1)    Panels of expanded polystyrene foam insulation installed with adhesive or mechanically fastened to the substrate, usually plywood or oriented strand board (OSB), 

2)    A base coat that is troweled over the foam insulation panels, 

3)   A glass fiber reinforcing mesh is laid over the polystyrene insulation panels and fully imbedded in the base coat, 

4)   A finishing coat is then troweled over the base coat and the reinforcing mesh.   

The base coat, mesh, and finishing coat is usually approximately 1/8 to 1/4 inches thick. 

EIFS were originally intended to be used over a masonry substrate. It is intended to be moisture impenetrable.  Since its traditional installation methods do not incorporate means to drain water or ventilate moisture, problems arise when moisture works its way behind the EIFS coat through any fracture in the system. Typical moisture entry points are improperly installed flashing around doors, windows, or roof elements, as well as perforations or cracks in the coating itself. 

Today, EIFS is characterized as a waterproof system that is lightweight, inexpensive and very flexible.  Architects applaud its ability to adhere to ornate design.  Builders appreciate that it is featherweight and easy to apply.  Homeowners approve of its price.  In addition to these attributes, EIFS is marketed as a waterproofing for the building and is frequently applied to plywood and OSB substrate. However, EIFS is a system that can fail its waterproofing claim because there are so many causes that can interfere with the integrity of the system. 

EIFS has been frequently installed in geographical areas that experience above average rainfall, driving rainstorms and hurricanes. Probably, the most problematic regions of the country for EIFS related claims have been Florida and the Northwestern part of the United States. 

The recent surge in new residential construction over the last few years has caused the minimal accepted standards used in construction to drop in all trade groups.  Hiring and keeping experienced labor is one of the greatest challenges for the whole construction industry.  Inexperienced workers, combined with fast-track construction can cause an inferior EIFS product. Another factor that has contributed to the growing number of EIFS related claims is associated with the application of EIFS products is Class 5, residential housing, which is subject to different building codes than commercial construction. Class 5 codes can be less stringent and may not be inspected as diligently as commercial buildings where the “good of the public” is closely protected. 

Many homeowner’s that have had EIFS applied to their homes have become so dissatisfied that they have filed class action suits.  Class action suits are a current trend. In fact, lawyers are lining up in court prior to even having any plaintiffs to represent for class action filings. 

EIFS is a simple system that requires very strict QA/QC installation controls and periodic maintenance.  It must be installed in the proper sequence and coordination with all other trade contractors. This must be done to assure proper flashing at roof eaves, flashing and backer rod around windows and flashing around door openings. 

It is recommended by the manufacturer that a professional caulker and sealer complete the seal around all window and door openings.  However, real problems occur when homeowners add an attached deck and crack the EIFS waterproof system, or, attach a hose rack to the side of the EIFS-coated house.  Both of these examples greatly reduce the integrity of the waterproof system.  Another mistake made by homeowners is not maintaining the caulk around window and door openings. This also causes water to infiltrate and get behind the EIFS.   

All exterior walls have moisture within them. There are acceptable levels and there are drainage or drying processes built into most systems.  Once water gets behind the EIFS, it has great difficulty escaping, even through weeps or other integrated drainage methods. 

The insurance industry learned to regard construction defect very seriously. CDs were not an emerging trend: it is a position that was going to persist.  EIFS resembles construction defect because compensation for damage is demanded from all contractors that were involved in the finished product. There is vast opinion on who or where the fault for the water intrusion lies.  

A number of insurance companies have noticed an emergence of loss activity related to EIFS specific products, which has caused them to take serious actions to stop further deterioration of their construction class of business profitability. Many insurance companies, recognized as leaders in the construction industry, have added full EIFS exclusions or other exculpatory provisions in their general liability insurance policies for all of their construction accounts. 

The red flag indicators they have used in making this decision includes: 1) following-suit with the other major construction insurance underwriters, where many have refused to write both residential and commercial contractors using EIFS products, while others have excluded residential contractors only. 2) Insurance carriers have compared the increasing level of GL losses for EIFS related claims to be a trend, looking the same as the run of construction defect claims that proliferated in California. When every contractor on the project is being sued for the defect, it is difficult to get class action certification whereby an insurance company can fight the claim only once for many insureds, and expert opinion appears to be the only defense at this time. 3) Contrary to California construction defect is that strict liability is not being forced on the insurance companies, but there is not only one State involved, and 4) The trigger on EIFS loss is being deemed continuous by some courts and that exposes many limits to one loss.

Many insurance companies also believe that there is not a need to impose a full EIFS exclusion on all of the construction accounts written.  However, they believe that they can implement some form of “Best Practices” initiative in partnership with organizations such as the National Association of Roofing Contractors (NRCA) in response to the roofing claims, and educate other specialty contractors in the field through underwriters, loss control, and claims adjusters being sensitive and concerned with EIFS issues in order to positively effect account profitability. The majority of insurance companies believe that a residential exclusion on accounts that install EIFS will allow them to stop the progression of losses in their construction contractor programs. 

The Association of the Wall and Ceiling Industries (AWCI) has made a responsible attempt to remedy the emerging EIFS issue. They have designed and implemented a certification program for installers and inspectors. The training is informative and tests are taken. However, the weakness of this program lies in the lack of accountability of the installers to the industry after the exam is passed and certificates are granted. There is no incentive or penalty for constant effort and consistent compliance. This exam is an important step but it does not provide the insurance companies with a strong enough argument for removing the exclusions, or give the insurance companies confidence that this is the final solution to the spiraling loss situation. 

The CD mitigation business unit of C-Risk believes that in order for the situation to improve, industry standards need to be developed and implemented, and stringently monitored. This would establish a more substantive case for the EIFS manufacturers, suppliers, installers, etc. The big question facing insurance companies is two-fold: 1) should they or should they not insure EIFS installers and their work/product, and 2) if they do insure commercial EIFS installers, how do they mitigate future occurrences and/or alleged EIFS defects.  

We have two basic construction arenas that encounter EIFS products. They are the residential and the commercial market place. In the construction industry, we have seen more use of EIFS in commercial construction than in residential construction. However exposure and/or liability appears to be higher in that of residential construction.  

In the residential market, the quality of installation is even more sub-par than that of the commercial market. This in itself leaves something to be desired.  Given the type of quality assurance and quality control (QA/QC) that C-Risk provides through their CD Mitigation unit, we believe that the problem of EIFS related claims can be properly managed and controlled. This is based on adherence to the following two guidelines: 1) overseeing the design and construction within that particular part of the construction process, and 2) supplying loss control individuals that are very construction savvy and detail oriented with regards to manufacturer installation recommendations, industry and trade standards and, city/county and state codes. Loss control individuals should have very strong construction backgrounds and significant field experience. 

The following requirements are also necessary in order to help mitigate and/or reduce the liability of future occurrences. Everyone involved with EIFS, from the design professional to the manufacturer (especially the installers) needs to understand the importance of the quality control of this particular product. The decision of insurance companies to write future work will depend on implemented changes that are necessary in order to protect their books of business.   

·        A mandatory certification and training class for installers. This course should be conducted by an accredited third party organization that has no affiliation. Maybe a coalition between the NAHB, EIMA and AWIC could be established as an EIFS advisory board. 

·        Course certification should be manufacturer and product type specific, not a general EIFS installation course. This may mean that the installers would be required to have multiple certifications for EIFS installation.   

·        Yearly re-certification requirements. 

·        Certification nonconformance reviews: Projects that have been designed using EIFS should require a loss control person to monitor the installation. The individual certified installers should also be monitored for compliance with recommended manufacturers installation requirements. If an installer has had 3 nonconformance write-ups against him/her, then their card should be suspended and they would not be allowed on other EIFS projects. 

·        Manufacturer participation (e.g. a representative from the manufacturer) a QA/QC person should conduct regular site inspections and approve the work and product installation. Site inspections should be scheduled at critical stages of installation, and also include periodic unannounced inspections.  

·        Design coordination: The design professional should coordinate with the manufacture and/or manufacturer’s representative so that they may work hand-in-hand to insure that the proper material is specified for application during the design process. 

In consideration of quality control for field personnel, it would take considerable time to develop quality control standards that could and would represent all the variables within this particular trade. We believe currently that the EIFS industry will be making rapid changes, because if they don’t, it won’t be long before EIFS products will be entirely dismissed from the construction industry as just a bad design. 

To develop a comprehensive quality control standards manual on all EIFS products would be significantly time consuming, but also updating these changes within the EIFS industry might in itself be a monumental task. However, we believe that the situation can be greatly improved if loss control field personnel conduct job inspections as follows: 

·        A loss control person should be present during critical EIFS installation times. This may require more time spent on the job than typically figured, but the extra time will be required until the EIFS situation is under control. A loss control person’s presence may not guarantee zero defects, but it will improve the potential for a quality installation process. 

·        All EIFS installers should be checked for their installer’s certification card. Some form of additional identification should also verify their identity; e.g., driver’s license, etc.  

·        Site inspections should be conducted both with scheduled site inspections and unannounced visits. 

·        All QC/QA personnel should have on their person the recommended manufacturer’s installation specifications for the particular product being applied. 

·        Inspection personnel should pay particular attention where dissimilar products meet; e.g. window frame to EIFS, door frames to EIFS, where different materials tie-in at inside and outside corners.  

·        Only products that have a water management system should be incorporated into the design.  A weep system should be incorporated into the design along with drainage channels, if applicable, on the backside of the extruded polystyrene (EPS).  

·        Careful attention needs to be made at the fastening of the EPS to eliminated penetrations.