Florida homeowners have been battling with insurers over whether or not they will have to pay for damage caused by Chinese drywall. Insurers have been unwilling to accept liability to for the damage, citing that the material does not meet the building standards established by the state. A settlement has been reached, however, between homeowners affected by the faulty material and Banner Supply Co., the company that supplied the drywall to more than 800 homes.
A number of insurance companies will take part in funding the settlement, which is worth $55 million. AIG and Chartis are among the companies contributing to the settlement.
Chinese drywall was used in the reconstruction efforts after Hurricane Katrina. The widespread damage put a strain on the already modest supply of materials, leading contractors to purchase Chinese drywall. The drywall is, in fact, a tainted material that emits a gas that erodes fixtures, wiring and air conditioning units. Insurers have been receiving claims from homeowners regarding this damage since 2006.
The settlement awaits final approval from a federal judge in New Orleans. After that, the $55 million will be distributed amongst those with valid claims against Banner. Banner will also participate in a recovery project that will remove all tainted materials from affected properties and replace it with proper drywall.
The settlement will count toward losses incurred by the state’s insurance companies but is unlikely to influence rates in a meaningful way.