Insurance Relief on the Horizon: What It Means for Hawaii Condo Owners

Written By Blue Cove Properties

If you own a condominium in Hawai‘i—or are considering buying one—there’s important news that could impact your financial future.

Amid soaring insurance premiums and tighter lending rules, a new bill passed by the state legislature is poised to provide temporary insurance relief to struggling condominium associations across the islands.

In this post, I’ll break down:

  • What the insurance crisis looks like in Hawai‘i

  • Why this issue matters to condo owners and buyers

  • The details of the new state-backed solution

  • What to expect moving forward

The Background: How We Got Here

Even before the devastating Lahaina wildfire on August 8, 2023, Hawai‘i’s condo insurance market was buckling under pressure.

Shrinking Coverage & Exploding Premiums

For years, the availability of master insurance policies for condominium buildings has been shrinking, leading to skyrocketing costs. Deductibles that once ranged from $10,000 to $25,000 per unit have ballooned to $250,000 or more in many cases. These increases are largely driven by:

  • Frequent and costly insurance claims

  • A limited pool of willing insurers

  • Aging infrastructure in older buildings

For example, one Waikiki high-rise saw its premium jump from $235,000 to $1.2 million after being dropped by multiple standard insurers due to unreplaced plumbing.

Impacts to Lending

The insurance gap has triggered a domino effect. Lenders are now restricted from selling mortgages to Fannie Mae and Freddie Mac if either:

  • The building has unfunded repairs over $10,000 per unit

  • The building doesn’t carry 100% hurricane or replacement coverage

This makes it harder for potential buyers to secure financing and limits refinancing options for existing owners. The aftermath of the Surfside collapse in Miami also led Fannie Mae to tighten lending standards for aging and underinsured buildings—impacting many Hawai‘i properties built before 1990.

Wildfire Risks Add Pressure

Historically, Hawai‘i has never been rated for wildfire risk. That changed after wildfires swept through Lahaina, Kula, Mililani, and parts of West O‘ahu. Now, insurers and reinsurers (who back insurance companies) are factoring wildfire exposure into pricing models—resulting in even higher premiums or dropped coverage altogether.

The State’s Response: Temporary Relief, Long-Term Vision

Recognizing the crisis, the Hawai‘i Legislature passed a bill in 2025 that expands the role of the Hawai‘i Property Insurance Association (HPIA) and Hawai‘i Hurricane Relief Fund (HHRF) to provide stop-gap coverage for underinsured condo buildings.

Key Features of the Relief Plan:

  • New state-backed insurance option for condos unable to secure coverage on the private market

  •  Hurricane and property insurance available through HPIA and HHRF

  • Designed as a temporary 5-year solution while a long-term strategy is developed

  • Flat recording fee replaces the old regressive mortgage fee, distributing costs more equitably

  •  Authorization for additional assessments or general fund allocations to support coverage

  • Coverage is only available to buildings in insurable condition—no structural deficiencies or deferred major repairs

Why This Matters:

  • Associations with dropped or partial coverage will have a safety net.

  • Buyers may be able to qualify for loans again if their buildings gain sufficient coverage.

  • Lenders, insurers, and real estate professionals can operate with more certainty in the market.

What to Expect Moving Forward

While this program isn’t a long-term fix, it’s a crucial step toward stabilizing Hawai‘i’s insurance market. The legislature has also tasked the Insurance Commissioner with conducting a formal study to explore:

  • Permanent insurance solutions for condos

  • Ways to reduce premiums and reinsurance costs

  • Policies to make aging buildings more insurable through upgrades and maintenance incentives

Expect further updates as this study progresses and as state programs roll out in mid-2025.

Final Thoughts

This new legislation could be a game-changer for hundreds of condo buildings across the state. It offers breathing room for owners, financial institutions, and buyers alike. But remember—this is a temporary fix.

If you’re currently in a condo, considering buying one, or worried about your building’s insurance status, don’t hesitate to reach out. I’m tracking these developments closely and am here to guide you through every change in this evolving market.

Contact me today to schedule a consultation or discuss your options.


Sources

  1. Hawai‘i State Legislature. Senate Bill 1044 SD2 – Relating to Insurance Coverage for Condominiums. Retrieved from: https://data.capitol.hawaii.gov/sessions/session2025/Bills/SB1044_SD2_.HTM

  2. Hawaii News Now. Insurance relief may come soon for condos in crisis. Published April 4, 2025. Retrieved from: https://www.hawaiinewsnow.com/2025/04/04/insurance-relief-may-come-soon-condos-crisis/

  3. Civil Beat. To Prop Up Hawaiʻi’s Insurance Market, Lawmakers Look To ‘Last Resort’ Funds. Published February 2025. Retrieved from: https://www.civilbeat.org/2025/02/to-prop-up-hawai%CA%BBi-insurance-market-lawmakers-look-to-last-resort-funds/

Blue Cove Properties