Judge: Policy Didn’t Cover Chinese Drywall Damage

An insurance company doesn’t have to pay for damages at a Virginia man’s home ruined by Chinese-made, sulfur-emitting drywall, a decision by a federal judge Thursday that could affect how lawsuits by thousands of U.S. homeowners are settled.

Judge Robert G. Doumar in U.S. District Court in Norfolk said in the ruling that no coverage was owed under a homeowner’s policy issued by Travco Insurance Co. to Larry Ward of Virginia Beach.

The judge said the policy does not cover removing or replacing the drywall, or any damages stemming from the material. That’s because the policy excluded damage caused by latent defect, faulty materials, corrosion and pollution.

The ruling does not preclude further claims that could be covered under the policy.

According to court documents, Ward made claims under his homeowner’s policy after the drywall in his home began to release sulfuric gases into the home and damaged his air conditioning, garage door and flat-screen televisions.

Attorneys representing both parties did not immediately return messages seeking comment. Ward also filed a lawsuit against several development and supply companies.

Randy Maniloff, a Philadelphia-based lawyer who has closely followed Chinese drywall insurance litigation, said attorneys for insurance companies and homeowners will carefully examine this case, as it is one of the first comprehensive decisions.

“This is one case out of many, many Chinese drywall cases,” said Maniloff. “This is the first one that’s going to get everybody’s attention. This will become sort of the benchmark — rightly or wrongly.”

Thousands of homeowners, mostly in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the drywall, which was imported in large quantities during the housing boom and after a string of Gulf Coast hurricanes.

The drywall has been linked to corrosion of wiring, air conditioning units, computers, doorknobs and jewelry, along with possible health effects.