Louisiana Bill Would Ban Chinese Drywall Cancellations
BATON ROUGE, La. -- A prohibition against insurance companies dropping coverage for homes or businesses that contain corrosive, Chinese-made drywall advanced Wednesday in the Louisiana Senate.
The bill by Sen. Julie Quinn, R-Metairie, would bar property insurers from canceling, refusing to renew, or increasing premiums or deductibles because of Chinese drywall at a property.
People who rebuilt their south Louisiana homes after Hurricane Katrina claim the imported drywall emits sulfur, methane and other chemical compounds that have ruined homes and appliances and harmed residents' health. The contaminated wallboard is costly to replace.
Quinn said she's received dozens of complaints from homeowners who say they will lose their insurance because they filed a claim related to Chinese drywall or who are afraid to report their drywall problems to insurers for fear they will be dropped by the company. She didn't, however, have specific numbers of homeowners who have lost coverage or faced a threat that they will lose coverage.
"I don't think you should be able to dump these policies because it harms your profit," said Sen. Elbert Guillory, D-Opelousas.
The Senate Insurance Committee approved the prohibition measure without objection Wednesday, despite opposition from the insurance industry, whose lobbyists argued the bill would violate existing insurance contracts and could force up insurance rates statewide.
"If you can't adjust your premiums to a particular risk, you're going to be causing a situation where you have to spread that risk to everyone else," said Chuck McMains, a lobbyist for the Property and Casualty Insurers Association.
Sen. Dan "Blade" Morrish, R-Jennings, said anyone with an insurance policy in effect for three years or more would be protected from cancellation or lack of renewal under existing law. Quinn's bill, he said, would impact those people who have had their current insurance policies for fewer than three years.
Quinn's bill only deals with drywall that was imported from or manufactured in China before Dec. 31, 2009. Anyone found in violation would face a penalty up to half the insured value of the home or property, plus all court costs and attorney fees.
In a report issued in November, the Consumer Product Safety Commission said its studies found a "strong association" between the Chinese drywall and corrosion in homes. The agency also said it found a possible link to health problems.
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