Miami Herald: 2nd Florida insurer drops policy over Chinese drywall
Oct 15, 2009
The Miami Herald published this article on October 15, 2009
Another insurer is dropping customers whose homes were built with Chinese drywall, which has been blamed for corroding metals in homes and causing breathing problems.
BY NIRVI SHAH
A homeowner in Hallandale Beach lost his property insurance coverage because the house was built with suspect Chinese drywall, making Universal North America the second insurer in Florida to take action against residences that have the imported material.
In a letter last month, Universal said it would cancel the policy — not set to expire until next July — because the home had an “unacceptable condition.”
The homeowner, who didn’t want his name used, had filed a claim over the summer because of damage suspected to have been caused by drywall. In September, the owner got a letter that said “the dwelling was built with Chinese drywall, which has been shown to have adverse long-term effects on the plumbing and other dwelling components.”
Universal, a subsidiary of Universal Group Inc. in Puerto Rico, is the 12th-largest residential insurer in Florida, with about 105,000 policies. The company did not return phone calls Wednesday.
The townhome won’t have coverage from Universal after Monday, but the homeowner has a new policy from Citizens Property Insurance.
It might not do much good, said Coral Gables attorney David Durkee, who represents the homeowner. State-run Citizens, like other insurers, is denying claims because homeowners policies don’t cover contamination or building material defects. But once a claim is filed, Citizens is giving homeowners six months’ notice that their policies won’t be renewed if they don’t fix the problems.
If homeowners don’t report the problems, they could end up without coverage in the future anyway.
“If an insurance company can prove you had a condition in the home that changed the risk, you didn’t tell them about it and they can prove they would either have not continued to write that policy or they would have increased the premium, they can rescind your policy after the fact,” Durkee said. “There is no place for these folks to turn.”
Florida Department of Health tests show the imported drywall contains sulfur compounds that could cause an odor. But there is no direct link so far between drywall and health and corrosion problems homeowners are experiencing.
Last month, Citizens told a Punta Gorda homeowner with Chinese drywall that his policy would not be renewed when it expires next March because the company has no proof that damage attributed to the drywall has been repaired.
For homeowners who have filed claims related to imported wallboard, “it’s an unfortunate Catch-22,” Citizens spokesman John Kuczwanski said. The nonprofit insurer has received 24 claims for repairs from property owners with Chinese drywall.
There is no single proven method of fixing homes affected by Chinese-made drywall.
A few builders have taken on repairs, including Miami-based Lennar, and GL Homes, by stripping homes to their studs and rebuilding.
Homeowners should be going after builders and suppliers, Kuczwanski said, acknowledging that many have, so far to no avail.
“If you buy a new car and it has a faulty switch,” he said, “you’re going to go back to the manufacturer.”