Editor's Note: This article originally appeared in National Underwriter,P&C.

Federal agencies are advising homeowners that "problem drywall,"which has sparked thousands of claims, should be replaced alongwith other components the drywall may have corroded.

The new "interim remediation guidance" was issued by the U.S.Department of Housing and Urban Development (HUD) and the U.S.Consumer Product Safety Commission (CPSC) to help homeownersstruggling to rid their properties of drywall produced in China andlinked to corrosion of metal and electrical components in theirhomes.

Homeowners in 32 states--but mainly in Florida, Louisiana andVirginia--living in houses built using drywall imported into thecountry from China between 2004 and 2007 have lodged claims thatthe material created foul odors; corrosion of pipes, coils andwiring; damage to furniture, fixtures and jewelry; as well ashealth problems that include respiratory ailments, headaches,coughing and fatigue.

Legal action that has resulted has seen actions againstwallboard manufacturers and builders. Insurers have rejected claimsagainst homeowners policies on the grounds that policy languageexcludes them.

The CPSC and HUD guidance recommends replacement of all possibleproblem drywall, fire safety alarm devices, electrical componentsand wirings, and all gas service piping and fire suppressionsprinkler systems.

"Taking these steps should help eliminate both the source of theproblem drywall and corrosion-damaged components that might cause asafety problem in the home," HUD and CPSC said in a statement.

The agencies said the guidance represents a "conservative,common sense approach to the challenges facing homeowners, and isoffered in advance of a complete understanding of certainscientific matters at issue."

They added that the guidance was being released now with therecognition that many homeowners want to begin the process ofrepairing their homes.

"The task force recognizes that less extensive or costlyremediation methods may have merit, but at present the task forcelacks a scientific basis to evaluate those methods," the guidancestates.

HUD and CPSC said studies up to now have shown a connectionbetween certain Chinese drywall and corrosion in homes, with a linkthat suggests hydrogen sulfide is causing the corrosion. CPSC iscontinuing to look at long term health and safety implications, thestatement said.

Meanwhile, a representative of the Insurance InformationInstitute said homeowners should heed the guidance, but that itdoes not change anything from an insurance standpoint.

Most homeowners policies, according to Loretta Worters, vicepresident of the I.I.I., exclude damage resulting from "faulty,defective, or inadequate" products.

Ms. Worters said, "The policyholder is not charged a premium forlosses which may arise because of these excluded occurrences, andthe insurer does not provide coverage when [they occur]."

She continued, "To make an analogy between this and what'shappened with the auto recall, no one ever thought of filing anauto insurance claim when they had faulty parts on their cars, andthis is the same thing. If the part is defective, it's themanufacturer that is responsible."

She noted that Florida Insurance Commissioner Kevin McCarty saidpublicly in Nov. 2009 that drywall-related losses were excludedunder standard homeowners insurance policies.

Ms. Worters also mentioned that U.S. Senator Bill Nelson(D-Fla.), a former Florida insurance commissioner, told the WallStreet Journal and NBC Nightly News within the past week that ifthe Chinese manufacturers of defective drywall did not pay for thelosses their product caused, the Chinese government should.

David Golden, director of commercial lines for the PropertyCasualty Insurers Association of America, said the guidancecontains no insurance references at all, and is based oninformation that is "far from complete."

He said CPSC notes that the information is not complete in theguidance, and added that the task force is taking a "veryconservative and safe approach" in what it's recommending.

Phil Gusman is associate editor of NationalUnderwriter, part of Summit Business Media's P&C MagazineGroup, which includes Claims.