FOR IMMEDIATE RELEASE
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NEW YORK, August 31, 2016 — Reporters working on stories regarding the insurance implications of hurricanes Madeline and Lester, can contact the Insurance Information Institute (I.I.I.) for information, analysis and interviews.
The two powerful Pacific hurricanes could hit Hawaii’s Big Island over the next few days, causing severe winds, heavy rain and potential flooding. A hurricane is defined as a tropical storm that has achieved sustained winds of at least 74 miles per hour. Madeline and Lester have maximum sustained winds of 120 mph, although Lester is expected to weaken as it approaches the state.
Hawaii’s costliest hurricane, based on insured property losses, was Hurricane Iniki in September 1992. Iniki caused $1.6 billion in losses when it occurred ($2.74 billion in 2016 dollars). The category 4 hurricane caused major damage to Kauai and parts of Oahu with winds up to 160 mph. It took years for businesses to rebuild on Kauai.
After Iniki, many insurance companies in Hawaii stopped writing hurricane policies and the state created the Hawaii Hurricane Relief Fund (HHRF). In 2002, insurance companies began writing hurricane coverage again; the state stopped collecting funds for the HHRF at that time.
Other significant storms hitting Hawaii include: The Kohala Cyclone in 1871; Hurricane Nina in 1957; Hurricane Dot in 1959; and Hurricane Iwa in 1982. The National Weather Service has a complete list of the state’s most notable weather events.
In Hawaii, homeowner insurance policies generally provide property coverage for all standard perils (e.g., fire, non-hurricane wind) but exclude hurricane and flood causes of loss. Therefore, mortgage lenders require homeowners to have hurricane and flood (in flood-prone areas) insurance as a condition of their loan. For those without a mortgage, hurricane and flood policies should still be considered to reduce the financial burden of repairing damage associated with those natural disasters.
The Department of Commerce and Consumer Affairs urges consumers to continually review their insurance policies. Policy definitions should specify what constitutes a “hurricane” and a “flood”. These definitions can vary between insurers. Hurricane definition variables may include whether a hurricane watch or warning has been declared by the National Weather Service, the timing of this declaration and where the storm makes landfall. Flood definition variables may include whether the water infiltration is a result of a weather condition or due to containment device failure (i.e., water heater). Flood policies typically exclude the latter as well as certain weather conditions. Flood insurance coverage is usually provided on a depreciated value, not replacement cost, basis.
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