A federal judge in Louisiana has awarded $164,049.64 to a familywhose home was affected by Chinese drywall.

U.S. District Court Judge Eldon Fallon, in New Orleans, actedafter presiding over a nonjury trial in the case of Hernandezv. Knauf, a homeowner's suit against drywall manufacturerKnauf Plasterboard Tianjin Co., Ltd (KTP).

The effects of Chinese-manufactured drywall have attractedlawsuits alleging the material emits noxious fumes that can causerespiratory problems as well as corrode wiring and other materialsin homes.

The Hernandez decision came a day after the LouisianaState Senate unanimously passed legislation to prevent insurersfrom cancelling or nonrenewing homeowners policies or policies forcommercial properties due to the presence of Chinese drywall.

In his ruling, Judge Fallon said KTP and the plaintiffs hadagreed that remediation was necessary, but disagreed on the scopeand costs of remediation.

He ruled that in addition to removing the problem drywall, theentire electrical system, all copper and silver plumbingcomponents, the HVAC system, affected appliances and consumerelectronics, and certain non-electronic personal property wouldhave to be replaced.

The sum awarded covers remediation, personal property, recurringalternative living expenses, nonrecurring alternative livingexpenses, pre-trial repair costs and post-trial repair costs.

Earlier this month, Judge Fallon awarded $2.6 million in damagesand repair costs to seven Virginia families that sued Chinesedrywall maker Taishan Gypsum Co., Ltd.

State Senator Julie Quinn, sponsor of the legislation regardinghomeowners insurance, SB 595, said while the Hernandezdecision does not affect her bill, she sees it as a positive stepfor homeowners and for insurers. She said the more damage that ispaid for by manufacturers, the less pressure there will be oninsurers.

Reacting to the Senate bill, Greg LaCost, assistant vicepresident, state government affairs for the Property CasualtyInsurers Association of America, said in a statement that it "sendsthe wrong message" about addressing the Chinese drywall issue.

"Existing state laws and regulations are more than adequate foraddressing any insurance concerns," he said, adding thatlegislative fixes could be harmful to the insurancemarketplace.

He noted that while insurers can nonrenew policies forunoccupied dwellings because of an increased risk of loss, insurerscan work with consumers, regulators and others to address thesituation without legislation.

He added, "There have not been problems with wholesalecancellation and nonrenewal of homeowners policies on homescontaining Chinese drywall."

Sen. Quinn told NU, however, that as homeowners makeChinese drywall claims, insurers are denying coverage and, in fact,cancelling or nonrenewing in some cases. She specified that not allinsurers are doing this, but some are.

For the homeowners, she said cancellation of coverage, andinability to obtain new coverage, causes defaults on theirmortgage.

Mr. LaCost mentioned a policy being developed by the LouisianaInsurance Department and the Louisiana Citizens Property Insurance,that would provide basic protection for homeowners with drywallissues, as a more pragmatic approach than legislation to addressingconcerns.

The policy, reported by NU Online in November 2009(http://bit.ly/cz2mll), isexpected to provide some measure of coverage for homes vacated dueto Chinese drywall problems.

But Sen. Quinn said, "As we sit here today, there is absolutelynothing offered by the state of Louisiana or Citizens plan in theway of coverage for citizens who have Chinese drywall."

She said her bill "is a very reasonable solution to a veryunique problem."

Eric M. Goldberg, associate general counsel for the AmericanInsurance Association, called the bill "misguided," saying that itrestricts insurers' ability to manage their exposures.

He said in cases where a homeowner's coverage is dropped due toChinese drywall, the homeowner could always find coverage in thestate's residual market.

He criticized the pattern where defective building products comeinto the country unregulated and then the insurance industry isexpected to pay to fix problems that arise.

He said the government should use its resources to exerciseoversight over these imported products.