McCarty: Chinese Drywall Not a Covered Peril

An unexpected piece in the Chinese drywall puzzle has just been uncovered. Florida Insurance Commissioner Kevin McCarty has made clear that in his opinion insurers have no obligation to cover defective Chinese drywall because it is not a covered peril. The Sarasota Herald Tribune reports that at a meeting with state legislators earlier this week, McCarty told them the insurance industry is not responsible for the drywall problem and that ultimately the federal government would have to come up with a funding solution. The November 4 article by Lloyd Dunkelberger quotes McCarty saying: “This is not a covered claim. This is not a covered peril. We need to come up with a plan for a funding source to take care of this.† McCarty described the Chinese drywall issue as a “very, very significant problem,† and stated that the financial responsibility lies with the Chinese drywall manufacturers rather than insurance companies. McCarty said it would be “unfair† for state regulators to try to force insurers to pay for something that is not covered in insurance policies. The commissioner cited estimates that about 100,000 homes may have been impacted nationally and could result in $8 billion to $10 billion in repair costs. Some estimate about 35 percent of those defective buildings may be in Florida, he added. While it was unlikely that insurers would drop customers solely because of Chinese drywall, there was a possibility companies would drop coverage if residents moved out of their homes, McCarty said. Check out I.I.I. background information on Chinese Drywall.

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