Bill Would Protect Insureds With Defective Drywall Complaints

November 18, 2009

U.S. Congressman Charlie Melancon of Louisiana has introduced federal legislation that would prevent insurance companies from cancelling or failing to renew homeowners’ policies as the result of Chinese drywall in their homes.

Aimed at the problem of defective Chinese drywall that is alleged to cause health problems and structural damage in homes, the Drywall Victims Insurance Protection Act would also prevent insurers from changing rates or altering the type or amount of coverage based on problems stemming from the product, according to an announcement on the congressman’s Web site,

The Drywall Victims Insurance Protection Act would also protect homeowners’ rights to sue their insurance companies if their coverage is dropped because of Chinese drywall problems. The bill defines Chinese drywall as drywall that either originated in or was imported from China from 2004 to 2007, or contains abnormal levels of strontium or sulfur.

Many homeowners have said that defective Chinese drywall in their homes emits sulfur, methane and other fumes that have damaged their homes and pose a serious health risk for residents. Reported health problems include nosebleeds, respiratory ailments, headaches, insomnia, and skin irritation.

Approximately 1,897 homeowners – 318 in Louisiana – have filed Chinese drywall complaints with the Consumer Product Safety Commission. Melancon’s announcement said consumer advocates estimate that 4,000 to 7,000 homes have drywall manufactured in China, and the cost of property damage could reach $3 billion.

The problem could become especially serious in Louisiana, where thousands of new homes were rebuilt after Hurricane Katrina, many using drywall manufactured in China.

Melancon said some insurers have cancelled policies for homeowners who report the problem and move to a temporary residence. Citing “vacancy” or “failure to maintain the home in insurable condition” as reasons for cancelling the policies, insurers say they cannot cover homes that are not occupied, according to the announcement.

Preliminary testing has confirmed that imported defective drywall from China contains higher levels of the hazardous chemicals strontium and sulfur. Later this month, the Consumer Product Safety Commission (CPSC) and the Environmental Protection Agency (EPA) plan to release the results of a more comprehensive study of the risks of defective drywall from China. Until more tests are completed, homeowners do not have clear direction on what steps need to be taken to repair their homes.

Source: Office of U.S. Congressman Charlie Melancon

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