In recent years, the conversation around chemical safety has increasingly focused on PFAS. Known as "forever chemicals" due to their resistance to environmental degradation, PFAS are found in a vast array of products—from non-stick cookware to firefighting foams and industrial applications.
While these chemicals provide valuable benefits, their widespread use has led to alarming levels of contamination in our water supplies and ecosystems, raising significant health concerns. Below, we dive into the complexities of PFAS, their risks, and the evolving insurance landscape surrounding these ubiquitous substances.
PFAS are a group of synthetic chemicals that have been used since the 1940s in a wide range of products. Their unique chemical structure gives them desirable properties like heat, water, and oil resistance, making them indispensable in many industries. However, these same properties make PFAS difficult to break down. As a result, PFAS have accumulated in water supplies, soil, and even human bodies. They’ve been linked to adverse health effects, including cancers, thyroid problems, and developmental issues in children.
Widespread Use: Like asbestos, PFAS has been incorporated into countless products and industrial processes over several decades. Its use is so pervasive that PFAS contamination has been detected in almost every corner of the globe.
Delayed Health Impacts: The full extent of PFAS’s health impact is still unfolding, much like asbestos, where health issues didn’t emerge until years after exposure. The time lag between exposure and the onset of health problems makes it difficult to establish direct cause-and-effect relationships immediately.
Persistence in the Environment: Asbestos fibers can remain in the lungs for decades, causing long-term health damage. Similarly, PFAS does not degrade naturally, earning its reputation as a "forever chemical." This persistence leads to long-term contamination of water sources, soil, and ecosystems.
Mounting Litigation: The legal landscape is already beginning to resemble the asbestos era. Lawsuits against manufacturers of PFAS-containing products. As more people become aware of PFAS contamination in their communities, lawsuits are expected to increase exponentially.
While the similarities are striking, there are significant differences that may make PFAS a more complex issue to address than asbestos.
Detection and Spread: Asbestos contamination was often localized—affecting workers in specific industries or buildings. In contrast, PFAS contamination is far-reaching, affecting drinking water supplies and ecosystems globally. This makes containment and remediation a more challenging and costly endeavor.
Diverse Sources of Exposure: Asbestos exposure was largely occupational, affecting those in industries like construction, mining, and shipbuilding. PFAS exposure, however, occurs through everyday consumer products, contaminated food, water, and even dust. This widespread exposure complicates the regulatory and legal response, as it involves multiple industries and consumer goods.
Ongoing Industrial Use: While asbestos use has been severely curtailed in many parts of the world, PFAS are still in active production and use, though under increasing regulatory scrutiny. The challenge lies in balancing their phase-out with finding viable alternatives for industries that rely on their unique properties.
Whether PFAS-related claim (normally bodily injury in nature) is covered under Commercial General Liability (CGL) insurance depends on several factors, including the specific policy language, exclusions, and the timing of the claim. PFAS-related claims can be highly complex due to the evolving nature of environmental regulations and the unique characteristics of PFAS contamination.
Policy Language and Pollution Exclusions: Most standard CGL policies contain pollution exclusions, which exclude coverage for liability arising from the discharge, dispersal, release, or escape of pollutants. Historically, insurers have considered PFAS chemicals to be "pollutants" under these exclusions. The broad nature of pollution exclusions means that many PFAS-related claims could be denied based on these provisions. However, the specific language of the exclusion matters:
Absolute Pollution Exclusion: This exclusion generally bars coverage for environmental contamination claims, making it unlikely that PFAS claims would be covered.
Sudden and Accidental Pollution Exclusion: Some older policies may provide coverage for pollution incidents if they are deemed "sudden and accidental." If the PFAS release can be characterized this way, there may be a potential argument for coverage.
Triggering of Claims: CGL policies are usually "occurrence-based," meaning coverage applies when an incident causing damage or injury occurs during the policy period, even if the claim is made later. With PFAS, which can take years or even decades to manifest health or environmental impacts, determining when the damage occurred and what policy applies can be contentious. The "long-tail" nature of PFAS contamination could trigger coverage under older policies without modern pollution exclusions. If PFAS contamination occurred years ago when exclusions were less stringent or nonexistent, a business may be able to access coverage under those older policies.
Bodily Injury or Property Damage: For PFAS claims to be covered, they typically need to involve bodily injury or property damage as defined in the policy. This could include situations where individuals claim illness or communities claim that water contamination has damaged property values.
Environmental Liability Policies: Some companies carry environmental impairment liability (EIL) policies, which are designed to cover pollution-related risks, including chemical contamination like PFAS. If a company has such a policy in place, it may provide coverage for PFAS claims, especially if the policy has broader definitions for pollutants and environmental harm.
Ongoing Litigation and Regulatory Uncertainty: As regulatory bodies like the U.S. Environmental Protection Agency (EPA) and various state agencies continue to tighten regulations around PFAS, litigation is growing. Courts have yet to fully determine how insurers should respond to PFAS claims, which means the landscape for PFAS coverage under CGL policies is evolving.
Understanding the nuances of coverage and liability in relation to PFAS is crucial for businesses. As regulatory measures tighten and litigation increases, stakeholders need to stay informed and proactive in their responses to these persistent chemicals. If you’re concerned about PFAS chemicals or need help navigating the current regulations the team at Roehr Insurance team can help.
