Concern over perfluoroalkyl and polyfluoroalkyl substances (PFAS)—often called “forever chemicals”—continues to escalate. These persistent contaminants pose significant challenges not only to regulators and industries but also to insurers, particularly those providing coverage to environmental consulting firms. PFAS exclusions are popping up across various liability policies, leaving many firms in a precarious position as they grapple with cleanup liabilities and third-party claims.
What Exactly Are PFAS and Why Should You Care?
PFAS encompass a large group of synthetic chemicals prized for their resistance to water, grease, and heat. You can find them in everyday products such as:
- Non-Stick Cookware
- Water-Repellent Fabrics
- Firefighting Foams
- Food Packaging Materials
Why the Heightened Concern in 2025?
- Environmental Persistence: PFAS do not break down easily, leading to long-term contamination in soil and water.
- Health Implications: Mounting research ties these chemicals to a range of adverse health effects, sparking more stringent regulations.
- Litigation and Liability: Regulators and affected communities are increasingly holding businesses accountable for PFAS contamination, driving up legal claims.
How Are PFAS Exclusions Affecting Insurance Policies?
1. The Emergence of PFAS Exclusions
In the past few years, insurers have begun implementing PFAS-specific exclusions in their Commercial General Liability (CGL) policies. For instance, endorsements published by the Insurance Services Office (ISO) in 2023 expressly exclude PFAS-related claims. As environmental awareness grows, insurers aim to limit exposure to costly PFAS remediation and litigation.
2. Challenges for Environmental Consulting Firms
Environmental consultants often handle projects at contaminated sites, making them prime targets for PFAS-related claims. When standard policies exclude PFAS liabilities, these consulting firms could face:
- Costly Cleanup Obligations
- Legal Fees
- Third-Party Lawsuits
Without adequate coverage, a single PFAS lawsuit can undermine a firm’s financial stability.
3. Professional Liability and Excess Coverage Under Threat
Some insurers are even extending PFAS exclusions to professional liability and excess coverage policies. For environmental consultants, these policies are typically crucial, covering legal claims tied to their professional services. Fortunately, there are specialty environmental insurance providers—like our company—actively negotiating to keep PFAS coverage intact, ensuring consultants aren’t left exposed.
Which States Face the Biggest PFAS Insurance Challenges?
While PFAS issues are nationwide, states with large industrial or environmental consulting sectors tend to have more PFAS-related claims and tighter regulations:
- California: Strict state-level regulations and a robust industrial sector.
- Michigan: Home to extensive manufacturing and significant PFAS contamination sites around the Great Lakes.
- North Carolina: Ongoing PFAS research and remediation near large chemical manufacturing facilities.
- New York: Aggressive environmental laws and litigious climate increase the potential for PFAS-related lawsuits.
- Texas: Rapid industrial expansion and a growing consulting market mean PFAS exclusions are an evolving concern.
What Should Environmental Consulting Firms Do?
1. Review Existing Policies Thoroughly
- Identify PFAS Exclusions: Determine if your current CGL, professional liability, or excess policies exclude PFAS liabilities.
- Assess Coverage Gaps: Consult an insurance specialist to quantify your risk exposure and financial vulnerabilities.
2. Explore Alternative Coverage Options
- Pollution Liability Policies: These specialized policies can offer broader protection against environmental liabilities, including PFAS.
- Directors & Officers (D&O) Liability: In cases involving mismanagement allegations tied to PFAS, a robust D&O policy might provide an additional layer of defense.
3. Investigate Historical Insurance Policies
- Policies Pre-Dating 1986: Older general liability policies—issued before the “absolute pollution exclusion” became standard—might still cover PFAS claims. Locating these policies can be a goldmine of coverage for long-term contamination issues.
Frequently Asked Questions (FAQs)
Q: What makes PFAS so problematic?
A: PFAS are synthetic chemicals that persist in the environment and have been linked to multiple health risks, making them a focal point for regulatory and legal scrutiny.
Q: How do PFAS exclusions impact my coverage?
A: PFAS exclusions in liability policies mean insurers won’t pay for claims arising from PFAS contamination. This leaves businesses—and particularly environmental consultants—responsible for cleanup or legal costs.
Q: Can I still get PFAS coverage?
A: Yes. Specialized pollution liability and certain professional liability policies may offer PFAS coverage. Some older policies might also apply, depending on the policy language and effective dates.
Q: Why look into older policies?
A: Older policies issued before the mid-1980s often lack the robust pollution exclusions we see today, potentially extending coverage to PFAS claims.
How Is Our Company Addressing PFAS Insurance Challenges?
As specialists in environmental insurance, our mission is to ensure that environmental consulting firms maintain the comprehensive coverage they need—despite emerging PFAS exclusions. We advocate on your behalf with carriers to:
- Tailor Coverage Endorsements
- Push Back Against Broad Exclusions
- Optimize Policy Terms and Limits
- Locate and Leverage Historical Policies
Sources and Further Reading
Below are some up-to-date references (as of February 2025) that support the information provided in this article:
- Hinshaw Law: Insurers Face Large PFAS-Related Losses
- National Law Review: PFAS Regulation and Insurance Coverage Implications
- Business Insurance: Federal PFAS Changes Open Floodgates to Liability, Exclusions
- Huff Insurance: Insights on PFAS and Environmental Coverage
- ISO (Insurance Services Office): PFAS-Exclusion Endorsements
By staying informed and proactive, environmental consulting firms can effectively manage the risks associated with PFAS and ensure their continued success and protection.
For a FREE consultation or more information on securing comprehensive environmental coverage, feel free to reach out to our team of specialists. Let us help protect your firm from the evolving risks of PFAS.
