I can see the pols stepping in and attempt to reconcile this event to where both sides are appeased, but there are going to be some losses somewhere.

Pertinent info from the article:

"John Kuczwanski, a spokesman for the Ivorys' insurer, Citizens Property Insurance Corp., said their claim was denied because the drywall is considered a builder defect, which is not covered under the policy. It also considers the drywall a pre-existing condition that could lead to future damage, which is why the company won't renew the policy unless the problem is fixed."

@Nighthawke:

Unfortunately the losses probably will not be suffered by the companies that deserve to lose money - the Chinese drywall suppliers.

For down the road when I do eventually buy a house: is there a way to tell if the home is made with this drywall before you buy it? I don't expect the homeowner/seller/agent to be all that forthcoming about something like this.

What we need is single-payer homeowner insurance; I'm sick of these insurance companies who only want to cover young, healthy homes with no issues, and who cut and run as soon as you make a claim. I'm only semi-joking; I fail to see why for-profit companies should offer any type of insurance at all any more.

What I am failing to understand is why are they not going after the builder?

It sucks for the homeowner, but I really don't see that this is the home insurers fault.

I also know many of the builders are out of business, but blaming the HOI company doesn't make too much sense to me.

FYI- most of the houses built with this drywall were in Florida and built between 2004 and 2007. Aside from the sulphur smell, another indicator is blackening of copper pipes (check your water pipes and condesors in air conditioners). Pipes should have a relatively clean copper appearance- if they are BLACK, you probably have a problem.

@Kimaroo - No Stars Upon Thars: It was a short term problem during the building boom, primarily during the 05-06 time period. By now, you should be seeing soot and odors if the drywall was installed. Additionally, there was only one supplier that brought in the Chinese drywall - I can't remember their name though (Kamenstein or something like that). If there are rooms with exposed drywall, that might help.

At least that is what I remember finding out while in the process of buying our house. Ours was built during the boom, but it appears that we were ok.

@Cant_stop_the_rock: Pre-exisiting condition! Maybe we need a public option.

While this is a builder defect, I agree, it is going to be tough to go after builders now that so many are shuttering (our builder is shuttered, they built an entire planned community in Maryland 20 years ago). Since the effects of the drywall are now known, I think it would make more sense to cover the non-affected problems and simply require a rider to handle the Drywall o' Doom.

@Anachronism: As much as I despise insurance companies, I have to side with them on this one. They are providing insurance, not warranty. I would absolutely love to file a claim with my HOI for all the builder's mistakes, poor craftsmanship, and faulty/junk materials that were used in my own house -- but there's no chance I would win that case. Unfortunately, this issue needs to be taken up with the builder and manufacturer.

Insurance companies are leeches. They need be honest and pay the claims and then go off and sue the builders/suppliers on their own.

@Anachronism:
Seconded. It shouldn't be the insurance company footing the bill this time.

Okay , the owners are getting screwed , but not by the insurance companies here. I hate this as much as anybody , but truthfully , they do have some options. But like most shitty situations ,the have to choose the option that is least bad , not most good.

Strategies:

1) Gut the house. Drywall is pretty easily removed (in MOST cases). Its removal does lend itself to a D-I-Y project . Get new drywall installed and be glad that it didn't cost more than it did. I would pursue this option real soon before some government agency decrees that this Chinese shit cannot be disposed of like other drywall. This would seem to be cheaper than tearing down the house and starting over.

2) Cut your losses and let the bank have ITS house back. (Stop making payments first) . Maybe even secure another house before your credit is ruined by letting the place go into foreclosure. Save those house payments that you are not making and use that for a down payment on a house with American or Canadian drywall.

3) Offer to split the cost of remediation with your lender in lieu of foreclosure. Really ,it's their house until it is paid for , and with this drywall problem they are going to lose most of their money if it goes into foreclosure because they will have to disclose this defect. It's worth a shot.

4) Go back in time and hire a builder that will not cut corners and intall this worthless shit. Set the WayBack machine to about ...2003 or so. This is the most problematic option because the WayBack machine only existed on the old "Bullwinkle" show.

Here's the hell of all this : There is no one to sue for damages. The owners have been injured (financially)and made sick (physically) and I'll bet that you could not locate the manufacturers of this stuff with a bounty hunter. Try suing a builder. If you have not already signed your rights away in arbitraton , they typically have no assets in their own name to attach. I'm getting tired of "free market" zombies telling us that the only code we should observe is caveat emptor.

Ok this can be looked at in two ways, for those of us that feel the insurance companies are in the the right it would prevent people from building their houses out of cardboard and use straws glued together for piping then saying the insurance company is responsible. For those who feel they are in the wrong, why is the insurance company not responsible to inspect that which they are going to insure and then be held accountable for that offer of insurance.

I can see being able to cancel and to do none renewal but for a claim already filled, it is an interesting line between warranty vs insured. I see the claim it is a builder defect powerful here and perhaps the ultimate claim for the 'new houses' but perhaps lacking for one which was build before the insurance was applied for!!

@Cant_stop_the_rock:

Just so you know - CPIC is the insurer of last resort in Florida for homeowners that cannot get insurance from private companies (especially owners that have beachfront property). They are essentially an accounting fiction that pretends to insure against loss. In reality ,they don't have anywhere near enough in reserve to pay out after a real catastrophe. If the BIG ONE hits ,they will in essence pass the cost on to the taxpayers of Florida to make good on their promises.I have a home there and use a private company. CPIC is like the DMV of insurance companies.They could give a damn if you are happy or not.

Here's a question (not loaded): how is this any different than an auto claim caused by a manufacturing defect?
When Ford & Firestone collaborated to produce tires that pop and Exploders that roll over, were all of the claims against the rolled Exploders denied, and auto policies cancelled?
Anyone know?

@sevenwhitehorses: The insurance company does inspect what they insure, but initially finding this defect would be next to impossible. Inspectors do not run tests on drywall composition. The closest thing would be finding the presence of obvious mold problems.

Problem is, homeowners insurance typically only covers the following: protection for man-made or natural disasters; damage due to fire, storms, etc.; loss of possession up to a particular dollar amount; liability coverage; and dwelling coverage.

However, I do agree that HOI should cover the consequences of whatever stinky drywall causes. (What are they, BTW?) I would see it equivalent to a water heater failure. The insurance company will not cover the cost to replace the water heater, but it will cover the cost to repair the water damage.

Am I the only one who had to read the headline multiple times before figuring out that this wasn't an issue with stinky cheese drywall?

@Anachronism:
I agree with the insurers as well. A CD (construction defect) claim should be filed against the builder. This isn't the type of thing a homeowner's policy should cover.

However, I don't think the insurance carriers should be dropping insureds for having the bad drywall. Just deny the damn claim.

@whateverthisis:
It's not the insurance companies' jobs to sue on construction defect. The homeowners need to file that type of suit.

@Wireless Joe: Because they make so much goddamn money when they don't have to pay claims and drop those who do claim on their insurance.

This is why we need regulation. Free market be damned.

They're not exactly getting dropped without notice. There are already laws that require insurance companies to notify customers a certain time in advance if they aren't going to be renewed (different per state, but I believe 2 months is average). Also, if an insurance company does renew a policy, they must stay on that location for a certain number of years as well (also varies by state). Some states, like Florida, only give insurance companies the option to non-renew every two or three years, instead of just every year.

As for dropping customer after offering insurance, an insurance company has a certain amount of days (usually 60) to decide if they want to stay on the risk. This is a discovery period for the insurance company if they find any information was falsified or omitted accidentally.

Honestly, this is just a part of the business. Some company will write the home, it just may be a bit more expensive. It's better for a company to drop coverage (given advanced noticed) and give the customer a chance to find proper coverage, than to deny a claim the customer assumed would be covered. I'd rather be informed two months in advance of a renewal, than to have this sprung up on me after the fact.

/Full disclosure, I work for a P&C insurance company, with a pretty good track record on claims. As for the talk of regulation, the industry is split. There are some who would welcome federal regulations because state laws vary so much.

@Kimaroo - No Stars Upon Thars:

Look at the copper pipes and wires. If they're black, good likelihood the drywall is there.

It's unlikely that being dropped from your insurance will result in foreclosure. The mortgage company will just attach its own insurance policy to the property and bill you for it at a premium several times what you used to pay.

At least that's what my mortgage company did when they retroactively decided that the insurance policy I purchased for my new home, which they signed off on and approved, was not sufficient.

I can't see how in the world this could be covered by the homeowner's insurance company.

I'm perplexed as to why anyone would think a claim against them - rather than a suit against the builder or manufacturer - would be appropriate.

Another issue...already underwater,stressed homeowners might decide to torch the house instead of spending 40k for drywall replacement...

@teke367: Citizens is the insurer of last resort in Florida; it's a state-type agency. Getting home insurance in Florida is...unique.

Never thought I would be so happy about having bought a house built in 1958......

If they can't even insure with Citizen's the foreclosed property won't even be able to be resold by the bank. Of course the bank isn't going to fix the problem with the house, so are they just going to sit and rot? Maybe bulldoze them?

Don't think people really understand that when they are saving those few dollars or a lot of dollars in some cases over time may winding up costing a lot more in the end.

These Chinese products, either building, electronic or anything else, have a warranty of 30 seconds or 30 feet! Many of the products coming from China have no repair facilities in place and if they claim that they do, what kind of part supply?

As a result the American people are being taken to the cleaners with toxic disposable products.

Thank you, greedy CEO's who thought they saved money by off-shoring manufacturing to places that have NO rules or checks and balances.

Thank you, elected officials that created tax BENEFITS off-shoring jobs and continue to allow this happen!

You should be able to ask the builder about specific building materials. You'd want to look for things sourced from the big US providers: USG, National Gypsum, LaFarge, or Georgia Pacific.

@Snarkysnake: People's rights? Social justice? Sounds like a bunch of pinko commie rag to me.

@Snarkysnake:

Why do you hate the DMV?

It took me about 15 minutes to drive to the DMV, on a Friday, stand in line, and get my tag renewed.

I spent 30 minutes in line at a private business to have my 5 minute emissions test done.

Which of these is more efficient? Hrm...

@Snarkysnake:

NO NO NO NO NO NO NO. #1 is *ABSOLUTELY NOT AN OPTION*.

Are you trying to kill people? You *DO NOT* remove moldy, mildewed, or "toxic" (asbestos, 'chinese,' etc) drywall on your own. EVER.

The companies that do this kind of removal/replacement frequently use rebreathers and other hazmat gear because the work is so incredibly dangerous.

You don't want to breathe in the dust. You don't want to get it on your posessions. In some cases, you don't even want it coming into contact with your skin.

@Scoobatz:

Homeowner's insurance doesn't cover natural disasters or storms. Those are considered "acts of god."

Homeowner's insurance also doesn't typically cover many types of water damage, including mold/mildew.

Most frequently, it ONLY covers loss due to theft or fire.

@RvLeshrac:

Of course, I'm an atheist, and as such, I'd sue the religion right out of any insurance company claiming an "act of god." They need to prove that "god" exists before they can go disclaiming "god's" actions.

@Snarkysnake: Sorry, but a home containing said Chinese drywall is essentially contaminated. Simply replacing the drywall is not going to solve the problem. You have to tear the entire house down, perform environmental remediation, and rebuild from scratch using better-quality materials.

(This, incidentally, is why I rent. Pretty much any home built in the last 20-30 years is nothing but particleboard, glue and vinyl. I'm surprised any of them last longer than a couple decades...)

@Kimaroo - No Stars Upon Thars: Have a reputable home inspection company (licensed and insured) inspect the home prior to purchase ($150 - $300 worth every penny) if the home was built during the suspect time period, ask the home inspector to look for that drywall specifically, and list the results in their inspection report for you.

I also suspect that environmental testing companies will soon have a test to see if the drywall is defective or not, given all the recent problems. They can test for mold and other problems, soon I'm sure they will regularly test for toxic drywall.

@RvLeshrac: Recently I have had very good luck at the DMV, but I think that computer technology has helped to ease the strain on resources at the DMV. I can renew my vehicle registration using the internet, and I can renew my licence every other year for 5 years (meaning, I only need to physically walk into the DMV once every 10 years primarially to have my photo taken again). A few years ago, it was a big pain in the neck standing in multiple lines and filling out 15 different forms.

@dwarf74: Desperation. Homeowners try to pursue corrective action with the builder and reach a brick wall because nothing yet (that I am aware of) definatively links the smell and corrosion of metal to the drywall, therefore in the eyes of the builder there is no defect and therefore no need to repair the house. Homeowners who are concerned about the health impacts and damage being caused to their home then turn to their own insurance company as a last effort to get the house repaired.

@Wireless Joe: Because no one else would be willing to insure everything that people want insured.

@thrlsekr: It was not necessarially a money saving issue, it was a demand issue. You have a nationwide housing boom that carried on for several years. Domestic manufacturers were able to keep up with normal demand until the 2004 Huricane season ravaged Florida followed by Katrina in 2005. Homeowners trying to repair/rebuild their home in 2005 and 2006 caused a surge in drywall usage in the South that manufacturers were not able to meet, so they turned to China as a source.

[www.popularmechanics.com]

@vq35de:@RvLeshrac: What? The drywall contains a bunch of sulfur. This is not the same as asbestos or mold. It's probably not incredibly safe, but it *shouldn't* be that much more of a health hazard than regular drywall (which imo, is not incredibly safe to deal with).

@RvLeshrac: In my own unfortunate experience, I can tell you that my policy covers water damage.

We had a new refrigerator delivered and installed. The water line was not secured tight enough and flooded our first floor overnight, damaging our hardwood floors, walls, basement ceiling and floors. My insurance company covered the cost to repair everything.

@Cant_stop_the_rock: I'm going to go out on a limb here and say that this stand by the insurance company isn't really unreasonable.

True, it's not the homeowner's fault. But it is a building defect for using substandard materials. The builder should pay. Or course, since they usually file bankruptcy shortly after they're done with construction the homeowner is left holding the bag. But that's not the insurance company's fault.

Seems to me the only recourse for the homeowner is to go after the manufacturer of the drywall. In an era of free trade such as this the government should help them.

@Rachacha:

Also, many of the builders may very well no longer exist, having gone out of business when the housing market collapsed.

Sweet, home insurance industry is trying to compete with medical insurers!

@Nighthawke: Maybe affected homeowners should file a class action suit against the idiots that keep allowing poisonous, dangerous and defective Chinese products into America. There has to be someone in charge of all this whether it's US Customs or someone else.

And in past cases (Mattel, Walmart) it's more than likely one incredibly large company that really needs to get chunks taken out of their revenue to make the final user whole in this. I'm sure the builders (still in business ones anyway) are angry at their suppliers for being possibly deliberately duplicitous about the quality and thus damaging the contractors' reputations.

@chilled: can't say as i'd blame'm.

@Snarkysnake: "I'm getting tired of "free market" zombies telling us that the only code we should observe is caveat emptor."

exactly. how do people think we got INTO all the current messes in the 1st place?