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The Associated Press June 16, 2010, 10:44AM ET

La. bill to ban Chinese drywall cancellations OK'd

A ban on insurance companies dropping coverage of homeowners who have found corrosive Chinese drywall in their homes is headed to Louisiana Gov. Bobby Jindal after getting final legislative passage Tuesday.

The bill by Rep. Julie Quinn, R-Metairie, would prohibit insurers from canceling or refusing to renew policies for homes because of Chinese-made drywall, which has been blamed for home corrosion and health concerns.

Insurers wouldn't be prohibited from raising premiums or deductibles, however.

The Senate gave final passage to the bill with a 37-0 vote agreeing to House changes.

People who rebuilt their south Louisiana homes after Hurricane Katrina claim the imported drywall emits sulfur, methane and other chemical compounds that have ruined homes and appliances and harmed residents' health. The contaminated wallboard is costly to replace.

Insurance industry lobbyists have argued the ban could raise insurance rates statewide and would violate existing contracts.

Quinn's proposal only deals with drywall that was imported from or manufactured in China before Dec. 31, 2009. Insurers found to be in violation under the bill would face a penalty of up to $15,000, plus all court costs and attorney fees.

The law would remain in effect until July 1, 2013.

Business insurance policies aren't included in the bill.

About 2,100 claims have been filed in federal court over the drywall. Louisiana Attorney General Buddy Caldwell is suing drywall manufacturers and developers on behalf of state and local governments.

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