As the federal government begins to weigh in on the effect of defective Chinese drywall on homes across the nation, a unique provision in Louisiana law is protecting homeowners in that state.

James Donelon

The state’s commissioner of insurance, Jim Donelon, announced a series of steps Nov. 23 to help homeowners with properties contaminated with the defective drywall.

Donelon said many Louisiana residents, like others across the nation, are vacating their homes after reporting foul smells, health problems and the corrosion of wiring and appliances due to the imported drywall. The Chinese product contains higher-than-normal levels of the hazardous chemicals strontium and sulfur, according to several studies.

The Consumer Product Safety Commission recently linked those higher amounts to health conditions experienced by homeowners, indicating a “strong association” between homes featuring Chinese drywall and levels of hydrogen sulfide in the air inside, as well as corrosion of electrical wiring, according to the federal agency.

In Louisiana, some insurers are canceling policies, citing vacancy of homes or failure to maintain the home in insurable condition, once policyholders leave the properties.

Donelon reminded consumers that they are protected under state law, through a unique statute that states any policyholder covered for more than three years by their homeowners’ insurer has the right to continue coverage while vacating and remediating his or her home of the defective drywall. This applies even if the defective drywall constitutes a “material change in the risk,” Donelon said, as long as the homeowner reports the issue to their insurer.

“Notification to your insurance company cannot be used against you and your premiums cannot and will not be raised by your insurer for such a report,” Donelon said in a statement. “I am here to make sure that insurance companies do the right thing and abide by our state’s three-year protection rule and all other consumer protection laws on our books.”

Donelon added that the Louisiana Citizens Property Insurance Corporation will now offer coverage for unoccupied homes with its Builders Risk Renovation policy. Homeowners who purchase this type of insurance from Citizens may pay less because it should be cheaper than the cost of a full homeowners policy, he said.

“Following Hurricanes Katrina and Rita, it’s believed that thousands of homes were rebuilt using drywall manufactured in China,” Donelon said. “The number of new or renovated homes containing defective Chinese drywall is unknown. It’s a tragedy that many of our citizens who were forced to rebuild their lives and their homes after the hurricanes of 2005 have become victims of circumstance yet again.”

Donelon has also established a Drywall Task Force within the Louisiana Department of Insurance to monitor the issue, appointed an investigator in the department to follow consumer allegations of unfair insurance policy cancellations due to the drywall and asked state lawmakers and Congress to aid homeowners in need.