Unmarketable property titles in Lava Zones 1&2 (park, agents)

[harrypritikin]

To summarize and add a little information to what has already been posted I must first touch on something that hasn't been mentioned yet.

There are two types of insurance; homeowner's insurance, which everyone seems to be talking about, but then there is also title insurance. If a homeowner's insurance company refuses to insure, the title is still "marketable" as it can be sold for cash or with owner financing as mentioned by others. However, if you can't get title insurance, then the title is unmarketable. It may be possible that this is what is happening. However, a title insurance company could make loss due to lava an exception and still insure against title defects. It remains to be seen how this will play out.

My understanding is that homeowner's insurance companies are going to stop giving insurance in the areas in danger of being inundated by lava; some of which were formerly in Lava Hazard Zone 2. I also expect that as policies expire they won't be renewed. However, local banks will sill loan in other areas that are in Lava Hazard Zone 2 because homeowner's insurance is available through Lloyd's of London. Mainland banks won't loan in Zone 2 because Fannie Mae and Freddie Mac are not buying loans given on homes in Zone 2.

Mahalo, Harry

[whtviper1]

Originally Posted by Irish Eyes_Mrs. Z

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?

I disagree.

First off - insurance is a fixed term and consumers have a choice to drop insurance - my opinion, insurers should be able to do the same thing - drop customers, much like a person who gets a DUI can get dropped.

Second - we don't have voter approved amendments in Hawaii - but something like this would fail miserably anyway. In the big picture, what if Allstate, Geico, and State Farm all said we are pulling out of Hawaii if you make us insure high risk lava areas? Think about how that would devastate the rest of Hawaii. As Spock would say - the needs of the many outweigh the needs of the few.

Lastly - the lava zones recently affected have been known for decades for high risk - everyone knew when they bought it was high risk - it would be sour grapes to complain now acting like they didn't know it was high risk.

[pbmaise]

smarino wrote

"If it then becomes un insurable, you do not
own the same property, trust me."

Well, I want to know who you are smarino since you seem to be one of the first I met on these boards that grasps this concept.

Yes, the property becomes different. So different that it invokes a claim against Title Insurance that warrants you property to be marketable to a future buyer.

Due, What you describe is saleability. You can sell a property with unmarketable title.

Is an engine on 4 wheels a car or a wreck?

Besides oceanfront properties are always an exception. What were property values doing 5 miles inland.

[pbmaise]

whtviper1,

You don't understand HPIA.

All insurance firms in Hawaii must be in the group by law. They are already insuring all these areas and collecting high premiums. Now they attempt to weasel out.

Law now says that policies cannot be dropped unless not paid, or insured does something wrong .

Example, Storing thermonuclear bombs in your basement violates your insurance policy and carrier may drop you.

[whtviper1]

Originally Posted by pbmaise

All insurance firms in Hawaii must be in the group by law. They are already insuring all these areas and collecting high premiums. Now they attempt to weasel out.

Law now says that policies cannot be dropped unless not paid, or insured does something wrong .

Example, Storing thermonuclear bombs in your basement violates your insurance policy and carrier may drop you.

They just want to fire you as a customer - forcing insurers to have policies in very high risk areas is bad for the rest of the people who don't live in high risk areas.

[pbmaise]

Harry

You wrote: " If a homeowner's insurance company
refuses to insure, the title is still "marketable" as it can be
sold for cash or with owner financing as mentioned by
others. However, if you can't get title insurance, then the title
is unmarketable."

Again no. Marketability is a legal term defined as a ready buyer willing to buy that requires typical insurance and financing.

Atypical insurance and financing make a property saleable.

Typical is in light of the type of property. So if it is simply a modest home the comparison is made between two similar homes.

As long as homes in Kona can be financed and insured, all LZ 1&2 is potentially in a Court of law deemed unmarketable.

I have detailed links to papers at the American Bar Association that explain in detail on Punaweb.

[pbmaise]

whtviper1

I gather you have a big red marker and map on your wall.

So you are drawing red lines around neighborhoods.

Guess what. Illegal by Federal Law.

So you won't lend to minorities living in the inner city?

You already pay a high price to be in a "safe area". Expensive insurance in other areas balances out savings on lower purchase price. The majority living in the "safe area" are now illegally trying to red-line.

The frightened insurance commission realizes they adopted a different Lava Zone mapping system than the USGS. And is trying now to rewrite a different one into law. This issue is important enough I will start a new thread.

[whtviper1]

Originally Posted by pbmaise

So you are drawing red lines around neighborhoods.


So you won't lend to minorities living in the inner city?

I'm not drawing a red line around a neighborhood - it would appear the insurance companies are - and nothing can stop an insurance company from pulling out of the state completely, how would that be good?

Lend to minorities in the inner city? I don't really do loans - minorities or not.

[WaikikiBoy]

Originally Posted by pbmaise

Yes, the property becomes different. So different that it invokes a claim against Title Insurance that warrants you property to be marketable to a future buyer.

Title Insurance only warrants the title of the property at the point in time in which it is issued. It is telling you, as the buyer of the property, that as of the date the policy is issued, the title is marketable and clear of any lien's, etc.

It is not a guarantee against changes that may occur or impact the title in the future.

Originally Posted by pbmaise

You don't understand HPIA.

All insurance firms in Hawaii must be in the group by law. They are already insuring all these areas and collecting high premiums. Now they attempt to weasel out.

Law now says that policies cannot be dropped unless not paid, or insured does something wrong .

Risk is not constant. It changes. Insurance Companies price for risk. As Risk changes, the Insurers may choose to change price up or down depending on that risk assesment ... or they may decide the risk is no longer something they want to cover at all.

If an Insurers assesment of the risk has changed, and they percieve the risk is now higher than they are willing to accept, they will attempt to mitigate that risk with higher pricing if they are not able to cancel the policies.

So if they are not able to cancel policies on risks that have changed and they find no longer acceptable, they will in turn raise pricing on those risks so substantially that the policy holders either cancel the policy themselves or the premium rises to the point where it cover the risk to the insurer to maintain the policy.

Ultimately ... all the risk is really on the shoulders of the Property Owner. Insurance is just a product that you ... the property owner ... purchase as a way to try and manage your personal risk.

[J.vick]

I'm coming in May to look for a home in HPP and my agent says that some parts of lava zone 3 that insurance companies are now not writing policies since lava Is flowing in that area.
This is real frustrating! I have several homes in the north part of the park I'm interested in.