Contaminated Chinese Drywall Creates Both Opportunity and Risk for Restorers
Note: The following is an excerpt from an article written by David Dybdahl of American Risk Management Resources, an SCRT Associate Member. He can be reached at 608-836-9590 or dybdahl@armr.net
Chinese drywall will affect thousands of “responsible parties” as the unfortunate owners of contaminated structures search for sources of funds to pay for the remediation of their property. It very unlikely that any of the parties associated with a property that has contaminated Chinese drywall installed in it will have any insurance coverage at all for the costs to remediate the property. Fire and water restoration contractors who have good coverage for mold losses may also have coverage for Chinese drywall related losses.
Restoration contractors face two risk management challenges related to Chinese drywall; 1. Drywall installed in routine fire and water damage restoration projects between 2003 to 2008 and 2. taking on new work to remediate Chinese drywall which was previously installed by another contractor.
If you are performing drywall remediation as a new service, you will need to modify your insurance coverage accordingly. It is highly recommended that you seek out a qualified insurance consultant to discuss your coverage for prior acts and prospective operations.
The Risks Associated With Chinese Drywall
Some, but not all sources of Chinese drywall off-gas sulfur dioxide which combines with water vapor to form airborne sulfuric acid within the built environment. Most, if not all contaminated drywall was installed in 2006 and 2007 in at least twenty four and as many as forty one states.
The source of the sulfide contamination is the gypsum rock in China which was used to manufacture the drywall. Most of the Chinese drywall was used for residential projects. Some imported drywall was private-labeled and not all was stamped “Made in China”. As a result it is difficult to determine which specific properties had Chinese drywall installed in them within this time period.
Restoration contractors may have installed contaminated drywall in their normal fire and water damage restoration work. The jury is literally out on the possible adverse health effects to the occupants of the contaminated buildings; these health affects do not appear to be acute. It is clear that buildings containing sulfide contaminated drywall, which smells like rotten eggs or burned matches will require remediation. Remediation involves removing the drywall, assessing and correcting potential structural damage, and the corrosion of electrical systems, HVAC equipment and the building contents.
Damages from the drywall include remediation costs, reduction of property values, increased fire risk and adverse health effects to the occupants and to remediators. Historical loss exposures can be traced to “responsible parties” including developers, construction managers, general contractors, subcontractors, building products suppliers, distributors and manufacturers, as well as restoration companies.
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