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Florida Insurer Says its Unclear If Policies Cover Chinese Drywall Damage

Oct 21, 2009 | Parker Waichman Alonso LLP

Florida's largest insurer says it has received at least two dozen claims over damage caused by defective  Chinese drywall.  However, Citizens Property Insurance Corp. has not paid on any claims, and says it is unclear whether Chinese drywall damage will be covered by its policies.

According to HeraldTribune.com, an executive with Citizens said that because of  the scope and complexity of the Chinese drywall problem, its attitude is that  "as a state and as a nation is that we need to figure out what the cure is for this malady."  

However, despite reports in the media, Citizens said it is not canceling or refusing to renew policies on homes with Chinese drywall.  But if the Chinese drywall leads to other damage, such as corroded wiring or plumbing, that existing damage may not be covered by a new policy, HeraldTribune.com said.

Questions about insurance coverage are just one of the factors that has left many Chinese drywall homeowners in limbo.  They are still awaiting word as to whether or not there will be a Chinese drywall recall.  U.S. officials are attending the U.S.-China Product Safety Summit in Beijing today, and are expected to press Chinese officials on the drywall problem.  Yesterday, we reported that a spokesperson for Inez Tenenbaum,  head of the Consumer Product Safety Commission (CPSC), said she would appeal to Chinese drywall manufacturers to do “what is fair and just”.  It was not clear whether that meant asking the Chinese firms to provide financial help to homeowners with the defective wallboard, or issuing a recall of the material.

So far the Chinese have been noncommittal regarding any type of solution to the drywall disaster.  And some in the U.S. have expressed frustration with their stance.  For instance, earlier this week, Senator Bill Nelson, D-Florida, told News-Press.com said his own visit this summer  with the Chinese General Administration of Quality, Supervision, Inspection, and Quarantine resulted in nothing but “a bunch of bureaucratic gobbledygook.” Nelson found his interaction with the head of the Chinese agency frustrating, and told News-Press.com that he got “fed up” when it became obvious the agency was not going to respond.  The summit that begins tomorrow involves the same Chinese agency that frustrated Sen. Nelson.

The CPSC has received over 1,500 complaints regarding Chinese drywall from homeowners across the country. Gases emitted from Chinese drywall are being blamed for significant property damage, including damage to HVAC systems, smoke detectors, electrical wiring, metal plumbing components, and other household appliances. These gases also produce a sulfurous odor that permeates homes, and cause metals, including air conditioning coils and even jewelry, to corrode. People living with Chinese drywall have also suffered eye, respiratory and sinus problems that may be linked to the gases.