A Barrier to EIFS? The Insurance Crisis Facing Exterior Insulation Finish Systems
By Elizabeth J. Anderson

What are EIFS? Exterior Insulation Finish Systems, commonly known as EIFS or synthetic stucco, are multi-layered exterior wall systems used on both commercial buildings and residential homes. These systems are usually comprised of five layers: an exterior finish, a reinforcing mesh to protect the system, an insulator, an adhesive substance binding the insulator to the building and a substrate to which the insulator is attached. EIFS were originally developed in Europe, making their first appearance in the United States more than thirty years ago, and becoming very popular in the early 1980s.

Why Use EIFS? * EIFS are very energy efficient, literally wrapping the exterior of the building or home in a thermal blanket. By insulating outside the structure, EIFS reduce air infiltration, stabilize the interior environment and reduce energy consumption. By contrast, traditional "between the studs" installation leaves gaps where heat and cold pass more freely between the outdoors and space within. EIFS can reduce air filtration by as much as 55% over standard brick or wood construction.

* EIFS adds to the "R-value" of a home or building. R-value is a measurement of the resistance to heat flow; the higher the R-value, the better the material's insulating value. Most EIFS use insulation board with an R-value of R-4 to R-5.6 per inch as the innermost layer in the wall system. When combined with standard wall cavity insulation, this extra layer can boost wall insulation from R-11 to R-16 or more. * EIFS allows increased design flexibility and aesthetic appeal at an affordable price. EIFS bear a resemblance to stucco or stone, but are far more versatile than these and other materials. EIFS come in virtually limitless colors and a wide variety of textures, but can also be fashioned into virtually any shape or design. With EIFS, applicators can create intricate architectural detailing that would often be cost-prohibitive with conventional construction.

The Problem: Litigation over Wet Walls EIFS are characterized as waterproof systems, because water cannot penetrate them if the integrity of the system is maintained. Unfortunately, there are many ways EIFS can be penetrated: improperly installed flashing around doors, windows, or roof elements, perforations or cracks in the coating itself, or homeowner penetration, such as when a deck is added and the EIFS is cracked. Unlike cavity wall systems, EIFS does not have a secondary drainage barrier to permit water that penetrates the face of the system to drain and escape. Therefore, once water penetrates an EIFS, it is trapped inside the system and the water often rots the wood framing or other interior elements. The irony: one of EIFS' strongest attributes - its waterproof nature - has become its primary weakness. Water damage in EIFS homes and buildings has led to a surge in litigation. In many parts of the country, especially those that with high heat and humidity,

Individuals experiencing problems with moisture entering their EIFS clad homes have brought more than a thousand suits, asserting contract, warranty and negligence claims. The lawsuits are typically brought against the general contractor, EIFS manufacturer, EIFS applicator, and in some instances, other subcontractors, such as roofers and window installers. Commercial EIFS building lawsuits are not as common, primarily because the factors contributing to EIFS failures inherent in residential homes are not present in commercial buildings.

First, commercial buildings often employ steel, rather than wood, framing and may use substrates that are not moisture sensitive. Additionally, commercial-grade windows tend to perform better than residential-grade windows, commercial subcontractors tend to be more experienced than their residential counterparts and commercial construction projects are better supervised. Finally, the flat roofs that don most commercial buildings avoid the problem of angled roofs that intersect with walls in most residences, an easy entrance for unwanted moisture. The surge in EIFS lawsuits has not gone unnoticed by insurance providers in the construction industry.

Contractors and EIFS installers desiring to use EIFS are finding it increasingly difficult to obtain insurance policies that cover EIFS failures. Some insurance companies have strict EIFS exclusions, while others limit the percentage of EIFS work that a contractor can do under the insurance policy. In addition, increased premiums have become standard for policies that do cover EIFS failures. The result: many are predicting the demise of EIFS.

The Solution: A Better EIFS EIFS are facing an uphill battle, but it is a battle that can be won. With all of its benefits, unmatched by any competitive product, residential homes and commercial buildings alike need EIFS. However, contractors and subcontractors wishing to use EIFS need insurance to cover construction defects, and insurance companies need to minimize their exposure. How can all of these seemingly irreconcilable needs be met? By employing several risk management techniques: * Require a mandatory training class and certification for all EIFS installers. The course should be conducted by an accredited organization.

The Association of the Wall and Ceiling Industries (AWCI) offers a program, EIFS - Doing it Right, and optional national certification. For more information on the program, see http://www.awci.org/eifs.htm. To further bolster confidence in such a program, a third party organization with no affiliation with the wall industry could develop a similar program.

* EIFS installers should employ a certified loss control individual to oversee the EIFS installation process. The individual should have an extensive construction background and should be very detail oriented with regard to installation recommendations, industry and trade standards, and city, county and state codes. This individual can make sure that the EIFS is installed in the proper sequence and coordinate with the other trade contractors to ensure the system's integrity.

* EIFS installers need to hire and retain an experienced workforce. The recent surge in new residential construction has forced builders to engage in fast-track construction, leading to lower minimal accepted standards in the industry. If EIFS installers maintain an experienced workforce, this decline in construction quality experienced on an industry-wide basis can be curtailed.

* EIFS manufacturers should get involved with the quality control process. A representative from the manufacturer should conduct regular site inspections and approve the work to ensure that the proper material is specified for application during the design process. EIFS manufacturers have an incentive to participate in EIFS construction - the continued viability of their product.

* Owners of residential and commercial buildings employing EIFS need to maintain the system properly. Caulk around window and door openings must be maintained to avoid water infiltration. EIFS professionals should be consulted before engaging in any projects that might jeopardize the integrity of the EIFS system. EIFS installers must take the initiative to educate those that will be maintaining the EIFS system by providing written materials and consultation services relating to EIFS care.

* Industry standards need to be developed and implemented for EIFS. These standards need to be stringently monitored: EIFS installers need to be checked for their installer's certification card, site inspections should be conducted both with scheduled site inspections and unannounced visits, and additional safeguards should be employed to ensure compliance with the industry standards.

* An EIFS system is available that makes use of a special water management system. These systems collect water that penetrates the EIFS and then diverts it back to the exterior of the building before it can cause rot damage. The system incorporates a special barrier paper, old-fashioned metal flashings, cement board in place of foam board and a combination of a cement basecoat topped with a textured polymer stucco material. The Bottom Line: EIFS can Survive the Insurance Crisis One thing is clear:

EIFS are facing a crisis; studies have shown that EIFS clad buildings have problems with moisture penetrating the system, and insurance carriers have taken notice. However, water penetration is a problem common to all exterior wall systems - EIFS simply have the added problem of being unable to expel unwanted moisture. If the integrity of EIFS, a truly waterproof system, can be maintained, it will not only avoid the problem of water intrusion; it will solve it. If general contractors,

EIFS installers, EIFS manufacturers and EIFS building owners work together, the fear of continued EIFS litigation facing construction insurance companies will be allayed, and EIFS can continue to provide a cost-effective, aesthetically pleasing, flexible, efficient way to protect.

Courtesy of AWCI