no impact on me so I did not investigate further, so it's possible the info was not accurate.

I was also under the impression insurance was pretty much not available for zone 1 except with special policies most people will never buy (LLoyds of London etc.), but was for zone 2.

[whtviper1]

Originally Posted by Green_Mountain

Do banks even finance properties in lava zones 1 and 2?

My bank does lava zone 2.

https://www.homestreet.com/everythin...the-big-island

[Green_Mountain]

Thanks whtviper1.

Originally Posted by hotzcatz

Why would they be unmarketable? All lack of insurance does is make it so you can't get a bank loan to buy them.

All?! Having homes that were financeable and insurable become the opposite won't make them "unmarketable" in the absolute sense, but it would certainly have a huge impact on their market value and demand for them. For people that bought houses that were both financeable and insurable, if they then become unfinanceble and uninsurable, that's going to be a painful hit to take, to put it mildly. Sort of like having your life savings invested in the stock market and seeing it crash.

[smarino]

I agree. For instance, you buy a home at a certain price, and it's insurable. If it then becomes un insurable, you do not own the same property, trust me. Knowing what they did about these areas before hand, why did anyone build there in the first place? A clear case of "it won't happen to us" thinking. NOT a good idea, no matter how good the deal was.

We lost a LOT of money in Galveston when a second hurricane hit right on the heels of the first one, despite all the odds. In all my years of coastal living and going through many hurricanes, the deal was that no big ones came right after a big one. All the data and all my experience said that. But global warming is a new ball game.

We didn't rebuild....we moved out of Galveston. At some point, common sense has to show up. And that may be the silver lining with Puna and other risky areas of the Big Island. Maybe people will get it that they shouldn't be building in those areas in the first place. Or if they do build there, the risk is theirs 100%.

[pbmaise]

The saga with insurance and lawmakers continues.

In latest version of HB737

Lawmakers permit 5% of all policies to be dropped per year... or more at the whim of the commissioner.

Further the hurricane relief fund will be robbed to help make sure insurance firm make no payouts.

https://legiscan.com/HI/text/HB737/id/1091155

[Irish Eyes_Mrs. Z]

Originally Posted by pbmaise

The saga with insurance and lawmakers continues.

In latest version of HB737

Lawmakers permit 5% of all policies to be dropped per year... or more at the whim of the commissioner.

Further the hurricane relief fund will be robbed to help make sure insurance firm make no payouts.

https://legiscan.com/HI/text/HB737/id/1091155

That sounds horrible. Is there no option for public input on these proposed legislative actions? How is voter turnout if people have no other option to change legislative and other actions they don't like? Does HI have the option for voter approved amendments to the state constitution like we do here in Oregon?

I can't help but feel for the thousands of people/households who stand to lose so much due to no fault of their own other than to have the misfortune to be in the wrong lava risk zone. Heck, you'd think most of the BI would be in a lava risk zone IF, say, Mauna Loa decided to spew again, someday.... Maybe you're in a zone 5 right now, but what if that changed at the whim of Pele?

[Due]

Originally Posted by smarino

I agree. For instance, you buy a home at a certain price, and it's insurable. If it then becomes un insurable, you do not own the same property, trust me. Knowing what they did about these areas before hand, why did anyone build there in the first place? A clear case of "it won't happen to us" thinking. NOT a good idea, no matter how good the deal was.

We lost a LOT of money in Galveston when a second hurricane hit right on the heels of the first one, despite all the odds. In all my years of coastal living and going through many hurricanes, the deal was that no big ones came right after a big one. All the data and all my experience said that. But global warming is a new ball game.

We didn't rebuild....we moved out of Galveston. At some point, common sense has to show up. And that may be the silver lining with Puna and other risky areas of the Big Island. Maybe people will get it that they shouldn't be building in those areas in the first place. Or if they do build there, the risk is theirs 100%.

We, like smarino, lived in the Galveston Bay (Clear Lake) area for a long time without having insurance issues. We were lucky and, although waterfront, have never been flooded or had extensive damages when Rita and Ike (or any other hurricane) hit the area. After the two big ones, our insurance became almost nonexistent and what was/is available is now extremely expensive. This prompted us to move (along with multiple other reasons).

Did the floods and insurance costs stop people from buying waterfront or in the area? NO.
The property prices went up and most of those buying aren't concerned about insurance or other costs. One of our neighbor's waterfront property sold for about $600,000 and the existing structures were bulldozed to make room for a huge house.