State Farm Reportedly Stops Renewing Hurricane Coverage for Some Hawaii Rental Homes
What Hawaii property owners, mainland investors, and buyers should understand about changing insurance requirements, single-wall homes, and financing concerns.
A recent Hawaii News Now story caught the attention of many Hawaii property owners, especially investors and owners of older homes. According to the report, State Farm will reportedly stop issuing or renewing hurricane insurance coverage for certain single-wall homes in Hawaii that are used as rentals.
Hawaii Insurance Commissioner Scott Saiki noted in the report that spreading risk among multiple insurance carriers may actually help stabilize the overall market instead of concentrating exposure with a single company. That may be true from the insurance industry side of things, but for many property owners, especially mainland investors who are not watching local Hawaii news every night, this could still become a very real issue.
Many older homes in Hawaii were built with single-wall construction and remain completely legal, functional, and important parts of Hawaii’s housing inventory. These are not necessarily unsafe homes or “problem properties.” Many are long-standing kama‘aina homes, plantation-era homes, or practical workforce housing that have served Hawaii families for generations. They have been insured for decades without issue.
At the same time, insurance companies nationwide have become far more cautious following major wildfire losses, hurricanes, rising rebuilding costs, and increasing pressure from the reinsurance market. Hawaii is not isolated from those broader market shifts.
The bigger issue here is not panic, it is preparation.
Insurance availability can directly affect:
- financing eligibility
- monthly ownership costs
- rental cash flow
- resale value
- and the future buyer pool for a property
Many mainland buyers and investors simply do not realize how different Hawaii property ownership can be compared to many mainland markets. In Hawaii, issues such as single-wall construction, lava zones, hurricane exposure, oceanfront corrosion and erosion, roof age, and rental use can all affect underwriting decisions.
Even if replacement coverage remains available, owners could still face:
- higher premiums
- stricter underwriting requirements
- reduced coverage options
- or financing complications with lenders
And this is where working with experienced LOCAL lenders becomes extremely important.
Not all lenders understand Hawaii’s unique insurance environment. A lender sitting in another state may not fully understand issues involving single-wall homes, lava zones, hurricane coverage requirements, leasehold property, or evolving Hawaii underwriting concerns. Local lenders deal with these situations every day and can often help identify potential issues much earlier in the process before they become closing problems.
This is especially important because mortgage lenders require hurricane insurance coverage on financed properties.
Hawaii still has insurance alternatives available, although options and underwriting requirements may continue evolving. Programs such as HHRF and HPIA exist for certain difficult-to-insure properties, including some homes located in higher lava risk zones, but many owners may still face rising costs or fewer available insurance options moving forward.
At this point, this does not mean single-wall homes suddenly become uninsurable or undesirable. Hawaii still has many older homes that continue to provide important housing opportunities and investment potential. But this situation does reinforce the importance of understanding insurance early when buying, selling, or investing in Hawaii real estate.
For owners who may be affected, now may be a good time to:
- review current policies
- confirm renewal terms
- speak with local insurance professionals
- and understand what options may exist if underwriting requirements change
As Hawaii’s insurance market continues evolving, local knowledge matters more than ever.
If you are thinking about buying, selling, or investing in Hawaii Island real estate, especially older homes or rental property, it is more important than ever to work with experienced local professionals who understand Hawaii’s unique market conditions, financing environment, insurance challenges, and property types here on the islands.
Aloha and Mahalo,
Lance Owens RB-24133, Broker In Charge
LUVA Real Estate, (808) 936-8383, KonaHomeTeam.realestate
Kona Real Estate Blog
