Hawaii homeowners are facing a growing crisis as insurance companies increasingly deny or cancel coverage for single-wall homes, a construction style prevalent in the islands. This trend has significant implications for Hawaii's real estate market, property values, and the financial well-being of residents. Single-wall construction, once a hallmark of Hawaiian architecture, is now viewed by insurers as structurally vulnerable, especially in the face of increasingly frequent and severe storms.
The issue stems from the inherent limitations of single-wall construction in withstanding hurricane-force winds. As Hawaii News Now's recent report illustrates, insurers are reassessing their risk in the wake of recent disasters, including the 2023 Lahaina wildfires, and the growing threat of climate change. This has led to cancellations and non-renewals, leaving homeowners scrambling for alternative coverage. Acting insurance commissioner Jerry Bump notes that “Insurers themselves are reassessing their risk ever since the Lahaina wildfires.”
For investors and developers, this shift presents both challenges and opportunities. The devaluation of properties with single-wall construction could impact investment returns and necessitate costly renovations to meet stricter building codes and insurance requirements. However, this crisis could also spur innovation in building techniques and materials. There may be opportunities for construction companies specializing in retrofitting these homes to make them more resilient or developing new construction methods that are better suited to withstand extreme weather. As Owner Builder Design explains, single-wall construction in Hawaii is radically different and must be considered when assessing its viability.
Homeowners are not only facing the loss of coverage, but also the potential for significantly higher insurance premiums for any available policies. Ian Lind notes that some insurance companies are not renewing hurricane insurance for older homes, further compounding the problem. Those homeowners are now in a difficult position and need to consider whether they can afford to carry the risk of natural disasters such as hurricanes without insurance.
The Department of Commerce and Consumer Affairs has received complaints from single-wall homeowners about canceled policies. This has led to challenges for homeowners seeking to sell or refinance their properties, as potential buyers and lenders may be hesitant to enter into deals without adequate insurance coverage. As the trend continues, addressing the insurance availability and affordability issues will become a top priority for policymakers and the state's business community. This situation could have a broad impact on the housing market across the state.
