Hawaii's Looming Property Insurance Crisis?

Hot Topics Reba Roy February 23, 2024

Navigating Hawaii's Property Insurance Waters: Post-Maui Fires



Aloha, valued readers! The allure of living in Hawaii is undeniable, offering a blend of community, convenience, and the unparalleled beauty of our islands. However, beneath the surface of this paradise, homeowners' and condo associations (HOAs) face a growing challenge that could threaten the very fabric of our communities: a looming property insurance crisis, exacerbated by the recent devastating Maui fires.

Section 1: The Rising Tide of Insurance Costs

The serene beauty of Hawaii is occasionally marred by natural disasters, a reminder of nature's power and unpredictability. These events, along with others around the globe, have a ripple effect, driving up the cost of insurance premiums here at home. The reason? A global market for reinsurance, where companies share their risk, means that a hurricane in the Caribbean or wildfires in Australia can affect what we pay for insurance in Hawaii.
Condo associations, especially, are feeling the pressure. “Right now, hurricane insurance is very expensive, and these condos can’t afford to pay for it,” says Sue Savio, president of Insurance Associates in Honolulu. This has led to a concerning trend: hundreds of Hawai‘i condo buildings, particularly high-rises on O‘ahu but also on other islands, are under-insured against hurricanes.

Section 2: The Importance of Adequate Insurance Coverage

Insurance serves as a crucial safety net, providing the means for recovery in the aftermath of a disaster. Yet, the reality for many condo associations in Hawaii is a gap between the coverage they have and the coverage they need. This under-insurance means that in the event of significant damage, the financial burden could fall heavily on individual owners, potentially leading to devastating financial consequences.
With the stakes so high, the question becomes: How can condo owners and HOAs navigate these turbulent waters to ensure their homes and investments are protected?

Section 3: Who Bears the Burden?

The distribution of insurance costs is a complex issue, influenced by a myriad of factors, including geography, climate risk, and regulatory environments. Surprisingly, the financial burden doesn't always fall where you might expect. A recent study suggests that homeowners in states with fewer natural disasters often end up subsidizing those in high-risk areas through higher insurance premiums. This counterintuitive situation raises questions about the fairness and sustainability of our current insurance system, especially as the frequency and intensity of natural disasters continue to climb.

Section 4: The Impact of Maui Wildfires on Insurance Perception

The tragic wildfires on Maui have cast a long shadow, prompting insurance companies to reassess the risks of operating in Hawaii. While Hawaii has traditionally been seen as a stable market, the increasing threat of climate change and natural disasters is causing a shift in perception. Companies are now more cautious, mirroring trends in other high-risk states like Florida and California, where insurance availability is dwindling. This reevaluation could mean higher premiums and stricter coverage limitations for Hawaii's homeowners, adding another layer of complexity to an already challenging insurance landscape.

Section 5: The Role of Maintenance Reserves

Maintenance reserves play a pivotal role in the health and sustainability of condo communities. These funds are essential for the upkeep of common areas and emergency repairs, yet many HOAs find themselves with reserves that are woefully inadequate. This underfunding leaves communities vulnerable, particularly in the wake of natural disasters when the need for repairs can be immediate and costly. Building a robust maintenance reserve is not just prudent financial planning; it's a critical safeguard for the future.

Section 6: Proactive Steps for Condo Owners

  • Review Your HOA’s Insurance Policy: Understand the specifics of your HOA's coverage and identify any potential gaps.
  • Discuss Reserve Funding with Your HOA: Advocate for a comprehensive review of the reserve fund and push for regular assessments to ensure it meets future needs.
  • Stay Informed: Keep up with local and national news on property insurance and HOA regulations. Knowledge is your best defense in making informed decisions.

Section 7: Evaluating Ownership Costs: To Sell or Not to Sell

Given the rising costs associated with ownership in Hawaii, it's a prudent time to reassess your investment. Consider the long-term financial impact of increased insurance premiums and maintenance contributions. Analyze market trends and reflect on your personal circumstances and lifestyle needs. This decision isn't solely about the numbers; it's about aligning with your broader financial and life goals.


The beauty of Hawaii and the appeal of living here remain undiminished, but they now come with new challenges. As your trusted real estate advisor, I am here to help you navigate these turbulent waters. By understanding the issues, taking proactive steps, and making informed decisions, we can work together to protect your investment in paradise.
For more personalized advice or to discuss your specific situation, please don't hesitate to reach out. Together, we can ensure that the dream of condo living in Hawaii remains a viable and rewarding one.

Have Questions?

Are you concerned about your condo's insurance coverage or maintenance reserves? Contact me today for expert advice and support tailored to your unique situation. Let's safeguard your Hawaiian dream together.


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