Almost everyone is at least loosely aware of the Florida Chinese drywall situationโin fact, itโs not just Florida, itโs all over the country.ย In short, โChinese Drywallโ (which is also sometimes referred to as โContaminatedย Drywallโ or โTainted Drywallโ) is drywall imported from China between 2004 and 2008, which was shown to emit sulfurous fumes suspected of causing corrosion of electrical wires and plumbing. According to research by the AP, over 500 million pounds of the stuff were brought into the US. The gases the drywall emits over time cause significant property damage, affecting HVAC systems, electrical wiring, copper plumbing, and appliances.
The Details
Citizens Property Insurance Corporation is Floridaโs homeownersโ insurance safety net. It was created by the Legislature in 2002 to offer property coverage to Floridians without private insurance options. The problem, of course, is that itย is now the largest home insurer in Florida. As with all bureaucracies, it grew far beyond its intended design and quickly became the โgo-toโ insurer when the common carriers decided that a home was too close to the ocean, too old to be insured, or found some other reason why they would opt out. Now, citizens have recently sent non-renewal notices to policyholders who have filed claims for damage because of defective Florida Chinese-made drywall in their homes.
Oops.
The notices specifically state that policies wonโt be renewed if the damage isnโt repaired within 6 months of the date of notice. However, the Florida Home Builders Association (FHBA) pointed out that neither the state of Florida nor any governmental entity to date has specified or approved any methods for verifying if indeed a homeowner has remedied the situation or met the requirements for continuation of insurance.
Additionally, what is the homeowner expected to do during the time that the work is to take place? According to the FHBA, estimates for replacing drywall and corroded components in a 2,000 sq. ft. home can go as high as $100,000.ย As many as 36,000 homes in Florida and 100,000 nationwide are thought to contain the imported wallboard.
From the article on HousingZone:
Citizenโs Public Information Manager John Kuczwanski says the insurer must work within the confines of its stated policies. โFor any of our policy holders, if thereโs any known damage to a structure, we require proof the damage has been remediated. That could be anything related to the structure,โ he says, noting that there are several minor differences with the drywall.
โThink about it in terms of roof repair or any other home repair. In this case, corrosion leads to a likely future claim for what is known as a โperilโ, such as fire or a water leak. We consider the drywall issue to be a builder defect,โ says Kuczwanski. โCitizens knows that itโs a very unfortunate situation. And people are attempting to find ways of becoming whole again. Unfortunately we have to work within the confines of our policies.โย
โIf we see multiple policy cancellations, I have a feeling there will be government intervention,โ Fitzsimmons says. โI think there will somehow be away for the big insurance companies to amend their policies. But itโs been a perfect storm from (Hurricane) Katrina to the downturn to the drywall.โย
Wrapping It Up
Citizens Insurance is claiming to review each policy on a case-by-case basis. However, they donโt feel that insurance should have to replace the drywall or make subsequent repairs. The trouble with this is that most contractors cannot possibly remedy entire neighborhoods worth of homes since it would quickly put them out of business. To nail down this point, there are currently 12 class-action lawsuits in 33 states.
Meanwhile, federal and state agencies in Florida and other states are investigating the manufacturers and suppliers of Florida Chinese drywall.
