A varnish composition for producing an electrically insulative thermoset coating is disclosed. The varnish composition comprises a functionalized poly(phenylene ether), an unsaturated polyester, and/or a vinylester resin. The varnish composition further comprises a reactive liquid monomer and a block copolymer comprising a poly(olefin) block, or a poly(diolefin) block, and at least one terminal poly(alkenyl aromatic) block comprising repeat units derived from an alkenyl aromatic monomer. When cured, the polymers and reactive liquid monomer forms an electrically insulative thermoset that provides superior crack resistance.