When Sally Richard decided to take advantage of the free home insulation program provided by Efficiency Nova Scotia, she did not expect that this would require her to spend $3,700 to meet the requirements of her insurance company.

But this is what happened when Londonderry's unfinished basement, NS, a woman's home was sprayed with polyurethane foam insulation and then sprayed with flame retardant paint. Her insurance company Kings Mutual insisted that she cover the bubble with a wall.

"Knowing that you spend so much money just to cover up what you think is free is very frustrating," Richard said.

Efficiency Nova Scotia told 76-year-old Richard that it would compensate her for her expenses, but before this situation caused a lot of pressure on her, this should be a stress-free plan.

Richard applied for and received approval for free home energy upgrades through the Nova Scotia Energy Savings Program's Home Warming Program, which was funded by the province as part of a long-term plan to upgrade low-income families.

"He [the auditor] thought we should [spray] foam insulation in our [unfinished] basement," Richard said.

She said she asked the installer if the foam had a fire hazard, but was told it was safe because it was protected by the thermal barrier of the flame-retardant spray. The insulation layer is designed to slow down the fire and provide the homeowner with an opportunity to escape the fire.

Richard said the insulation materials were very different and she was satisfied with the results-until her insurance company Kings Mutual visited her to make sure her home was eligible for insurance.

She was told that the flame-retardant intumescent paint used on the insulating material could not be accepted by the company as a thermal insulation layer. In order to maintain her coverage, she had to set up physical barriers of studs and drywall.

When she asked why this work was needed, she was told that the company had discovered that the flame-retardant paint was chipped and did not provide adequate insulation coverage. She was told that this might cause a fire hazard.

Although this was an unexpected expense, Richard continued to work.

"I thought,'What is money compared to life?'" she said.

After CBC News contacted Efficiency Nova Scotia, the organization called Richard and asked her to submit a receipt. After that, she was told that she would be reimbursed in full for this expense.

"They have been very good," she said. "I am glad to know that they will take care of this."

Sarah Chiasson, Service Delivery Manager at Efficiency Nova Scotia, says she only knows that one insurance company—Kings Mutual—will not insure flame retardant sprays.

She said that safety is the organization's top priority. "The last thing we want to do is to bring any pressure or safety issues to these homeowners."

Chiasson said that the organization and its contractors are responsible for ensuring that all upgrades are safe and comply with building codes, but at the same time she acknowledged that “the insurance company has the right to decide whether to insure these upgrades.”

She said that about 10 Kings Mutual customers are in the same situation as Richard, and Efficiency Nova Scotia will work with each of them to find "personalized solutions." Chiasson asks anyone with similar issues to contact Efficiency Nova Scotia.

Chiasson said the organization has taken steps to prevent the same problems in the future by requiring participants to consult their insurance companies before installing insulation materials.

"It is noted in some of our forms, but we are making it more clear. We have put it on our website, we make sure it is in all our forms, and we make sure that our partners mention it in their Go home when you get to it."

Kings Mutual wrote to its customers stating that it has decided not to cover the house with polyurethane foam insulation with flame-retardant spray as a thermal barrier.

The company lists acceptable obstacles as "at least half an inch of plaster, gypsum board, plywood, cardboard, insulating fiberboard, particle board, oriented strand board (OSB) or wafer board."

It stated that "flame retardant sprays have a tendency to crack and peel, which Kings Mutual does not accept."

Russell Acomb, Head of Loss Prevention at Kings Mutual, said that although the company admits that flame-retardant intumescent coatings can be used as a thermal barrier according to building codes, his company insists on physical barriers.

"As an insurance company, we can go beyond [building codes], and Kings Mutual's philosophy has always been life safety first," he said. "We are proud that we do everything we can to ensure the safety of policyholders."

CBC News contacted samples from other insurance companies and asked if they would accept flame-retardant sprays as a thermal barrier suitable for spraying polyurethane foam, which is flammable.

Wawanesa and Aviva did not answer our question, and Intact simply said: "We will require them to comply with building codes."

The Canadian Polyurethane Foam Contractors Association (CUFCA), which promotes the safe use and installation of spray polyurethane foam insulation, has written to Kings Mutual outlining its concerns about the company’s policies.

"This is not in compliance with building codes," CUFCA spokesperson Andrew Cole told CBC News, adding that many spray-type flame retardant coatings have been approved as "alternative solutions", which means they have been tested and found to comply with National Building Code.

Matt Covey, head of Halifax's fire protection department, said that some spray-type flame retardants have been tested and have proven that their performance as a thermal barrier is comparable to more common products such as drywall.

Covey said that as long as the tested flame retardant spray is installed by a licensed company and installer, it will be considered safe.  

As for Kings Mutual, it did not apologize for needing a physical barrier.

"We can rebuild buildings. We can't replace life," Acombe said.

Yvonne Colbert has been a reporter for nearly 35 years, covering everything from stories of human interests to provincial legislatures. Today, she helps consumers navigate an increasingly complex market and avoid blackmail. She invites story ideas at yvonne.colbert@cbc.ca

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