Few on Big Island are quake-insured

By Kevin Dayton
Advertiser Big Island Bureau

HILO, Hawai'i — Twenty-eight years after the Big Island's last major earthquake, only a tiny fraction of the homes here are insured against earthquake hazards.

Brian Yanagi, manager of the Hawai'i State Civil Defense earthquake-tsunami-volcano program, said the Big Island's seismic rating is comparable to that near California's San Andreas Fault.

The agency's Earthquake Advisory Board is refining a computer model to estimate earthquake scenarios, and the potential losses are huge, Yanagi said.

"If you have a quake above a 7.0 magnitude on the Big Island in general, there could be over $1 billion in damage," he said.

Earthquake coverage for the Big Island is so expensive that few people buy it, and experts are instead trying to persuade people to modify their homes to make them more resistant to shaking. No one is sure how many homeowners have heeded that advice, but it is believed to be a small number.

Don Thomas, director of the Center for the Study of Active Volcanos at the University of Hawai'i-Hilo, said that after years of warnings, residents have adopted an almost fatalistic attitude toward earthquakes that can be hard to overcome.

"I think the intensity of the interest depends on how recently we've been shaken out of bed," he said.

Hawaiian Volcano Observatory seismologist Paul Okubo and other experts said there will be an abrupt awakening someday. "It's been almost 28 years since the last magnitude-7 earthquake, and that earthquake will certainly ruin my day," Okubo said. "The clock is just ticking."

Big Island Mayor Harry Kim said he knows from his years as county Civil Defense director that many homeowners believe their insurance covers earthquake damage, when, in fact, almost no one is covered.

Earthquake coverage is excluded from standard homeowner policies, and the insurance companies registered to do business in Hawai'i have not offered earthquake coverage on the Big Island since the Pu'u 'O'o eruption began in 1983, said Glenn Santos, a longtime insurance agent with Business Insurance Services Inc.

State Farm Fire & Casualty Insurance Co., the state's largest home and auto insurer, doesn't sell earthquake coverage on the Big Island because of the increased risk related to active volcanoes, said spokeswoman Carolyn Fujioka.

Coverage is available from some out-of-state brokers, but at a high cost with a high deductible.

State Insurance Commissioner J.P. Schmidt said banks and other mortgage lenders don't require earthquake insurance — as they do hurricane coverage — so homeowners generally didn't buy it when it was more widely available in the past. Since few people wanted the coverage, insurance companies stopped offering it, he said.

"I think the people on the Big Island and elsewhere are familiar with the risks and have made an informed decision on that," Schmidt said. He said that "certainly mortgage lenders are very sensitive to risks to their collateral, and if they felt it was a significant or an important risk, then they would be requiring it."

Santos said one factor that may make Big Island residents reluctant to buy coverage is that even the largest of the earthquakes in recent decades did relatively little damage.

He said the 1975 quake hit while he was sleeping in his second-floor Hilo condominium. "That place rocked and rolled, but the only damage that we suffered in our unit was the refrigerator door opened and whatever was on the door ended up on the floor," he said. "To my knowledge, the condo did not suffer any structural damage in an earthquake that large."

The total damage from that event, estimated by the U.S. Geological Survey at $4.1 million, may seem modest, but Okubo warned things may be different now that the population of the Big Island has grown to about 150,000 and development has spread.

"You certainly don't need the advantage of a computer model calculation to understand that ... you're talking about a much larger loss than what was experienced before."

Kim said the federal government should adopt a program to provide earthquake coverage in much the same way it provides flood insurance in flood-prone areas. Santos also would like to see some sort of government program set up to offer affordable earthquake insurance.

In the meantime, Civil Defense officials in Hawai'i are trying to persuade people to make improvements such as adding shear walls to strengthen home foundations, particularly those built using the post-and-pier construction common in many plantation homes.