Category one Hurricane Lala skirted Hawaii's Big Island over the weekend without making landfall, but its rainfall, up to 32 inches in places, triggered flash floods and mudslides that swept more than 100 properties from their foundations, according to Governor Josh Green (pictured).
According to media reports, one person died in a car accident tied to the storm, and more than 200,000 households lost power at the peak of the event. The storm has since weakened to a tropical storm tracking west of the islands, though tropical storm warnings remained in effect across all eight major islands as of Sunday.
Insurance Business had flagged the risk of this kind of outcome before Lala arrived, noting that rainfall-driven landslide and mudflow damage typically falls outside standard homeowners coverage and instead depends on National Flood Insurance Program policies or surplus lines placements, meaning a storm that never makes landfall can still generate a meaningful, fragmented claims picture.
Hawaii's Department of Commerce and Consumer Affairs Insurance Division has repeatedly reminded residents this year that most standard homeowners, condominium and renters policies exclude flood damage entirely, and that hurricane wind coverage is typically written as a separate policy or endorsement rather than bundled into a standard homeowners form.
That structure traces back to Hurricane Iniki in 1992, a category four storm that caused six deaths and roughly $3 billion in damage after making landfall on Kauai, and drove enough insurers out of the state that Hawaii created the Hawaii Hurricane Relief Fund to stabilize the market.
More than three decades later, hurricane wind coverage, flood coverage and standard property coverage in Hawaii still function as effectively separate products with different triggers, deductibles and claims processes, meaning a single storm event like Lala can require a homeowner to navigate multiple policies, or discover a gap between them, simultaneously.
Zephyr Insurance, one of the state's specialty carriers, activated hurricane coverage for Big Island policyholders ahead of Lala's approach and reminded customers that standard homeowners policies exclude both hurricane wind and flood damage, that flood losses fall to NFIP or private flood policies, and that vehicle damage would need to be pursued separately through comprehensive auto coverage.
Lala's flooding lands on a Hawaii property insurance market that was already under strain before the storm arrived. The 2023 Maui wildfires destroyed more than 2,200 structures and drove insured losses past $3.2 billion, and a report from the Insurance Fairness Project earlier this year warned that repeated climate-driven disasters are pushing Hawaii's property insurers toward higher rates and tighter underwriting, with hundreds of thousands of properties across the state not currently qualifying for flood insurance at all.
That combination, rising rates following a multibillion-dollar wildfire loss and a large population of structurally uninsurable or underinsured properties, means Lala's flood and mudslide damage arrives at a moment when the state's insurance capacity and consumer trust in coverage were already stretched thin.
Catastrophe modelers typically wait until a storm's final track and intensity are confirmed before publishing loss estimates, and no formal figure has been released for Lala as of this writing.
Analysts tracking the storm before it arrived noted that Hawaii's insurance-linked securities and catastrophe bond structures are generally built to protect against far more intense, higher-category storms, meaning a category one system like Lala is unlikely to trigger reinsurance or cat bond recoveries even though it can still cause significant localized economic and property damage.
That dynamic mirrors what happened with Hurricane Lane in 2018 and Hurricane Hone in 2024, both of which caused meaningful flood and wind damage in Hawaii without making landfall.
Hawaii's Insurance Division is urging residents to document damage immediately, contact carriers promptly and understand that flood claims will likely need to be filed separately from any wind or homeowners claim, guidance that adjusters working this event should expect to repeat often given how frequently Hawaii policyholders misunderstand which policy actually covers rainfall-driven damage.
For brokers serving Hawaii clients, Lala is a timely reminder to review whether existing flood coverage, still opted into far less often than hurricane wind coverage across the islands, is adequate given how much of this storm's damage came from rain rather than wind, a pattern Hawaii's own claims history suggests is more the rule than the exception for storms approaching the islands.
