Bill would Ban Chinese Drywall Cancellations

Posted December 14th, 2009
by Staff (no comments)
From the collections of the Mitchell Library, State Library of New South Wales

From the collections of the Mitchell Library, State Library of New South Wales

One of the more frustrating things about the recent problems with Chinese drywall is that unsuspecting homeowners who build their home in good faith have found that they are being dropped by their homeowners insurance providers, who are seeing the problems with the drywall as a preexisting and non-covered condition that causes other problems in the home that won’t be covered either.

Some lawmakers, however, are setting out to change this situation. A bill, created in the U.S. House of representatives, would force insurers to continue carrying its clients in an unaltered way, regardless of whether or not the home has the defective drywall installed.

This so-called “Drywall Victim Insurance Protection Act” is designed to help homeowners have peace of mind, and to keep them from having to worry about losing their insurance while they go through the process of repairing the damage caused by the Chinese Drywall. The bill is sponsored by Representative Charlie Meancon, of Louisiana. Some experts suggest that the chances of the bill passing, however, are relatively remote.

Specifically, the bill makes it illegal for an insurance provider to either cancel or to refuse to renew a policy on single-family dwellings based on the presence or the suspicion of the affected drywall. The Chinese drywall was imported from China between 2004 and 2007, and may have elevated levels of the chemicals sulfur and strontium. For more about the drywall and the problems that it can cause, check out the Consumer Products Safety Commission website.

In addition, this bill prohibits insurers from changing either the terms of the homeowners coverage or changing their premiums due to the presence or suspicion of the drywall. It would also allow any homeowners who have had their homeowners policies canceled to sue their insurance company.

The bill comes as a response to reports in the media that some insurers have decided to drop or to not renew the homeowners insurance policies of some customers because of the Chinese drywall. The insurers claim that the drywall defects are due to either pollution or defective construction, both of which are usually excluded from homeowners policies.

One company, Citizens Property Insurance Corp. even told a couple from Colorado that they would not renew the policy on retirement home in Punta Gorda. The company later reversed its decision after it attracted widespread media coverage.

The bill, if it should pass, would be a boon to victims of the defective Chinese drywall. The biggest challenge, of course, is that insurance tends to be regulated by the individual states rather than by the federal government, and so the bill could raise constitutional issues.

Categories: Chinese Drywall

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