Granite State Ins. Co. v. American Bldg. Materials Inc.
(M.D. Fla. July 13, 2010)
Two insurers have filed suit against their insured, American Building Materials Inc. (“ABM”), a drywall supplier, and KB Home Inc., alleging that their policies do not cover claims arising from defective drywall installed in homes constructed by KB Home.
In 2009, ABM reported 35 homeowner claims to the plaintiff insurers. The claims arose from the “unusual release of sulfide gases” from ABM-supplied drywall used in the construction of homes by KB Home. ABM sought defense and indemnity against the claims for itself and KB Home. The insurers denied coverage based on the policies’ pollution exclusions. According to the insurers, “the mere presence of defective drywall is not ‘property damage’ and there is no coverage under the policies for any costs arising out of the process of repairing or replacing the drywall.” The insurers also denied coverage based on lack of an “occurrence,” damage outside the policy periods, and because no lawsuit had been filed seeking damages under the policies.
The U.S. Consumer Product Safety Commission reports that it has received thousands of complaints from residents who believe their health symptoms or the corrosion of certain metal components in their homes are related to drywall imported from China. Litigation involving insurance coverage for Chinese drywall claims is still in its infancy, however. Recently, a Louisiana judge held that a policy’s pollution exclusion did not bar coverage for Chinese drywall claims, while a federal court in Virginia decided in June that a policy’s pollution exclusion precluded coverage for the same type of claims.
For a copy of the complaint, click here
Carrie Appler and Dan Gerber