Legal Terrain

Mitigating PFAS Liability with Insurance: Are You Covered?

April 11, 2024


On Legal Terrain, we have previously reported on examples of the rapidly growing wave of PFAS-related litigation across the country. Advances in monitoring show that PFAS is ubiquitous in the environment. Accordingly, it is no surprise that, here in the Commonwealth, more and more of our clients are becoming subject to litigation. Companies are being hauled into court by private parties on tort claims, and many of these cases are bring brought as class actions, increasing the stakes. State and local governments are also bringing lawsuits for environmental liability, such as contamination of drinking water supplies.

PFAS litigation is only in its infancy. In these early stages, it is estimated that potential liabilities exceed hundreds of billions of dollars. Many companies are at risk, as potential defendants have broadened from those that produce PFAS, to those that incorporate PFAS into their finished products, and now to others that use PFAS-containing products as part of their manufacturing or agricultural practices. Disclosures required by a new EPA rule may even provide evidence to support liability claims.

As the prevalence of such claims rises, prudent companies and organizations will evaluate whether their insurance coverage could limit exposure and loss. If there is coverage, the next step is determining how to maximize it.

Now is a good time to inventory potential insurance coverage. Start by finding all policies. Your insurance broker, insurance carrier, or law firm can be good sources for old or missing policies. Once you have the policies corralled, a professional can help you evaluate what types of coverage may be available to you and assist you with pushing back on an insurer’s likely initial rejection of coverage.

The reality is that a claim can trigger multiple policies, as PFAS use and exposure can occur over long swaths of time. Legacy occurrence-based commercial general liability policies issued between the 1940s and mid-1980s were often written with broad coverage and few exclusions.  Some of these policies will have unlimited duty to defend language. Policies issued after 1986 often include total or absolute pollution exclusions; however, there may be carve-outs for sudden and accidental releases. As PFAS claims continue to rise, current policies will likely include PFAS-specific exclusions.

If you are subject to a claim, it is important to put all insurance carriers on notice promptly.  Doing a preparatory coverage review, as suggested above, will help streamline the notification process. Claims associated with these “forever chemicals” will proliferate in the coming years, and the best practice is to be prepared for what likely lies ahead as the target group of defendants widens.

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