Insurers Cancel Drywall Claimants

October 29, 2009
Michael Sheehan

Homeowners who have Chinese drywall in their homes are facing a new problem – insurers are cancelling the homeowners policies of those who have filed damage claims over the possibility of future damage claims.

Drywall imported from China has been blamed for a long list of miseries, health problems like upper respiratory infections, damage to plumbing, and corroded electrical wiring, which can cause appliances like air conditioners and microwave ovens to break down. Now, homeowners who have Chinese drywall in their homes are facing a new problem — insurers are cancelling the homeowners policies of those who have filed damage claims.

In addition to denying the claims, based on exclusions for builder defects, at least one insurance company in Florida has notified policy holders who have filed claims that that their coverage would not be renewed unless the drywall is replaced. The reason: Chinese drywall has been shown to have long-term “adverse effects” on building components, like plumbing, which could lead to future damage claims. The estimated cost of replacing the drywall in an average home and correcting any damage that it may have caused is $100,000 or more, but homeowners may find some relief from home builders. Lennar Corp., which has pinpointed at least 400 Florida homes with confirmed drywall problems, has set aside $39.8 million for repairs, and several other home builders have set aside funds to correct any drywall problems.

An estimated 100,000 homes, mostly built in 2006 and 2007, could have Chinese drywall problems and several federal agencies, including the Consumer Product Safety Commission and the Centers for Disease Control and Prevention, are investigating the imported drywall. To report a suspected drywall problem or to get more information, go to the CPSC’s Drywall Information Center.