Chinese drywall breeds insurance fears

HAMPTON ROADS, Va - Homes once full of life, and children, now sit empty across Hampton Roads. Boxes fill rooms at townhomes in Newport News, just a few feet from outlets that expose corroded wires. The corroded wires are just one of the signs of defective Chinese drywall. In Virginia Beach, beds are still made. However, a little boy's room is empty. His father felt he had to move his children out, away from the stench and potential health hazards of the drywall.

"You just have no clue of what damage it's causing, and how frustrating it is to have a beautiful home and have to walk away from that home," homeowner Larry Ward told WAVY.com.

Ten On Your Side has been there as frustration took homeowners to local lawmakers and to Capitol Hill. In October, homeowners presented 1st District Congressman Rob Wittman with clothes from a house with defective drywall. Wittman replied, "Wow! I can smell sulfur."

The homeowner explained, "this is what we live with everyday."

Since the beginning of the year homeowners have been looking for help to pay the costs of replacing defective Chinese drywall so they can live in their homes again.

Ward explained, "The quotes that we have gotten have been 225-thousand to 450 thousand, so it's quite a cost."

A cost too great for him, a single dad, to handle on his own. "I always thought insurance would cover this. I went right to my insurance company asked them about this. Evidently there are some exclusions in every policy," Ward said.

So 10 On Your Side set out to get some answers. One exclusion has Virginia Beach Councilman Bill DeSteph's interest and he's working to clarify policies in Virginia.

"Right now it lies with the state insurance commissioner. Get the to come out with a ruling on the pollution exclusion. Once we get that, I've got enough members of the General Assembly and our Senate stepping up saying we're going to work with you on this. We're going to make it happen," DeSteph said.

The councilman wants Virginia's Insurance Commissioner to define "pollution exclusion." In other states with chinese drywall, insurers have denied claims and canceled policies using those two words. "A lot of the insurance companies are using the pollution exclusion without using a pollution event," DeSteph explained.

What does pollution exclusion mean? Basically, if something outside the home, like a chemical spill, causes pollution in the home, insurers wouldn't have to pay for damages. That exemption may not apply to defective drywall installed as part of a house.

Ward's insurer has not denied his claim - but the company has not approved it either. Ward said, "I have contacted them and asked them to forward their findings to me. They have said, they have - the inspector has turned it over to their litigation department."

On Monday, Virginia's insurance commissioner is scheduled to meet with DeSteph and members of the Virginia General Assembly.

There are no existing guidelines in Virginia that refer specifically to defective Chinese drywall. As a general rule, insurers can not cancel a policy that's been in effect for more than 90 days. However, there is no statute that prevents a company in Virginia from not renewing coverage due to the existence of Chinese drywall.

So far, just one builder in the region has taken a proactive step to replace defective drywall. Others are leaving it to attorneys and homeowners, while waiting for insurers to make coverage decisions.

Ten On Your Side discovered insurance questions could be answered by the Consumer Product Safety Commission. We were with the director, in the field as she toured homes in Hampton Roads. But it's the work happening in laboratories that is supposed to produce results for homeowners. Scientific tests at the federal level are intended at some point to reveal whether the drywall in these homes is a hazardous material or a defective product.

Ten On Your Side found the difference determines who pays to fix the problem.

"If it's a hazardous material, it will be declared like black mold. And there's a lot of exclusions in homeowners insurance policies and in the builders liability policies that do not cover pollutants," according to Cheri Hainer, the Permits and Inspections Administrator for Virginia Beach. While insurers don't have to cover pollutants, Hainer says it's a different story with defective products.

She said, "If it's determined to be a defective product, it will be covered by the builders' and probably a lot of the homeowners' insurances."

Ten On Your Side learned the test results the Consumer product Safety Commissioned promised, could be revealed as early as next week.

If CPSC findings are definitive, it could mean the difference between homeowners picking up the tab, or insurers paying to rebuild homes.

Ward is optimistic, "With some time we're going to get the results we need so we can have the outcome that so many people in Virginia need, and across the country."

One ruling at the federal or state level could help families move