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You still own the land (assuming the rules haven't changed in the last decade or so and you owned it in the first place, a lot of Hawaii property is leasehold meaning you own the house but lease the land), it will just be difficult for you to do anything with it for a very long time (though there are parts of the 1990 eruption that are already being developed over). If I'm remembering correctly, it is somewhat common for people who's land is lost to lava to donate it back to the county/state in order to get away from paying property taxes.
As for the property losses, you can get homeowner's insurance that covers damage and loss of use. There's a regular debate about how much the state should do to encourage/discourage development in risky areas. It's pretty much like the debates you see in flood prone areas and just like the Federal Flood Insurance Program is criticized as encouraging risky development there's a state insurance program in Hawaii that does the same thing for people who aren't able to find private insurers for their property.
At least that's the way of it as I remember from when I lived there and discussed it with classmates who lived on the Big Island. I'm sure Brad will set me straight if needed.
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