Tackling Pollution Exclusions To Chinese Drywall Claims


Originally published in Insurance Law360 - November 8, 2011.

Federal and state courts in Virginia, Florida, and Louisiana have now published at least twenty-one rulings on insurance coverage actions related to Chinese Drywall. The outcomes and dispositive issues have varied, with insurers prevailing so far in seventeen of the twenty-one major decisions. Where insurers have prevailed, courts have ruled that pollution, latent defect, faulty materials, or corrosion exclusions preclude coverage or that the insured lacks a legal obligation to pay sums as damages.

Some patterns have emerged from the decisions to date. The Chinese Drywall issue that has received the most judicial attention is application of pollution exclusions. Almost all of the twenty-one major decisions in these states have included pollution exclusion rulings, and these rulings are the focus of this article. With limited exceptions, courts in Virginia and Florida have found that pollution exclusions preclude coverage in Chinese Drywall cases. Judicial treatment from courts in Louisiana has been more mixed.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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