Seagrass wracks, the remains of dead leaves accumulated on seashores, are important ecosystems and beneficial for the marine environment. Their presence on the touristic beaches, however, is a problem for the tourism industry due to the lack of aesthetics and safety reasons. At the present time, seagrass leaves are landfilled, although this is not considered an ecological waste management practice. Among other proposed practices for more sustainable and environmentally friendly management, such as composting and biogas or energy generation, in this study we aim to use seagrass leaves for the production of insulation materials. Insulation boards from two types of seagrass leaves (Posidonia oceanica and Zostera marina) at densities varying from 80 to 200 kg m−3 were prepared and their physical and mechanical properties were examined and compared to those of wood fiber insulation boards. The thermal conductivity of seagrass-based insulation boards varied from 0.042 to 0.050 W m−1 K−1, which was up to 12% lower compared to the latter. The cone calorimetry analysis revealed that seagrass-based insulation boards are more fire resistant than those from wood fibers, as they release very low amounts of heat during combustion and do not ignite when exposed to a single flame (Bunsen burner). A simplified cost analysis showed that insulation boards made from seagrass leaves can be up to 30% cheaper compared to those made from wood fibers. After their end of life, seagrass leaves can again be considered a valuable resource and be further utilized by adopting other management strategies.