Hawaii: State Farm insurance company stops issuing all boater insurance as blowback reactions to DOBOR’s new insurance requirements gain momentum

(Please see latest updates at the bottom of this article)

A $million coverage for a $10k, 26' boat?

If you've got a 26 foot or larger boat in Hawaii's public harbor system, you will be required to get what amounts to $1 million in comprehensive coverage in order to satisfy Ed Underwood's latest assault on the boating community, according to State Farm before they shuttered their boating insurance division.

The legal mandate for this rule, HRS § 200-13.5, was snuck through the legislature in 2017, with no public testimony, and has suddenly resurfaced and has been weaponized by the DLNR's DOBOR administrator Ed Underwood.

Underwood has recently been called out as a sexual predator, having sexually harassed and abused a female coworker during working hours in a state of Hawaii Department of Land and Natural Resources office.

The latest in a long list of DLNR poorly thought through schemes

This latest in a long list of poorly thought through schemes by the DLNR has further eroded the recreational boating environment for those wishing to enjoy Hawaii's ocean recreation resources.

We were informed by two different State Farm agents, before State Farm shuttered their boating insurance division, that any vessel, regardless of its value, in order to get $100,000 in "wreck removal" coverage -- DoBOR's new insurance requirement -- would need to purchase a comprehensive policy in the amount of $1 million. The wreck removal component of that policy is 10% of the total comprehensive package. There is no such thing as a separate salvage component add-on to liability insurance.

Some other insurers, as well, are balking at the requirement, some calling it "ridiculous", because DOBOR is asking insurers to ensure boats whose value, in some cases, is less than $10,000, for 100s of thousands of dollars to up to $1 million in comprehensive insurance.

Underwood claims that the reason for this newest insurance requirement is that there are no longer any funds left in the Boating Special Fund traditionally allocated for salvage operations. 

What Underwood doesn't say is that DOBOR created the vacuum in funds in the Boating Special Fund --the source of salvage funding-- in the first place. 

The mass exodus of rent-paying tenants and the subsequent catastrophic collapse in revenue was a direct result of another very poorly thought through rule change by Suzanne Case's DLNR in 2019.

In 2019, at the urging of Ed Underwood, the DLNR passed draconian new regulations as part of massive changes to statute 13–234. The new rule changes instantly doubled slip fees for all boaters in the public harbor system. This rule was passed despite 100% opposition from thousands of boaters across the state of Hawaii who warned the DLNR, at the time of testimony, that this would essentially empty the harbors. 

And the rule did just that. There was in fact a mass exodus of rent paying boaters from the public harbor system and, as a result, the Boating Special Fund has been seriously depleted.

Grounding of commercial vessel triggers insurance mandate for recreational boaters

Underwood claims that the trigger for the new insurance mandate was the grounding of a 60 foot yawl on the reef in front of the Hilton Hawaiian hotel. However what he failed to inform the press about is that the grounded vessel was a commercially operated vessel with a commercial captain who was violating Coast Guard safe-operation rules and regulations. Despite this, Underwood has decided to punish all recreational boaters with this new insurance mandate.

In forums across Facebook and elsewhere, boaters were unanimous about their frustration in not being able to find the kind of insurance that Underwood is mandating, and were worried that they wouldn't even be able to sell their boats because there would no longer be a market for boats needing slips in Hawaii. 

Possible public harbor chaos in the wake of mandate

This, of course, will create a whole new mess in Hawaii's Public Harbor system as boaters may have no other choice but to do one of two things: either walk away from their boats and just let them rot right where they are causing a massive cleanup problem for the state, or they will be forced to sell their vessels for pennies on the dollar, as there will no longer be a market for boats that need a slip in Hawaii harbors.

Clearly discernible path taken by Ed Underwood over the past decade deliberately causes the decline of the public's harbor system

There has been a clearly discernible path taken by Ed Underwood over the past decade to deliberately cause the decline of the public's harbor system. This "ridiculous" insurance mandate is perhaps the final nail in the coffin. Underwood hopes to hand over all publicly owned harbors to private for-profit out-of-state corporations who will then make these harbors available only to more affluent, mostly out-of-state tenants.

Harbor offices in complete meltdown

Adding to the chaos, conditions within the state's public harbor offices are near chaotic with staff shortages, incompetent handling of accounts being epidemic, compounding existing account errors, disastrously slow handling of slip assignments, near zero enforcement of any kind, and the, in some cases, fraudulent mishandling of public funds. When the new insurance mandate goes into effect on May 1st, the state's public harbor offices may be underwater.