Lloyd’s Surplus Lines of Insurance and Kilauea Volcano Class Action

Kilauea, a volcano on the Big Island of Hawaii, has been erupting since 1983. When new fissures opened in it in May 2018, sending lava in new directions and destroying property that had previously not been threatened, a number of homeowners found out that their insurance coverage was inadequate. The complaint for this class action claims that the plaintiffs were sold the wrong insurance, sometimes with lava exclusions, against Hawaiian insurance rules.

The class for this action includes all persons with a home in Hawaii who bought a surplus lines homeowner’s insurance policy with a lava exclusion, during the applicable statute of limitations, from one or more of the broker defendants, where the policy was underwritten or subscribed to by Lloyd’s.

Many people only discover the true worth of their insurance policies when disaster strikes. This seems to have been true for some residents of Hawaii, when they lost everything they owned to a lethal lava flow: their homes, clothing, electronics, personal identification papers, records, tools, and furniture. At that time, the plaintiffs in this case discovered that they had been sold what the complaint calls “virtually worthless” surplus-lines insurance policies from Lloyd’s of London that would result in claim denials. 

The complaint claims that Pyramid Insurance Centre, Ltd. and Moa Insurance Services of Hawaii offered the plaintiffs Lloyd’s surplus lines, with numerous exclusions including exclusions for lava hazards, when they could have offered more appropriate coverage. The complaint claims that the companies told the plaintiffs that these were the only policies available to them, when that was not true. It also says that they did not do the due diligence required under Hawaiian law before placing surplus lines of insurance and that they inflated the amounts of coverage beyond the appropriate limits. 

The complaint alleges, “Defendants knew they were not allowed to place Plaintiffs and the Class with surplus lines insurance unless the insurance coverage amounts exceeded the coverage available through traditional insurance carriers, including the state’s own HPIA [Hawaii Property Insurance Association] insurance program.”

Why did they do this? The complaint claims that the companies had arrangements with Lloyd’s for “kickbacks” or commissions, and that the commissions increased with the size of the premiums. Also, the complaint says, it reduced loss ratios and payouts for claims. 

The complaint says that the plaintiffs should have been offered other, more comprehensive insurance, such as insurance through HPIA, which provides coverage against sixteen perils, including lava. 

The complaint alleges breaches of contract, breaches of good faith and fair dialing, and breach of fiduciary duties, among other things. 

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Lloyd’s Surplus Lines of Insurance and Kilauea Volcano Complaint

December 21, 2018

Kilauea, a volcano on the Big Island of Hawaii, has been erupting since 1983. When new fissures opened in it in May 2018, sending lava in new directions and destroying property that had previously not been threatened, a number of homeowners found out that their insurance coverage was inadequate. The complaint for this class action claims that the plaintiffs were sold the wrong insurance, sometimes with lava exclusions, against Hawaiian insurance rules.

lloyds_homeowners_insurance.pdf

Case Event History

Lloyd’s Surplus Lines of Insurance and Kilauea Volcano Complaint

December 21, 2018

Kilauea, a volcano on the Big Island of Hawaii, has been erupting since 1983. When new fissures opened in it in May 2018, sending lava in new directions and destroying property that had previously not been threatened, a number of homeowners found out that their insurance coverage was inadequate. The complaint for this class action claims that the plaintiffs were sold the wrong insurance, sometimes with lava exclusions, against Hawaiian insurance rules.

lloyds_homeowners_insurance.pdf
Tags: Deceptive Insurance Practices, Homeowners Insurance, Insurance, Sale of Inappropriate Policies