Understanding Your Commercial Insurance Policy's EIFS Exclusion

Exterior Insulation and Finish System (EIFS) exclusions are common in commercial general liability policies and may prevent coverage in certain situations where EIFS’s are utilized in construction. It is important to be aware of these exclusions and understand how they can impact you and your property or business.
 
What are EIFS's?
EIFS, or Exterior Insulation and Finish System, is an energy-efficient integrated exterior insulation and synthetic stucco system. In most cases, insulation board is bonded to the outer wall surface using a specially designed adhesive. A water-resistant base coat is then put on top of the insulation and a finish coat is applied on top of the finish coat.  
 
However, due to the lack of a built-in moisture management system, EIFS has become well-known in the building world as putting homes at risk for damage. The tendency of EIFS to trap water behind a building's walls has resulted in numerous insurance coverage disputes over the years. As a result, many insurers have included an EIFS exclusion in their commercial general liability policies, which excludes coverage for property damage caused by the use of EIFS in construction.
 
How Common Are EIFS?
EIFS has been commonly employed in commercial and residential construction for decades. EIFS has grown in popularity as a cost-effective way to insulate both residential and commercial construction projects. Furthermore, the material is extremely flexible, allowing for increased design flexibility.
 
However, EIFS can be a significant source of loss and is not being used in modern construction as commonly as in the past.
 
What is the Associated Risk?
Many systems tend to trap moisture for a variety of reasons, including incorrect application or installation, material incompatibility, and failed or inadequate caulking. These weaknesses can cause:

• Toxic mold to accumulate in large quantities
• The finishing material to deteriorate
• Significant deterioration of the application base material (especially wood framing)
• The external material to collapse

 
Such events can necessitate large-scale reconstruction or complete replacement of elements of a structure.
 
EIFS Exclusions Explained
As a result of the overt risks, EIFS related damages may be excluded from commercial property insurance coverage. The most common exclusion language excludes coverage for losses involving the designing, making, preparing, selling, installing, distributing, maintaining, repairing, or adjusting of structures designed with EIFS, just to name a few. A loss involving a policyholder's product or work linked to EIFS may even be excluded from coverage.
 
Finding an Insurance Adjuster to Help You Understand Your Commercial Insurance Policy EIFS Exclusion
Getting in touch with a licensed insurance professional is an excellent first step if you need help understanding your commercial insurance policy, the EIFS exclusion or if you need to file a claim.
 
Reliant Insurance Adjusters treat all our client’s property damage claims as if they were our own. While other firms may provide similar services, our honesty and integrity speak for themselves.  We are committed to providing the professionalism, knowledge, and experience necessary to obtain the best possible settlement for your claim. Contact us for assistance today.