State Farm steps into Chinese drywall fray

Maker of Chinese drywall, insurer pay to fix U.S. homes | Business Insurance.

I’ve been following Chinese drywall semi-closely since I wrote about it early this year for III.

To catch you up: In 2005-2006, post-Katrina and at the tail of the housing boom, drywall fell into short supply. A lot of defective drywall shipped from China into the South, got installed in homes and there combined with the humidity to let the drywall exude toxic gases.

The main victims were heating and cooling coils, which the gases ate away. But the solution is to gut-rehab the homes, replacing all coils and all siding. Cost: $50K and up.

This should be an exposure for the manufacturer of the product, or perhaps the distributer. But the story I’ve linked to indicates State Farm will pay for the rehab on up to 300 homes, a move the plaintiff’s attorney calls “a guide. It’s embryonic, and it looks toward a birth of an eventual global resolution.”

Now $50K per claim on 300 claims is $15 million, with more to come.

Not sure what State Farm was thinking.