Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 4 minutes
Perfluoroalkyl and polyfluoroalkyl substances (PFAS) are a large group of man-made chemicals used for heat, oil, and water resistance in many industrial and consumer applications. Because PFAS can persist in the environment, drive cleanup obligations, and trigger litigation, they have become a growing risk issue for many businesses and their insurers.
Why PFAS is treated as a high-risk issue
Research suggests that exposure to certain PFAS, particularly legacy compounds such as PFOA and PFOS, may be associated with health effects. Evidence and conclusions vary by compound, exposure level, and population, and scientific understanding continues to evolve.
Examples of health outcomes that have been reported in the research for certain PFAS include:
- Increased cholesterol and changes in liver enzymes
- Immune effects, including lower antibody response to some vaccines, in some studies
- Thyroid dysfunction and small reductions in birth weight in some studies
- Cancer hazard classifications for specific PFAS. IARC has classified PFOA as carcinogenic to humans (Group 1) and PFOS as possibly carcinogenic (Group 2B).
The rise of PFAS exclusions in insurance policies
Insurers are increasingly adding PFAS-specific exclusions or broader endorsements that restrict coverage for PFAS-related bodily injury, property damage, and cleanup allegations. In the U.S., industry-standard endorsements have been introduced, and many carriers also use proprietary PFAS exclusion language.
Even when a policy does not contain a PFAS-specific exclusion, insurers may argue that a pollution exclusion or contaminant definition applies, depending on the allegations, facts, and jurisdiction. Coverage is highly policy-specific, and outcomes can vary significantly across courts.
What this can mean for your business
If your operations manufacture, use, transport, apply, or dispose of PFAS-containing materials, PFAS exclusions can shift high costs back onto the business, including:
- Defense costs for third-party claims and litigation
- Investigation and cleanup costs tied to alleged releases or migration
- Business interruption impacts tied to remediation or supply chain disruption
- Regulatory response costs in some scenarios
Many fines and penalties may be uninsurable or limited by law and policy language, so do not assume insurance will respond to those amounts.
Where PFAS risk commonly shows up
PFAS risk is not limited to chemical manufacturers. It can appear across:
- Fire suppression and AFFF legacy use, including training areas
- Industrial operations with coated materials, surface treatments, or specialized manufacturing
- Waste handling, landfills, and wastewater pathways, where PFAS can concentrate over time
- Real estate transactions involving sites with historic industrial use
Which insurance policies are most often impacted
PFAS restrictions can appear across multiple lines, including:
- Commercial General Liability and Umbrella/Excess: PFAS-specific exclusion endorsements are increasingly seen at renewal, and pollution exclusions are often litigated.
- Environmental or Pollution Legal Liability: May provide a better fit for certain PFAS scenarios, but underwriting and exclusions vary.
- Contractors’ Pollution Liability: Important for contractors working at contaminated sites or performing remediation-adjacent work.
- Professional liability: Potential exposure for environmental consultants and engineers, depending on services and allegations
Practical steps to reduce the impact of PFAS exclusions
Complete avoidance is not always feasible, but you can reduce risk and improve insurability:
- Map your PFAS touchpoints
Create an inventory of where PFAS may exist in products, inputs, firefighting systems, waste streams, and historical site conditions. - Strengthen EHS controls and documentation
Focus on release prevention, wastewater and waste handling controls, vendor due diligence, and retention of disposal manifests and sampling data. - Plan for renewal early
Ask your broker for a written endorsement review, including PFAS and emerging contaminant exclusions. If an exclusion is mandatory, discuss whether any defense carve-outs, sublimits, or buy-backs are available. - Consider specialized environmental coverage
For companies with meaningful PFAS exposure, explore environmental insurance options designed to address pollution-related liability gaps, subject to underwriting.
Questions to ask your broker at renewal
- Do we have any PFAS-specific endorsements or emerging contaminant exclusions?
- Does our policy definition of pollutants or contaminants create PFAS uncertainty?
- Are there options for a PFAS carve-back, sublimit, or defense-only protection?
- Should we quote Pollution Legal Liability or Contractors Pollution Liability to address key gaps?
If you receive a PFAS-related notice, demand, or lawsuit
Notify your broker and coverage counsel promptly, preserve records, and track defense costs carefully. Do not assume a PFAS allegation is automatically uninsured. The outcome often depends on wording, timing, and the allegations pleaded.
