Insurance Coverage Basics for Volcano Claims

Damage caused to property by lava flow, which recently started to move again on Hawaii’s Big Island, is covered under a homeowners, renters or business insurance policy, according to the Insurance Information Institute.

Besides lava flow, most standard homeowners, renters and business insurance policies provide coverage for property loss caused by volcanic eruption when it is the result of a volcanic blast, airborne shock waves, ash or dust.

Also covered under homeowners and auto policies are:

• Fire or explosion resulting from volcanic eruption.
• Property damage, vandalism or theft for homes and businesses that have been looted after evacuation.
• Damage to vehicles from lava flow under the optional comprehensive portion of an auto insurance policy.
• Direct, sudden damage to automobile engines from volcanic ash or dust

For businesses:

• Business interruption insurance may apply for direct physical damage from a covered peril—such as a volcanic eruption—to a business that forces a suspension of operations
• Business interruption cover may apply if there is physical damage to other property that prevents customers or employees from gaining access to the business; or if the government shuts down the area, preventing customers or employees from gaining access to the premises.

There is typically a 72-hour waiting period before business interruption coverage kicks in.

What’s Not Covered?

The cost to remove ash from personal property is generally not covered unless the ash first causes direct physical loss to the property. There is also no coverage to remove ash from the surrounding land.

Also not covered under most policies is damage to homes, businesses or vehicles that occurs over time due to volcanic dust.

The lava flow, which first bubbled out of the Kilauea Volcano on Hawaii’s Big Island on June 27, had come to a standstill in late September, but soon thereafter resumed its slow crawl forward. It is now moving at a rate of about eight to 11 yards per hour, according to the U.S. Geological Survey, and several homes may stand in its path.

Homeowners, renters and business insurance policies do not cover damage from earthquake, land tremors, landslide, mudflow, or other earth movement regardless of whether or not the quake is caused by or causes a volcanic eruption. Earthquake coverage can be added either as an endorsement for an additional charge or by purchasing a separate earthquake policy.

Volcanic effusion (i.e. volcanic water and mud) is not covered under a typical homeowners, renters or business insurance policy. However, it is covered by flood insurance, available through the National Flood Insurance Program. Typically there is a 30-day waiting period before from date of purchase before a policy goes into effect.

Source: Insurance Information Institute