Insurance Companies Hanging Chinese Drywall Homeowners Out to Dry

If you file a claim for damages caused by Chinese Drywall, you might lose your insurance via cancellation or non-renewal.

Palm Coast, FL – October 16, 2009Chinese Drywall has caused severe damage to hundreds of homes in south Florida and along the Gulf coast. Affected homeowners who thought things could not get worse are finding out that they can get worse; much worse. Now their insurance companies are refusing to renew their policies or cancelling them altogether.
The building boom coinciding with the arrival of damaging hurricanes left many builders in the south scrambling for building supplies. Seeking alternate supply sources some turned to drywall imported from China. Builders who subcontracted drywall installation were often unaware of the source or the material.
It turns out that Chinese drywall contains traces of strontium sulfide, which emits a rotten egg odor and causes metal corrosion, particularly of copper and silver. Most affected are copper wiring, air conditioner condensers, appliances, fixtures, and jewelry. There have been complaints that it also affects residents’ health.

Between a rock and a hard place

Affected homeowners have limited options. Often the homes are no longer livable, forcing the owners to find temporary quarters. Remediation involves gutting the home, removal of all drywall, wiring and  exposed plumbing. The months-long project generally costs between $75,000 and $100,000.
Whether they seek remuneration through a class action suit against the manufacturer or attempt to recover their loss via a claim directly against the builder, months will pass before any reimbursement arrives. Meanwhile, homeowners’ lives must go on. The mortgage, taxes, and insurance must be paid.
In hopes of quicker reimbursement, some homeowners filed a claim with their property and casualty insurance company. To their surprise, the insurance companies not only denied the claim but also notified the policy holder that their policy would either be cancelled or would not be renewed. Mortgage companies require homeowners to carry property insurance. A lapsed or cancelled policy subjects the property to possible foreclosure.
Insurance companies respond that their policies do not cover "faulty, inadequate or defective" workmanship, construction or materials; denying any claims accordingly. The cancellations and non-renewals are predicated on the assertion that defective drywall constitutes a pre-existing condition that may lead to future damage (and claims).
So, should you tell your insurance company that you have Chinese drywall? If you do, they will likely terminate your policy. If you don’t they may deny subsequent claims because the home contained undisclosed drywall.
The problems continue. One couple moved out of their home because defective drywall was making them sick only to be dropped by their insurance company because the policy did not cover "vacant" dwellings.
In case you are wondering, one of the companies denying claims and cancelling policies is Citizens Property Insurance Corp., the insurer of last resort for people who can’t find affordable coverage elsewhere. Citizens is backed by the State of Florida.
Fortunately, only two confirmed cases of Chinese drywall have been reported in Flagler County.

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3 replies
  1. erp
    erp says:

    Chinese Dry Wall

    Builders used the dry wall from China without determining its quality, so why are insurance companies liable? Let the builders who installed it, replace it.

    People scream when their insurance rates go up and this is the reason.

    Unless a homeowner’s insurance policy specifically says they are insuring against a builder using defective materials, then the homeowners have no claim again them.

    If this is allowed, there’ll be no end of claims like this and the rest of us will be paying even higher insurance rates.

  2. Pete McKinley
    Pete McKinley says:

    What Builder in Flagler

    Do you know who the builder was that had Chinese Drywall foung in the homes? Was it the same builder in both the cases that were confirmed? Pete

  3. Toby
    Toby says:

    Reply to erp

    I believe the Florida consumer protection law clearly puts the onus on the builder, whether or not they were aware. Hence, the builders insurance company is probably on the hook. The consumer must only prove the product is defective.

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