Insurers dropping Chinese drywall policies: Homeowners at risk of foreclosures

[debbierlus]

WEST PALM BEACH, Fla. – James and Maria Ivory's dreams of a relaxing retirement on Florida's Gulf Coast were put on hold when they discovered their new home had been built with Chinese drywall that emits sulfuric fumes and corrodes pipes. It got worse when they asked their insurer for help — and not only was their claim denied, but they've been told their entire policy won't be renewed.

Thousands of homeowners nationwide who bought new houses constructed from the defective building materials are finding their hopes dashed, their lives in limbo. And experts warn that cases like the Ivorys', in which insurers drop policies or send notices of non-renewal based on the presence of the Chinese drywall, will become rampant as insurance companies process the hundreds of claims currently in the pipeline.

At least three insurers have already canceled or refused to renew policies after homeowners sought their help replacing the bad wallboard. Because mortgage companies require homeowners to insure their properties, they are then at risk of foreclosure, yet no law prevents the cancellations.

"This is like the small wave that's out on the horizon that's going to continue to grow and grow until it becomes a tsunami," said Florida attorney David Durkee, who represents hundreds of homeowners who are suing builders, suppliers and manufacturers over the drywall. "This is going to become critical mass very shortly."

During the height of the U.S. housing boom, with building materials in short supply, American construction companies imported millions of pounds of Chinese-made drywall because it was abundant and cheap. An Associated Press analysis of shipping records found that more than 500 million pounds of Chinese gypsum board was imported between 2004 and 2008 — enough to have built tens of thousands of homes. They are heavily concentrated in the Southeast, especially Florida.

The defective materials have since been found by state and federal agencies to emit "volatile sulfur compounds," and contain traces of strontium sulfide, which can produce a rotten-egg odor, along with organic compounds not found in American-made drywall. Homeowners complain the fumes are corroding copper pipes, destroying TVs and air conditioners, and blackening jewelry and silverware. Some believe the wallboard is also making them ill.


MORE.................http://news.yahoo.com/s/ap/20091015/ap_on_re_us/us_chinese_drywall

[SPedigrees]

1. As the health insur cos do, so do the home owner's insur cos.

Claim denial for pre-existing wallboard.

[Orrex]

2. Why aren't the builders and/or importers held liable?

The insurance companies are acting in an unconscionable--but entirely predictable--fashion, but why should the builders who used these toxic materials not share some liability?

[debbierlus]

12. The court cases are just starting...it will be awhile to see how it all shakes out.

[FarCenter]

3. The builders didn't put on a proper coat of lead paint to seal the drywall

[omega minimo]

4. Class Action Lawsuit -- Recced for visibility. This is important.

[debbierlus]

5. This is going to be a MAJOR economic problem....

[omega minimo]

6. This is the "cheap crap from China" chickens coming home to roost.

[debbierlus]

7. I swear they recycle their toxic waste and sell it to us...

Toys, clothing, all sorts of shit...

And, what can we do? We don't make anything anymore, so we buy their cheap ass crap that breaks in a couple months and poisons us. Plus, we have sold a mass amount of our manufacturing equipment to them, so we don't have the physical means to manufacture it.

NAFTA was just a brilliant idea.

[omega minimo]

8. How bout a class action suit against NAFTA/GATT?

[debbierlus]

9. Now, there is an idea...

I have no idea if that is feasible...but it warrants explanation.

[drm604]

10. It seems like the least guilty party is the one getting screwed here.

It sounds like this ends up with the bank taking the house even if the homeowners have been completely responsible, paid their bills on time, and done nothing wrong.

There is something seriously wrong with a system that allows this.

I wonder how the corporate interests are going to convince the teabaggers to protest against these innocent homeowners?

[debbierlus]

11. There is something wrong with a system that allows the use of this contaminated shit

...to begin with....

[lynne]

13. Doesn't anyone ever read their insurance policy? Defective products are NOT covered on ANY -

- homeowners policy. Just like flood, mold, earthquake and war. All NOT COVERED under a basic homeowners policy. The contractor is responsible in this situation for using inferior products and the claim for damages should be made under the contractors commercial policy. I would imagine that the contractors insurance company will then go up against the manufacturer of the product for damages.

Yes, the company can cancel as the risk has changed and is now outside the underwriting guidelines. Replacement coverage is usually available through a pool-type risk sharing association or via a specialty market.

I would recommend that everyone pull out their homeowners policies and read the EXCLUSIONS section of the policy.

[ConsAreLiars]

14. The "EXCLUSIONS section of the policy" is rthe same as all the others written by criminal predator

gangsters.

They basically say "If you are going to try to claim any benefits beyond whatever token amounts we choose to dole out, you are going to be totally fucked over, SUCKER! We're in this scam to use your fear to steal you blind and the kick you in the groin if you expect any different result. And our henchmen and underlings and suck-ups and the great reliable mass of braindeads will tell you that it's already in the fine print of your contract, so HAHAHAHA!"

[annabanana]

15. am kick . . ... . . n/t

[onethatcares]

16. abundant and cheap

well that worked out well. Maybe we can get the Chinese to make and sell us tires too?

[AllentownJake]

17. These Homeowners are going to have little recourse

Most construction companies incorporate individual projects as LLC. At the time the development is done, the LLC has very little money in its accounts to compensate home owners. Legally the big pockets have protected themselves with a series of legal entities.

They will still have responsibility for the note owed, since the bank isn't responsible for the inspection on a new house before the close.

More signs of a system with an epidemic of fraud during the Bush Administration.