Expanded Polystyrene (EPS) Insurance

Managing Risks With EPS

Expanded Polystyrene Panels (ESP) are a type of Insulated Sandwich Panel (ISP) that has been used within construction in Australia for over 50 years. Due to being a lightweight, durable and cost-effective material it has always been a popular choice.  Yet over the last 15 years, there has been a significant amount of property loss associated with this component.

It is normally sandwiched between two steel facings behind drywall, sheet metal, or concrete. According to DIN4102, ESP is classified as a B3 product – it is highly flammable and easily ignited. This meaning, if it is susceptible to any exposed building installations it leads to a higher risk of fires than other materials.

Examples of such occurrences include the Channel tunnel at the Düsseldorf International Airport where a railcar containing polystyrene caught fire. At the Browns Ferry Nuclear Power Plant, a firestop failed to be tested and certified in accordance with the final installation. This unfortunately contributed to a fire infringing a fire retardant which then reached the foamed plastic beneath. In the last 24 months alone, there have been about two multi-million dollar fires involving Polystyrene.

Insurance companies have then been left feeling apprehensive, resulting in some even pulling out of the market. On the other hand, this has caused insurance premiums to skyrocket with a crackdown on building structures that are flammable. Over time this has coined the term with insurers as the ‘EPS risk’.

Sandwich panels alone do not start fires and when they have been involved it is often within high-risk regions like cooking areas. How it is spread is often related to a lack of fire risk management, prevention and containment procedures.

Preventing and containing early fire spread is critical.

  1. EPS panel ceilings are very vulnerable to fires igniting beneath them;
  2. Fires under EPS panel ceilings escalate very quickly, as the EPS melts it contributes to the fire and evaporates to fuel;
  3. Fires also disperse throughout panels, roofing and walls, before overflowing at the panel seams;
  4. Fires ignited by EPS walls and ceiling panels alone is enough to cause the destruction of major steel roof beams;
  5. Firefighting efforts provide minimal assistance due to the rapid spread and challenges in fire characteristics with risk of collapse;
  6. Undertaking appropriate risk assessment of the area is vital. If this is difficult to do due to the type of business, assess if the use of panel systems with high fire risks is necessary.
Hotel Insurance Broker Perth

In some instances, the use of stand-alone cold stores and panel systems within areas that fire risk is deemed low have achieved fewer fire losses. For low-risk environments, there tend to be more choices available when choosing a type of panel system.

However, for a number of businesses, it is highly likely that the line between high or low-risk environments will be blurred. The level of the financial risk involved is expected to ultimately drive insurers decisions. Fire safety measures play a considerable role in these situations, and the level at which facility managers understand and apply these practices is incredibly important.

If these practices are implemented correctly, the chance of flammable sandwich panels adding to the fire drops significantly. Below are some important factors in checking for panel hazards:

Business Insurance Broker Perth
  • Potential ignition sources should be stored away from sandwich panels.
  • A 10m gap between timber or plastic pallets and sandwich panels is strongly recommended.
  • If a forklift is on-premises the battery should be appropriately distanced unless the panel system has at least 60 minutes of fire resistance.
  • Automatic fire suppression systems should be attached to all heating and cooking equipment if appropriate.
  • Panel faces should be mechanically attached to the supporting structure in order to prevent the chance of detachment if a fire occurred.
  • Electrical cables in close proximity of sandwich panels should always be encased within a metal conduit.
  • Smoke vents, sprinklers and electrical equipment near the panels should be tested at least annually.

For Existing Buildings

The major factor considered by insurers is a recognition that the insured is proactive in minimising their own risks and not solely relying on an insurance company if anything goes wrong. Every operator with this type of building material should have a carefully created risk management plan for the building and the associated operations.


With an established building, it can become challenging to change the structure to make it safer against fires. Relying solely on an insurance company can be risky, following an appropriate risk management plan is the best way to reduce hazards.


 A Risk Management plan should include:

  • Hot work and cold work permit controls.
  • Electrical and equipment maintenance programmes inclusive of thermographic imaging.
  • Housekeeping – regular panel and building assessments and repair.
  • Ammonia contamination fixtures (eg. exhaust fans).
  • Business continuity plan.
  • Spot protection for hazardous systems.
  • Staff training for potential risks.

For New Buildings

Although EPS provides many benefits, it not only can lead to higher insurance premiums but an increased chance of hazards as well. Yet if EPS is used, installing an approved sprinkler system is key to helping eliminate risks.

Yet alternative materials are now readily available. There are completely inflammable panels that are constructed from fibreglass ‘wool’. Furthermore, polyisocyanurate insulation foam is a great alternative as it has been the subject of numerous fire tests and is certified by Factory Mutual (USA) or the Loss Prevention Council (LPC).

Unfortunately, the full disclosure of EPS is often not shared with insurers, leaving us brokers to educate our clients.