Toops Scoops: The Great (Dry)wall of China: Mold Redux?

Having lived through and written about the Great Mold Crisis and other scares, I'm watching with interest the development of another potentially hazardous-to-your-health building issue: Chinese drywall.

You've probably already seen the reports: Material shortages after Hurricane Katrina caused U.S. builders to start using drywall imported from China, which allegedly emits sulphurous vapors that corrode metal and could adversely affect health. In common use since 2008, it's estimated that enough of the drywall has been used to construct 60,000 houses of 3,000 square feet each.

At this point, the issue is still just a blip on the radar, with little or no insurer reaction in the form of policy changes or exclusions. Most insurers seem to be taking a wait-and-see attitude to determine the exact trigger of the problem (some say moisture activates the nasty fumes) and whether the threat is real or exaggerated.

Policy maven and all-around cool guy Chris Amrhein reports that at this point the threat may be primarily in the minds of hungry class-action attorneys. “I haven't heard a word on the insurance side of the room,” Chris says. “All of the smoke and fire seems to be coming from Congress and Florida/Louisiana homeowners, who obviously hate the smell of rotten eggs coming from this allegedly Chinese drywall.” In fact, the Florida Health Department, which is currently studying the drywall, recently observed that there is no “specific” health hazard arising from its use, and that its sometimes rotton-egg odor is caused by strontium sulfide, a material absent from good old American-made drywall (there doesn't seem to be a consensus about the damage to pipes or property).

If it turns out that the drywall is causing a real problem, resulting in homeowner reimbursement from the manufacturers and distributors–and ultimately their insurance carriers–there appears to be no coverage provided. “From a purely coverage form standpoint, the industry response will no doubt include the total pollution exclusion and any number of variables on the EFIS endorsements,” Chris says.

You'd think that Congress has enough to worry about right now, but some sources I spoke with say they wouldn't be surprised to see the issue escalate to federal attention. Chris took me down Memory Lane by naming some scares of the past, including overhead electrical wire radiation, silicone implants, Alar-treated apples, and of course, witches–all of which got their share of official political attention.

Good advice in the meantime? Advise your homebuilder customers to review their policies and their liability limits–and maybe consider using greener products in their buildings.