Volcanoes are generally not considered when discussing insurance risks. They tend to be in more remote areas, there is no volcano season and unless they erupt spectacularly, not much attention is paid to them.

Hawaii has many volcanoes that are tourist attractions, and it has been estimated that around 500 million people currently live near an active volcano. However, unlike hurricanes, predicting an eruption is tricky. Although scientists can view continuously-gathered satellite data; record internal and external temperatures and seismic activity; monitor magma accumulation, volcanic gas, and deformation; whether or not that volcano will even erupt in this lifetime is completely unknown.

While volcanic activity is fairly infrequent, volcanoes can cause inordinate amounts of property damage per occurrence because of their unpredictable nature. In 2010, a volcano erupted in Iceland. It spewed ash several miles into the air, disrupting European air traffic for six days in April and again in May, generating earthquakes and electrical storms. Its impact was short-lived and it was considered dormant by August.

Volcanoes that have become tourist destinations have their own risks, particularly for the surrounding infrastructure, since even a small eruption can cause significant property damage. Volcanoes generate earthquakes before, during and after eruptions, and may occur months or years before there is activity.

The fertile soil surrounding a volcano makes it highly productive agriculturally, and a large eruption can destroy residential buildings, contents, crops, livestock and agricultural buildings.

Following an eruption, flowing lava can travel great distances, burning, burying or damaging anything in its path. Earthquakes, earth movement, flash floods, mud slides, rock falls, fires, explosions, debris (including ash, dust and particles) and smoke damage also result from volcanic activity. Such damage can give rise to claims under a property, personal or commercial policy.

What's Covered?

In principal, volcanic activity is an insurable risk affecting several kinds of coverage.

Lava creeping towards a house will set it on fire. Efforts to pump seawater onto the lava to cool or redirect it are not always successful; however, fire is a standard covered peril.

Most homeowners, renters and business policies provide coverage for property loss caused by a volcanic blast, airborne shockwaves, ash, dust, lava flow, fire or explosion. If occupants are evacuated, property damage resulting from vandalism or caused by looters will also be covered.

If the insured has a comprehensive auto policy, losses from lava flow will be covered, while damage caused by ash (such as a roof caving in from the weight of the ash or an engine being ruined by the ash) is also covered under most policies. However, ash cleanup, damage to land, trees, lawns and other property is not covered.

Business interruption coverage is generally an endorsement added to an owner's policy and any losses must result from suspended operations, an inability to access the building, or a governmental closure of the area in order for coverage to apply.

Extended exposure to ash or smoke inhalation can cause severe medical issues both at the time of the exposure or later in life, which involves health insurance coverage. Most of the 57 deaths following the Mount St. Helens eruption in 1980 were caused by asphyxiation due to inhaling hot ash.

Property policies in general do not cover earth movement, and volcanoes are no exception. Volcanoes generate tremors before, during and after eruptions, and earthquake insurance must be purchased separately.

An FC&S subscriber asked whether or not lava flow was excluded based on the landslide earth movement exclusion. The exclusion in both the HO-3 and the DP-3 policies states, “Earth Movement means: a. Earthquake, including land shock waves or tremors before, during or after a volcanic eruption; b. Landslide, mudslide or mudflow; c. Subsidence or sinkhole; or d. Any other earth movement including earth sinking, rising, or shifting caused by or resulting from human or animal forces or any act of nature unless direct loss by fire or explosion ensues, and then we will pay only for the ensuing loss. This exclusion does not apply to loss by theft.”

The answer to this question really depends on whether or not the lava causing the damage was fresh and still in the liquid state, or if it had solidified and formed igneous rock. In the case of fresh lava, the earthquake exclusion would not apply. In the case of solidified lava, the earthquake exclusion would prevent recovery for those damages.

Nationally, there are active volcanoes in Alaska, California, Hawaii, Oregon, Washington, and Wyoming. Kilauea on the Hawaiian Islands is the most active of the five volcanoes that form the Hawaiian Islands, and has been continually erupting for more than 30 years, spewing a large lava fountain and releasing gas and dust. The volcano is under constant surveillance and at the first sign of activity, residents living nearby are asked to evacuate their homes.

When a family is asked by the authorities to vacate their home, the cost of being displaced may be covered by their homeowners insurance policy, HO 00 03. The Civil Authority Prohibits Use section provides coverage for additional living expenses and fair rental value (as defined by the policy) for no more than two weeks, as long as the insured has been displaced from the premises by a civil authority because of direct damages to a neighboring premises as result of a covered peril. If the lava sets neighboring homes on fire and the authorities decide to evacuate the area, the insured will receive living expenses for up to two weeks.

Volcanoes are not your average hazard; but the damage they cause, like many other perils, is insurable.