Drywall causing insurance pain

Homeowners with Chinese drywall faced with rejected claims, dropped coverage

gagostin@bradenton.comOctober 8, 2009 

Homeowners with Chinese drywall could have yet another issue to tackle.

Aside from health concerns and displacing homeowners, toxic drywall can cause roadblocks in homeowners’ insurance policies. In most cases, insurance companies are likely to reject claims over Chinese drywall and, in some circumstances, insurers will not renew policies.

“That’s scary because those of us affected by it are already stuck in a bad spot between our mortgage and not being able to live in a home that was paid for,” said Lakewood Ranch resident Kristin Culliton, who has a class action lawsuit pending against Taylor Morrison over Chinese drywall confirmed in her home in March 2008.

Culliton said her insurance policy through Nationwide was renewed in September, but she realizes she could be at risk of cancellation.

“It’s one more thing to worry about,” Culliton said.

Chinese drywall has been shown to emit sulfuric gases that cause respiratory problems and symptoms such as itchy eyes and nose bleeds. Homeowners also have reported corrosion to electrical components such as air conditioning units and appliances.

Parrish resident Grant Reid, whose Crystal Lakes home has Chinese drywall, is concerned about what will happen when he tries to get new insurance after his insurer State Farm exits the property insurance market.

“That’s a concern,” Reid said. “If we get dropped, I don’t see how any other company would insure us.”

The state-backed Citizens Property Insurance recently canceled the policy of a Punta Gorda resident’s home over Chinese drywall damage.

Citizens Property Insurance notified Jim Ivory his policy would not be renewed because it was unsure if damages from Chinese drywall had been repaired. Citizens also denied a claim Ivory filed earlier in the year over drywall damage caused to his home and appliances.

Citizens Property Insurance does not cover Chinese drywall because it is considered existing damage or a builder’s defect.

Denying insurance claims or coverage due to Chinese drywall seems to be relatively new for homeowners.

The Florida Department of Financial Services received a total of 38 complaints between 2003 and October 2009 regarding Chinese drywall insurance issues.

Of those, five were complaints of claim denial and there was one complaint of non-renewal.

Culliton is frustrated her insurance company won’t cover her claim.

“I called my insurer several times to see if it was covered under my policy and it wasn’t,” Culliton said.

State Farm does not cover damages from Chinese drywall nor does the Bradenton-based DesChamps & Gregory. Alden Weichel, president of Bradenton Insurance, said most insurers his company deals with do not.

“It’s not a covered peril such as fire, a hurricane or accidental water damage,” said Justin Glover, spokesman for State Farm.

State Farm considers on an individual basis whether to renew policies, Glover said.

Citizens is clear about its coverage responsibilities

“The existence of Chinese drywall would not cause a policy to be dropped, however if there is known damage to a home for whatever reason Citizens would not renew a policy until the damage is fixed,” said John Kuczwanski, spokesman for Citizens Property Insurance.

Bonnie Corsi, personalized manager at DesChamps & Gregory, said the Bradenton insurance company has so far received just one claim over Chinese drywall. That claim was refused.

Filing a claim over Chinese drywall damages may be the biggest risk factor for homeowners in terms of not being renewed.

“As long as no claims have happened, it shouldn’t be a problem,” Weichel said. “If a claim has come out it could face nonrenewal.”

Weichel said insurers, in general, are concerned that if one claim is made, it could be the first of several.

“If you have a family of four or five and the mother is making a claim she can’t sleep at night and is having ailments, they may be thinking a year from now another family member might start having ailments and we’ll have another claim,” Weichel said.

— The Miami Herald contributed to this report.

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