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Louisiana Commissioner of Insurance Jim Donelon says homeowners whose properties are contaminated with defective Chinese drywall and who have been covered for more than three years by their homeowners insurer have the right to continue their coverage while vacating and remediating their home.
Additionally, Louisiana Citizens Property Insurance Corporation (Citizens) will now offer coverage for these unoccupied homes with its Builders Risk Renovation policy, Donelon said. Homeowners who purchase this type of insurance from Citizens may pay less because it should be cheaper than the cost of a full homeowners policy.
Donelon said many home owners in Louisiana are vacating their homes after reporting foul smells, health problems and the corrosion of wiring and appliances due to drywall imported from China that contains higher than normal levels of the hazardous chemicals strontium and sulfur. Some insurance companies are canceling these policyholders, citing vacancy or failure to maintain the home in insurable condition.
However, Donelon said, policyholders are protected by a consumer protection law unique to Louisiana. Policyholders whose homes contain defective Chinese drywall, even if the defective drywall constitutes a “material change in the risk,” may continue their coverage as long as they have had their policies with their homeowners insurer for three years and as long as the homeowner reports the issue to the insurer.
“Notification to your insurance company cannot be used against you and your premiums cannot and will not be raised by your insurer for such a report,” Commissioner Donelon added. “I am here to make sure that insurance companies do the right thing and abide by our state’s three year protection rule and all other consumer protection laws on our books,” Donelon said.
Commissioner Donelon said he believes Louisiana’s defective Chinese drywall problem is only going to get worse, necessitating the immediate action he has undertaken.
“Following Hurricanes Katrina and Rita, it’s believed that thousands of homes were rebuilt using drywall manufactured in China. The number of new or renovated homes containing defective Chinese drywall is unknown,” Donelon added.
“It’s a tragedy that many of our citizens who were forced to rebuild their lives and their homes after the hurricanes of 2005 have become victims of circumstance yet again,” Donelon said.
Other measures taken by Commissioner Donelon include:
Far more funding is necessary by Congress to assist home owners, particularly in Louisiana, Mississippi and Florida, who were first victimized by the hurricanes of 2004 and 2005 and are now being victimized by the importation of this defective Chinese drywall, Donelon says.
Such measures being proposed include Act 487 of the 2009 Regular Session of the Louisiana Legislature by Senator Gray Evans and House Concurrent Resolution No. 185 by Representative Burns charging the Department of Health and Hospitals and the Department of Insurance, in consultation with the Louisiana State Licensing Board for Contractors, to investigate the health risks associated with living in homes containing Chinese drywall and to make recommendations to the Legislature prior to the 2010 Session relative to insurance coverage issues.
Source: Louisiana Department of Insurance