Fake Stucco, Real Trouble: EIFS-Related Claims Constrict CGL Markets

By | June 11, 2002

Mold may be getting all the attention at the moment as a major threat to insurers, at least in Texas and California, but another problem has wreaked havoc for homeowners, carriers, and contractors nationwide for several years, now: damages stemming from exterior insulation and finishing systems (EIFS), often referred to as fake or synthetic stucco.

EIFS (pronounced “eefis”) is an exterior cladding system used on both commercial and residential structures. Typically, EIFS consist of an exterior finish, a reinforcing mesh, an insulator such as polystyrene, an adhesive to bind the insulator to the building, and foam board attached to the building itself. These systems have been touted as energy-efficient and flexible enough to accommodate myriad building and home designs.

Problems arise, however, when moisture is retained between the sheathing of a house and the foam board component of the finish system. Over time, the house’s sheathing may rot, and attract termites. And where there’s moisture, there’s always the potential for mold to develop.

According to EIFSFACTS.ORG, a consumer advocacy Web site, about 30 manufacturers in the U.S. make EIFS, including Acrocrete, Dryvit Systems, Omega Products International, Sto, and TEIFS Wall Systems. The EIFS Industry Members Association (EIMA) claims that EIFS make up only two percent of the residential construction market, but notes that sales have been increasing between 12 and 18 percent per year. If these figures indicate a growing trend, then they could just as well indicate a growing problem.

Humid climes beware
EIFS have been in use for quite some time: Developed in Europe to repair buildings after World War II, the finishing system was first used in the U.S. by Dryvit in 1969, for commercial structures. In the 1980s, the residential construction industry began using EIFS, but made no engineering changes to address differences between commercial structures consisting of stone and steel and residential homes, made of wood.

Since EIFS’ introduction, homeowners from North and South Carolina to Alabama to California and Washington have reported property damage due to moisture. Homeowners in states with humid climates have been most prone to EIFS-related damages. Jeff Albright, executive vice president for the Independent Insurance Agents of Louisiana, explained the situation in his and other states first by pointing out the differences between true and synthetic stucco systems: “The difference between the two is that for true stucco, (the builder) will nail a wire mesh to the side of a building. First, they put down some type of water-repellant interior material, like tar paper or some type of synthetic material. Then they nail on the wire mesh. True stucco is just the concrete-stucco mixture right down on the building, and it’s basically solid concrete.”

Albright continued, “What they do with the stucco systems is, they put some type of material behind it to minimize the amount of real stucco material that you’re using. Typically, it’s a styrofoam-type of material. The problem is that the styrofoam-type material does not breathe, and it it’s not properly installed-and that’s the critical issue: Is it properly installed? And some people would challenge that even if it is properly installed, just the design of the systems itself inherently causes moisture in a moist climate, which obviously we have in Louisiana, and in a good part of Texas, too.”

Albright pointed out that the styrofoam layer “causes it to sweat, and for moisture to condense behind the exterior concrete stucco surface. Over a period of time, that moisture will build up, and it will cause two different problems.

“One is the deterioration of the materials-rot, that type of thing,” Albright continued. “The other thing, which is getting more and more press these days, is the mildew and mold issue, and the purported toxic mold, which then creates all kinds of potential problems.”

This article appears in full in the June 10 issues of the Insurance Journal West (Page 34) and Insurance Journal-Texas South/Central (Page 22). To comment on this story, e-mail seisenhart@insurancejournal.com

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