VOLCANIC ACTION

Volcanic Action – What Is Covered Under Property Insurance?

In plain language: When an insurance policy mentions "volcanic action," it's referring to the damage caused by the eruption of a volcano, including lava flow, ash, and airborne particles. It doesn't however, include earthquake or tremor damage that might happen before an eruption. 

Technical definition: "Volcanic action" is a peril often covered in property insurance policies. It provides protection for property damage arising from the eruption of a volcano when the eruption results in airborne blast or shock waves, ash, dust or particulate matter, or lava flow. However, this typically excludes loss or damage caused by earthquake, landslides or other earth movement even if attributable to volcanic eruption. 

Picture living near a mountain range, a picturesque, peaceful, and tranquil sight. Now imagine that one of those mountains is an active volcano. This situation is a reality for many, particularly in regions such as Hawaii or along the Pacific "Ring of Fire." You might wonder, "how is that covered in an insurance policy?" 

TL;DR

Volcanic action is any damage caused by a volcanic eruption, including from lava, ash, or volcanic dust. 

Understanding volcanic action matters in agency work when clients are located in areas prone to volcanic activity. 

A common misunderstanding exists between volcanic action and other perils like earthquake or landslide, which are typically excluded. 

Agencies can take advantage of additional coverages or endorsements to fill in the gaps left by these exclusions. 

What Is Volcanic Action in Insurance?

In the context of insurance, volcanic action refers to the damage caused to property due to volcanic eruptions. These eruptions can result in lava flow, airborne particles such as ash and dust, or impact shock waves. This term typically appears in the policy form's coverage and exclusions sections. 

Despite the inclusion of volcanic action in many standard property insurance policies, coverage is often limited. For instance, damage resulting from landslides, other earth movements, or earthquakes linked to an eruption will most likely be excluded. This difference is an important distinction for insurance agencies to be aware of and communicate effectively to their clients. 

Key Related Terms to Know

In the context of insurance, volcanic action refers to the damage caused to property due to volcanic eruptions. These eruptions can result in lava flow, airborne particles such as ash and dust, or impact shock waves. This term typically appears in the policy form's coverage and exclusions sections. 

Despite the inclusion of volcanic action in many standard property insurance policies, coverage is often limited. For instance, damage resulting from landslides, other earth movements, or earthquakes linked to an eruption will most likely be excluded. This difference is an important distinction for insurance agencies to be aware of and communicate effectively to their clients. 

Key Related Terms to Know

Earth Movement – a type of exclusion in many property insurance policies which refers to damage caused by movement of the earth such as landslides, mudflows, sinkholes, and more. 

Sublimit – a limitation in an insurance policy specifying a maximum amount of coverage available for a specific type of loss. 

Endorsement – a written agreement attached to an insurance policy to add, modify, or exclude specific types of coverages or risks. 

Exclusion – a specific risk or type of damage that is not covered by an insurance policy. 

Debris Removal Coverage – a component of many property insurance policies providing coverage for the cost to remove debris after a covered loss. 

Common Questions About Volcanic Action

How does debris removal after a volcanic eruption work? 

In many cases, insurance policies include some form of debris removal coverage. If a property affected by a volcanic eruption needs debris cleanup before repairs can be undertaken, this coverage could potentially apply. However, it's crucial to clarify the specific details with the client as policies may contain sublimits or other restrictions on this coverage. 

What loss scenarios involving volcanic action might not be covered? 

An important aspect to understand is that while volcanic action may be covered, related events like earthquakes, tremor shocks, or landslides caused by a volcano usually aren't. For example, if a tremor before a volcanic eruption results in damage to a client's property, the policy probably won't cover this type of loss. 

Why does it matter to understand the difference between volcanic action and volcanic eruption? 

The differentiation between "volcanic action" and "volcanic eruption" is crucial. The eruption of a volcano can cause various damages – lava, ash, or the tremor of earth. However, not all are covered when an insurer refers to volcanic action. This distinction is vital to manage client expectations about coverage effectively. 

Volcanic Action vs. Earth Movement

Understanding the contrast between volcanic action and earth movement is crucial to navigate policy coverage.  

Real Claim Examples Involving Volcanic Action

Scenario 1: The Smith’s house was located at the base of a dormant volcano in Hawaii. When the volcano erupted unexpectedly, their house was destroyed by flowing lava. Their property insurance policy covered the loss under "volcanic action," providing funds to rebuild elsewhere. 

Scenario 2: Some miles away from the Smiths, Johnson's vacation home was covered in thick volcanic ash after the same eruption, causing significant damage. His insurance also covered this under volcanic action, setting him up for repairs after the cleanup. 

Scenario 3: However, the Jones family, who lived further from the volcano, did not have the same good fortune. When the eruption caused an earthquake that damaged their property before any volcanic action could occur, their claim was declined. The earthquake damage fell under the earth movement exclusion, showing that not all damage caused by a volcano is covered under volcanic action. 

Limitations and Common Mistakes

Volcanic action does not usually include damage from the earth movement caused by a volcanic eruption. 

Misunderstanding the perils covered under volcanic action can lead to an unexpected coverage gap. 

Not explaining this complex coverage in simple terms can lead to client dissatisfaction or E&O exposure. 

How to Explain Volcanic Action to Clients

Personal Lines client "Imagine your policy as a shield against specific things like fire, wind, and yes, even volcanic eruptions. This means your policy could pay out if your home is damaged by volcanic lava or ash. But remember, it won't cover everything, like earth shaking that happens during an eruption." 

Small Business owner "Your property policy understands the risks unique to your situation, including volcanic activity that could damage your premises. Coverage extends to losses from specific results of an eruption, such as lava flow or ash. However, it's essential to note this coverage doesn't extend to earth tremors or landslides caused by the same eruption." 

CFO or Risk Manager "Considering our proximity to active volcanoes, your policy includes coverage for 'volcanic action'. While this may sound comprehensive, it specifically refers to damage from volcanic eruption effects like lava or volcanic ash. Unfortunately, earthquake or landslide damage resulting from a volcano is not included under this term."