I know, it's the age-old question: can fiberglass insulation burn?
Not really, but there is a caution!
There are many kinds of chimney vents - masonry and metal.
One particular type is called a "Type B vent." A Type B vent utilizes two different tubes - an interior tube which carries the heat and a surrounding tube which does not touch the interior tube.
The separation allows for the dissipation of heat so that what outer ring touches would not get too warm.
It is a safety feature. This Type B vent is used for gas appliances (furnaces and fireplaces), not solid-fuel appliances like wood or coal.
However, the International Residency Code requires a separation between the outer ring and anything it might touch inside a house.
Why? If the outer ring is cooler what could be the harm of it touching anything? And especially something that is not considered combustible, like fiberglass insulation?
From the IRC:
G2425.4 Insulation Shield.
Where vents pass through insulated assemblies, an insulation shield constructed of not less than 26 gage sheet metal shall be installed to provide clearance between the vent and the insulation material. The clearance shall not be less than the clearance to combustibles specified by the manufacturer's installation instructions. Where vents pass through attic space, the shield shall terminate not less than 2 inches above the insulation materials and shall be secured in place to prevent displacement.
Most manufacturers require a 1" or 2" space around their Type B vent materials. Often the space instruction is stamped onto the vent itself. In this case I could see no stamp, so on a report I can only say that the manufacturer should be consulted as to the distance they require.
But the question remains - if fiberglass insulation cannot burn, why worry? Keep in mind, this is not only a code, it is a FIRE code. Fire codes are very specific.
The answer to the question is: because of the rare, but possible, chimney fire. Chimney fires can burn around 2,000F! That's hot! At that temperature fiberglass insulation actually acts to absorb and spread the heat. Hence, nearby combustible materials, as you see here, can ignite. This is a condo. A spreading fire would not be good.
This inspection is on a new condo, before anyone has occupied it. The fabled final walk through! I often wonder how the builder will react to a comment on a report about something like this, perhaps considering it to be unimportant minutia. The builder might even try to skirt it by saying the county already approved it. This is in a very narrow attic space requiring a taller-than-usual ladder to get to (10'). So, did the county see it? The home inspector sure did! I wonder what the local fire marshal would say!
Nonetheless, I don't write the code. And the code is a MINIMUM standard! Building to code is NOT impressive. Building to a Best Practices standard would be impressive!
My recommendation: it is not the requirement of the home inspector to cite codes. But sometimes it's necessary. Either this insulation installer did not know about the Type B vent separation instruction, or did not care. I suspect the former. But it's the home inspector's job to observe and report. Even if the code is not cited in the report (which this home inspector did) it is still the code. If the supervisor does not know that, well, shame on him...
And yes, I was the home inspector.