Pro-Demnity Insurance Company 111 Moatfield Drive Toronto, Ontario M3B 3L6 Tel: (416) Fax: (416)

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1 Pro-Demnity Insurance Company 111 Moatfield Drive Toronto, Ontario M3B 3L6 Tel: (416) Fax: (416) November, 2008 EIFS Survey Report In the last few years Pro-Demnity experienced a marked increase in the number and size of claims involving Exterior Insulated Finish Systems (EIFS). The extent of the claims gave rise to concerns as to the impact on the mandatory insurance program. Equally troubling has been the stance taken by counsel on behalf of some EIFS manufacturers who, when faced with claims, have been intent on minimizing the manufacturers obligations and responsibilities for both the performance of the systems and for the advice provided to architects respecting the use and suitability of EIFS systems they sold. Architects are very exposed to such claims and have not always been able to successfully rely upon the information provided by the manufacturers as an effective defence in such actions. Guarantees provided by the manufacturers have typically been limited to the replacement of defective products, and fine print in manufacturers catalogues and guarantees often disclaims responsibility for the design, selection or installation of the EIFS system in use. The architect has been left exposed to claims respecting the selection, design and installation of the products; often involving a complete re-cladding of the building. In order to assist Pro-Demnity better understand the exposure of the mandatory insurance program to EIFS claims, in late 2007, Ontario architectural practices were asked to complete a survey respecting their use of EIFS. This bulletin includes highlights of the most significant findings and conclusions that were able to be drawn from the responses and from Pro-Demnity s recent experiences addressing EIFS claims and concerns. As a result of the better understanding of EIFS and the issues associated with its use and the claims experience, a number of important changes have occurred or are under consideration. Changes to Pro-Demnity s Insurance Policy: 1. Pro-Demnity is considering amendments to the non-drained wall Exclusion in the Pro- Demnity policies. One consideration would clarify that an exterior wall system would need to incorporate at least two planes of protection (water barriers), provision for drying of the assembly and a dimensioned, ventilated air space, drained to the exterior to comply with the insurance requirement (e.g. a rain screen ). 2. The amended Exclusion would no longer refer to OAA Practice Bulletins which would have included the Rain Penetration Control Practice Guide and the now discontinued EIFS Interpretation Bulletin. 3. Measures are being considered to address Insulated Concrete Form (ICF) construction and the use of Barrier coatings on ICF without drainage provisions. A separate

2 2 cladding incorporating provisions for drainage and drying would be required for an ICF exterior wall to be insured, notwithstanding the ICF is filled with concrete. Changes to Practice Bulletins by the OAA: 1. The OAA has withdrawn the EIFS Interpretation Bulletin that was appended to the OAA Rain Penetration Control Practice Guide and posted as a Practice Bulletin. The EIFS Interpretation appeared to have been frequently misunderstood. 2. The OAA has withdrawn its Rain Penetration Control Practice Guide as a Practice Bulletin. It is still available as an resource to OAA members. EIFS Industry Quality Assurance Program: Coincidentally, the EIFS Industry has developed and is rolling out its own EIFS Quality Assurance Program (QAP) respecting the use and installation of its products and systems. Pro- Demnity strongly recommends that architects utilizing EIFS familiarize themselves with the features and requirements of the QAP and encourages and supports its use by architects and by their clients. Current details of the EIFS Quality Assurance Program Inc. can be obtained from the EIFS Council of Canada and their website or from the suppliers and manufacturers who are participating in the QAP. Pro-Demnity is very encouraged by the development and adoption of the QAP by the EIFS industry. It is hoped that the QAP will be expanded to include the quality of information being provided to architects and purchasers of EIFS respecting system performance criteria and expectations, system selection considerations, design and interface details, and to provide the opportunity for QAP review of an architect s system selection, design, specification and details respecting the use of EIFS prior to tender. EIFS Standards: At present, there is no recognized Canadian Standard respecting the design and installation of EIFS systems that can be referenced in a building code or referred to by a designer, although the ULC S-716 family of standards respecting EIFS is currently in the development stage. The first available ULC Standard S addresses Materials and Systems. It is understood that future standards in the series will address Application and Installation and provide Design Guidelines respecting the use of EIFS systems. OAA and Pro-Demnity Approvals : The survey responses indicated reliance on the OAA for information about EIFS. A number of EIFS manufacturers have included assurance in their product literature that one or another of their systems complies with the OAA Rain Penetration Control Guide. Neither the OAA nor Pro-Demnity have ever approved of any system as meeting any standard or complying with the Guide or an insurance requirement; nor would they do so for obvious reasons of legal liability. You must exercise your own professional judgment in this regard.

3 3 EIFS Survey Highlights: The following highlights summarize the information obtained from the survey. Comments reflecting the insurer s observations are provided in italics. Response Rate: - Overall response rate was about 50% and applied consistently to all sizes of practices. This is a very high response rate for such a survey. The survey responses fairly represent the range of practices in Ontario based on the annual fees reported. Use of Specialist Consultants: - The largest sized firms all used Building Envelope Specialists (BES) at least some of the time. The lower the fees reported, the less likely was the use of a BES by the practice. Very few small practices reported using a BES. This is not surprising since to retain a BES is likely a significant expense for a small practice with relatively low income. Where EIFS is Used: - 56% of firms reported some use of EIFS by the practice; 44% reported that they do not use EIFS at all. - The highest usage of EIFS in any category was on Condominiums by a handful of large firms. - Another high reported use of EIFS was on Single Family Residential, by smaller firms. - Commercial and Retail were other areas where EIFS was reported in common use. - Lowest use of EIFS was reported on Education and Health Care. Pro-Demnity is particularly concerned and aware of the number and size of claims in the Condominium and the Private Single Family Residential markets. EIFS claims typically involve the costs for a complete replacement of the failed system rather than remedial repairs, making these claims particularly costly. Systems Being Used: - 26% of those using EIFS report using a Drained and Pressure Moderated system at least some of the time - 75% report using a Drained system at least some of the time - 53% report using a Dual Barrier system at least some of the time - 21% report they still use Face Sealed systems at least some of the time; of these more than half report use of Face Sealed systems over other than solid masonry or concrete backup. Drained and Pressure Moderated systems utilizing a rain screen approach are presumed to be the best performing of those available. The CMHC Best Practice Guide advises these systems offer maximum protection from water ingress and may be required to comply with

4 4 insurer requirements. Face Sealed is currently excluded from insurance coverage unless utilized over a mass masonry or concrete wall. Based on the survey results and Pro-Demnity s claims experience, many architects should reconsider the systems they are selecting and specifying and increase the extent and quality of the documentation and interface details they provide in their construction documents. Use of Drained Joints: - 34% of those reporting use of Dual Barrier systems DO NOT use drained joints. - 3 out of 4 in the highest fee categories reported they always use drained joints. In contrast, only 7 out of 15 reporting in the lowest fee category always use drained joints. Use of Drained Joints with a Dual Barrier system was a prerequisite for use of such systems meeting the insurance requirement in the OAA EIFS Interpretation (now discontinued). Pro-Demnity is advised that the ability to ensure a drained joint is delivered and effective can be problematic in practice. Reliance upon caulking as a long term component of a water barrier in a wall system is equally problematic. EIFS System Used Most Often by the Practice: - 16% Drained and Pressure Moderated - 53% Drained - 24% Dual Barrier - 4% Face Sealed - 3% Other Drained was the highest for all categories of firms; however, the largest firms report Drained and Pressure Moderated as the second most common. In contrast, smaller firms report Dual Barrier as the second ranked. Recognizing that the use of a BES was most common with larger firms, it may be inferred that use of a BES may encourage use of the Drained and Pressure Moderated systems. One respondent reported that the question was incorrect his EIFS supplier assured him Drained and Pressure Moderated EIFS was not available in the market. (Only one architect reported this advice ) The EIFS Council advised Pro-Demnity that a number of architects referred the survey to their EIFS supplier for assistance. Pro-Demnity is concerned that the EIFS industry (and the advice available to architects) has not been particularly effective in distinguishing the characteristics and performance features between various EIFS approaches. Pro-Demnity is concerned that the value and importance of pressure equalization and, drainage in an exterior wall may be misunderstood by many architects using EIFS based on the relatively low reported level of use of Drained and Pressure Moderated EIFS systems.

5 5 Pro-Demnity reminds architects that the rain screen concept has been a fundamental underlying principle and recommended design approach applicable to exterior wall design in Canada for many years. Most Important Sources of Information about EIFS: - 25% EIFS Manufacturers Catalogues - 23% OAA Practice Bulletins - 17% EIFS Technical and Sales Reps - 12% CMHC Best Practice Guide - 6% OAA Con Ed programs - 6% Building Envelope Specialists - 4% Pro-Demnity Bulletins - 7% Other Perhaps the good news is that the highest ranked source is the manufacturers who design and produce the products and systems, and sell them to the public. However, it is of concern that OAA Practice Bulletins rank a close second. Architects should not be looking to the OAA or Pro-Demnity for technical information respecting the suitability, selection, design and specification of proprietary systems and products. That is properly the responsibility and obligation of those that sell their systems to the public. Further, architects must be mindful that they need to exercise their own professional judgment respecting the suitability of materials, systems and interface details on the projects they design, although, obviously they should be entitled to rely upon information received from EIFS manufacturers in any assessment. or conclusion they reach. Familiarity with Non-drained Exterior Wall Exclusion in the Pro-Demnity Policies: - 89% yes - 11% no The Pro-Demnity Insurance policies may be downloaded from the OAA website. Refer to Exclusion 1.s in Policies No.1, 2 & 3 or Exclusion 1.r in Policy No. 4. Note that changes to the Exclusion are anticipated as described in the introduction to this report. Recommendation that an EIFS System be Changed from that Specified: - 63% of EIFS users report experience of an effort by others to change the EIFS after tender. - Of these, the recommendation for change is most often from the Contractor, Project Manager or Construction Manager (63%) and / or from the EIFS Contractor (40%). - The overwhelming reason is to save costs (60%). - Better than 40% of architects reported instances of changes to the specified EIFS system being made without their knowledge.

6 6 Change to EIFS systems after design and specification appears to be an uncomfortably common phenomenon in the construction industry. The rationale is overwhelmingly to reduce costs, prejudicing any effort to improve performance by selecting and specifying potentially better performing (but more expensive) systems. Interestingly, very small firms appeared to not experience the same extent of post design change to an EIFS system as did other groups. However, experience of the OAA Practice Review program was that a disconcerting number of smaller firms simply didn t include details and specifications for EIFS on their drawings. In such circumstances, it would be impossible to ascertain what was specified in the first place and therefore equally impossible to recognize a change had occurred. Service Life of EIFS: - 55% of practices report they always discuss service life with clients and another 29% sometimes. However, these figures drop to 43% and 26% when the topic is the service life of EIFS. - 62% advise that they don t know enough about the service life of EIFS to properly advise their client on the subject - Between 20% and 30% architects report advising clients that EIFS needs more maintenance, is not as durable as other claddings or that other claddings should be considered. - Of those who ventured a number, 19% suggest the expected service life of EIFS is more than 25 years, about 24% chose between 20 and 25 years; and 57% suggest 20 years or less. More than a third of the latter group suggested a maximum service life of 10 years. - It is very difficult to identify the sources of information about service life of EIFS being relied upon personal experience was the highest that was reported. - The highest answer to who should be the source of information about service life was Building Envelope Specialists at 32%. Standards and testing organizations were thought the next best source by 16%; Manufacturers and / or their sales representatives by 15% and the CMHC Best Practice Guide by 12%. Only 2% thought that architects specifying the products should be relied upon for this information. Clearly service life is a conundrum. The apparent reliance upon Building Envelope Specialists for information about service life is contrary to the survey findings since so few architects actually retain them. Standards and Testing organizations don t provide such information. The CMHC Guide ventures that a minimum 30-year service life for properly designed and applied EIFS is anticipated and indicated by field performance ; however, the guide goes on to point out that longer term service for many products and formulations has not been determined. It is a concern to Pro-Demnity that the OAA is considered the best source for information about service life of EIFS by 11% of architects even higher than the Manufacturers of the products and systems at 9%. The OAA does not provide such information What seems clear is that there is little published by the manufacturers and suppliers of EIFS, or by anyone else, that an architect could rely upon in advising its client as to what is a reasonable expectation of any EIFS installation or to distinguish the service life and maintenance expectations of one approach from another.

7 7 Draw Results: Pro-Demnity thanks all participants who took the time to assist by completing the survey. Participants in the survey were eligible to participate in two draws, the first from among the first 100 (and ties) responses received, the second from all responses within the December 14, 2008 time limit (excepting previous winners). Drawn from the first 100 responses (and ties) 5 winners of $ Battaglia Associates Inc., Architect - Brian Lee, Architect - GB Architect Inc. - Shawn Freeman Architect - Steven Fong Architect Drawn from all responses received within the designated time limit of December 14, winners of $ Ann Lawson Architect Inc. - Cianfrone Architect Inc. - Evans Bertrand Hill Wheeler Architecture Inc. - Henry Schefter Architects Inc. - Janice Van Barren, Architect - John C. Houghton Associates, Architect - Lin Architect - Romanov Romanov Architects Inc. - Turner Fleischer Architects Inc. - WGD Architects Inc.