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Bill Would Prohibit Insurers From Dropping Chinese Drywall Homes

On November 17 a federal bill, the "Drywall Victim Insurance Protection Act," was introduced in Congress. The bill was sponsored by Rep. Charlie Melancon, a...
November 24, 2009

On November 17 a federal bill, the "Drywall Victim Insurance Protection Act," was introduced in Congress. The bill was sponsored by Rep. Charlie Melancon, a Louisiana Democrat and former PIA member. It would prohibit insurers from canceling or modifying coverage of homes because they contain defective Chinese drywall and would allow homeowners whose polices are dropped or not renewed for this reason to sue their insurers.  The bill is in response to reports that some insurers, claiming that the drywall problem is not covered in policies under pollution or defective construction exclusions, have dropped or may drop or not renew some homeowners insurance policies.  Michael Barry, a spokesman for the Insurance Information Institute, said the proposal "would have little or no effect" because "insurance is regulated at the state level, and any legislation that affects policyholders would have to originate from statehouses, not Congress."

Melancon's bill drew praise from U.S. Sen. Bill Nelson (D-Fla.), who wrote 11 insurance companies to express outrage at cancellations. "While homeowner insurance largely is governed by state laws, it doesn't hurt to press wherever possible, and Nelson certainly supports Rep. Melancon's effort," said Nelson spokesman Bryan Gulley.

On Monday, November 23 the Consumer Product Safety Commission (CPSC) released results from a major indoor air study of 51 homes along with initial reports from two studies of corrosion in homes with Chinese drywall.

Although most of the problems with Chinese drywall have been reported from Florida and Louisiana, seven Hampton Roads, Virginia  homes built with the tainted drywall will be the focus of the first federal trial involving the building material. The trial is set to go forward in New Orleans on January 25.

Bill Would Ban Dropping Chinese Drywall Homes (Bradenton FL Herald 11/18/09)

CPSC Statement On Studies of Chinese Drywall (CPSC 11/23/09)

Seven VA Homes in First Drywall Trial (Virginian-Pilot 11/23/09)