Chinese Drywall and Insurance Coverage

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In Auto-Owners Insurance Company v. American Building Materials, Inc. and KB Home, et.al., 2011 WL 1878236, Case No. 8:10-cv-313-T-24-AEP, issued May 17, 2011, a home builder (KB Homes) was sued by homeowners for damages resulting from the use of Chinese drywall. KB Homes sued its drywall supplier, American Building Materials, Inc. (ABM), to whom Auto-Owners had issued a Commercial Liability Insurance policy. KB Homes also made a claim against this policy, and Auto-Owners brought suit against both KB Homes and ABM seeking a declaration that it had neither a duty to defend nor indemnity in the underlying lawsuit. The Court held that under the “property damages” coverages, Auto-Owners was obligated both to defend and to pay indemnity for such damages, since these were not excluded under the “pollution,” “sistership,” or “your products” provisions of the policy. While this opinion makes reference to the multi-district litigation in Louisiana involving Chinese drywall products, its ruling is limited just to the facts of the underlying case.





Trenton H. Cotney
Board Certified in Construction Law
Trent Cotney, P.A.
1207 N Franklin St, Ste 222
Tampa, FL 33602
(813) 579-3278

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