The use of external thermal insulation composite systems (EIFS/ETICS) on energy-efficient facades is a growing trend for saving energy during hot weather. EIFS is commonly used and tested in cold weather conditions. However, it is important to investigate both, the construction and performance of the system to ensure its functionality and prevent any potential damage. It is particularly important to consider damage-free construction in hot climates, as there is limited research on its effects in these conditions. To address this, a case study was conducted at the American University campus in Ras al Khaimah (RAKRIC), United Arab Emirates (UAE). The temperature and relative humidity inside and outside the construction were measured using a wireless sensor system (RFID). The use of measurement data enabled the creation of a comprehensive hygrothermal simulation model. This model was validated using data from the real case study and its accuracy was confirmed. The validated model was then used to investigate damage-free construction methods and confirm the energy-saving benefits of thermal insulation in hot climates. In contrast to previous investigations, this paper examines the structural damage to ETICS and defines the appropriate parameters (mainly sd value) of the coating system to mitigate the risk of moisture damage. The study presents the optimized design in detail and analyzes measurements and hygrothermal simulation results to provide a guide for planning functional ETICS under all climatic conditions.