A hurricane watch does not decide which deductible applies
A hurricane watch does not decide which deductible applies
2026-09-10 · Hawaii · Regulation
Hawaii’s Insurance Commissioner has told insurers, in writing, that they may not decide which deductible applies to a Lala claim by pointing at the storm’s name.1
Commissioner’s Memorandum 2026-7A, “Tropical Storm and Hurricane Lala — Property Insurance Claims and Applicable Coverage,” issued August 26, 2026, with an Attachment A setting out the storm’s insurance timeline hour by hour.
The operative sentences
“Damage should not automatically be characterized as hurricane, tropical storm, flood, or other damage solely based on the broader weather event.”
And, more pointedly:
“The existence of a Hurricane Watch, Hurricane Warning, or named storm does not, by itself, establish which coverage or deductible applies.”
A hurricane watch or warning can be in force while the storm is officially classified a tropical storm. Insurers may not treat those terms as interchangeable unless the policy expressly does.
Why that sentence is worth money
Because of the arithmetic. A Hurricane Relief Fund policy carries a fixed 2% per-building deductible. On a $100 million building that is $2 million before a dollar of recovery. An all-other-perils deductible on the same master policy may be a few tens of thousands.
Which deductible applies is, for many Hawaii associations, the largest single number in the claim.
The rest of what the memorandum requires
Coordination between insurers. Where a policyholder has multiple potentially applicable policies — homeowners, hurricane, flood, renters, condominium — insurers must coordinate, and “consumers should not be unnecessarily placed in the middle of disputes between insurers,” nor discouraged from filing because another insurer may ultimately pay.
Reasons, tied to the policy. Denials, limitations or particular deductibles must be explained by identifying the relevant policy provisions and the factual and contractual basis.
Records. Insurers must retain the date and approximate time of loss, location, determined cause, applicable policy and endorsements and deductible, the storm classification and the governmental watch or warning in effect, inspection findings, and the basis for any denial. The Division “will monitor complaints and inquiries arising from Lala and may request information from insurers.”
The naming trap the Commissioner had to write down
“the County of Hawai‘i is a separate municipal government” from the State of Hawaii. Using “Hawai‘i” interchangeably has produced incorrect coverage determinations — a mayoral proclamation for the County is not a statewide proclamation, and vice versa. For an association on Hawaii Island, which proclamation covers the loss is a real question with a real answer.
What a board can do on an open claim
- Preserve time-stamped damage documentation. Photographs with metadata, dated inspection notes, work orders. The memorandum makes time-of-loss a recorded field for a reason.
- Pull Attachment A. It is the Division’s own timeline of Lala’s classification and the watches and warnings in effect. It is the reference document for any argument about which deductible attaches.
- Do not accept a blanket “hurricane deductible” determination that is not tied to the policy language and the actual cause of loss at your building at that time.
- Ask for the reasons in writing. The memorandum entitles you to a determination that identifies the provisions relied on.
- Separate the perils. Wind, water driven by wind, flood and interior water damage from a failed component are different causes with different coverage. A single “storm damage” label collapses distinctions worth money.
The statutory backdrop
Whatever the deductible, allocating it is a board decision with a due-process condition attached. HRS § 514B-143(d) gives the board three options on a claim for damage to a unit or the common elements: pay the deductible as a common expense; “after notice and an opportunity for a hearing, assess the deductible amount against the owners who caused the damage or from whose units the damage or cause of loss originated”; or require the owners of the affected units to pay it.
Note where the hearing requirement sits — on the second option only. A board planning to charge a deductible to particular owners on causation grounds owes those owners notice and a hearing, and a board that skips it has created a second dispute on top of the first.
Section 514B-143(f) also puts adjustment in the association’s hands: “Any loss covered by the property policy… shall be adjusted by and with the association,” with proceeds payable to the association or an insurance trustee and held in trust for owners and secured parties as their interests appear.
The proclamations in play
Three are relevant to the current claim season: the Proclamation Relating to Tropical Storm Lala; the Proclamation Relating to August 2026 Tropical Cyclones, effective August 22 and expiring October 21, 2026; and the Proclamation Relating to September 2026 Tropical Cyclones, effective September 2 and expiring November 1, 2026. Those dates also determine which claims fall under the 10% public adjuster fee presumption.
What to watch
Whether the Division publishes complaint data from the Lala claim cycle, and whether any insurer’s handling draws a market-conduct examination. The memorandum’s closing line — that the Division may request information from insurers — is the part that gives it force.
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