Florida's Citizens Reconsiders, Renews House With Chinese Drywall

Florida's state-backed property insurer has taken a second look at a home with corrosion from defective Chinese drywall and decided to renew its homeowners' insurance policy on the house after all.

Citizens Property Insurance Corp. had previously told James and Maria Ivory that not only was their claim for damage from the drywall not covered but also their homeowners policy would not be renewed because of the drywall damage.

After the homeowners complained, Citizens conducted a second and more in-depth inspection and decided it would renew the policy. Inspectors determined that the damage was not as bad as first thought, according to John Kuczwanski, public information manager for Citizens.

"The initial determination to nonrenew was due to the existence of known damage (corrosion) that could lead to a greater risk for a claim filed for a covered peril (fire or water leak)," Kuczwanski wrote in an e-mailed explanation. "Based on the concerns of the policyholder, we conducted a more in-depth inspection and determined the progression of the corrosion had not reached a point to where there were significant concerns that a covered peril claim would be filed. Therefore we rescinded the notice of non-renewal."

The Ivory family still faces the problem of replacing the drywall. Homeowners policies from Citizens or other insurers do not typically cover replacement of defective building materials.

"The home has Chinese drywall. Our policies do not cover replacement of the drywall, nor do they cover the damage to the electrical and plumbing systems resulting from corrosion. But the homeowners will still have coverage with Citizens," Kuczwanski confirmed.

Thousands of homeowners in the U.S., many of them in the Southeast, bought houses constructed with Chinese drywall between 2004 and 2008. The imported drywall has been found to emit sulfuric fumes and corrode pipes.

Some homeowners have filed lawsuits against Chinese drywall manufacturers but even if those are successful, which many observers doubt, they could take years. In some cases, the owners can't live in the houses but still have mortgages on them they have to pay.

The federal government is studying the problem and considering some sort of relief for homeowners.

The original decision by Citizens to nonrenew the Ivory policy raised concerns that more homeowners might find their policies in jeopardy if they tried to file claims related to drywall. Insurers could decide to cancel policies because the drywall could eventually cause covered damage or because, in some cases, the houses are now vacant.

The Associated Press reported that two other insurers in Florida have canceled policies after owners filed claims related to Chinese drywall.

Kuczwanski said the issue of Chinese drywall is "still in its infancy" and Citizens, the state's largest property insurer, has only had only 24 drywall claims filed.

"We understand this is a trying issue for those impacted and are encouraged by the involvement of many levels of government in attempting to solve this unfortunate situation," he said.