PFAS: a guide for insurance policyholders

What are PFAS?

Per- and polyfluoroalkyl substances (PFAS), otherwise known as “forever chemicals”, are a family of over 12,000 synthetic chemicals that share a unique structure of carbon-fluorine bonds, one of the strongest chemical bonds in organic chemistry. This structure provides resistance to heat, oil, water, and degradation. Due to these desirable properties, PFAS have been valued and widely used in a variety of industries and products since the 1940s, including food packaging, cookware, firefighting foam, clothing, cosmetics, electronics, medical equipment, military equipment, and construction materials.

In recent years, increased scientific attention has focused on the environmental persistence and health impacts of PFAS. As regulatory frameworks, new PFAS litigation cases and public awareness continue to evolve, businesses across various sectors are assessing their potential exposure and considering appropriate risk management strategies. This article explores the current landscape of PFAS-related liability and offers practical insights for evaluating insurance coverage and corporate preparedness.

Liability risks

Although PFAS have been in widespread use since the 1940s, it wasn't until the early 2000s that more comprehensive research began to investigate their impacts. Findings have since indicated that PFAS are highly resistant to environmental degradation, leading to their accumulation in soil, water, and air, as well as in the bodies of humans and animals, leading to links to environmental and health concerns.

For companies involved in the manufacture, use, or distribution of PFAS—either currently or historically— potential PFAS liability is becoming an emerging focus. Key areas of potential exposure include:

• Regulation

Global regulations on PFAS are rapidly evolving across jurisdictions: the US has set drinking water limits, states like California have banned PFAS use in specific products, France has recently become one of the first countries to introduce a wide ban on PFAS, and the EU is moving towards a similar EU-wide ban.

In the UK, regulations are comparatively limited, however the Environmental Audit Committee has announced a review of UK research efforts and regulation to examine whether the UK's chemical regime is equipped to manage PFAS exposure. Further regulations may come as a result of this review.

As regulatory standards continue to develop, companies may face obligations related to compliance, disclosure, and potential remediation. Staying informed and engaged with regulatory trends is essential for managing future risk.

• Litigation

PFAS litigation in the US and Europe is well-established. Claims initially targeted large manufacturers, but have now expanded to include a broader range of companies, including those that use PFAS in their products or operations.

Key areas of litigation include:

• Environmental Contamination: Claims related to alleged contamination of water systems, soil, and groundwater, often involving demands for remediation and compensation.
• Personal Injury: Claims alleging health impacts from PFAS exposure.  For example, in 2024, Sweden's Supreme Court recognised elevated PFAS levels in blood as a form of personal injury, even in the absence of other manifestation of illness.
• Consumer Products: Claims brought by consumers for false or misleading advertising, particularly where PFAS are present but not disclosed, or where products are marketed as “safe” despite containing PFAS.

Whilst PFAS litigation in the UK is in its infancy, it may follow the wider trends already seen in  the US and Europe. The groundwork for litigation in the UK may be beginning to take shape with the Environment Agency identifying various sites across the country with high PFAS concentrations prompting claimant firms to investigate potential pollution on behalf of residents in at least two of these locations.

While comparisons to asbestos/mesothelioma litigation are sometimes drawn, PFAS-related health effects are broader and not exclusive to PFAS exposure.  Thus far, there is no ‘signature disease' known to arise from PFAS exposure (unlike asbestos and mesothelioma) and that may influence how litigation unfolds in the UK.

Only a small proportion of the 12,000+ known PFAS compounds have been studied in detail. As research continues, new findings may inform regulatory decisions and claimants' legal arguments, potentially increasing exposure for companies. For businesses, this underscores the importance of proactive risk management.

Considerations for corporate policyholders  

Corporates from affected industries who currently manufacture, use or are associated with PFAS, or have been in the past, should be aware of the following considerations to assess and manage their insurance position:

• Applicable insurance policies: A variety of insurance policies may provide cover for elements of PFAS liability including Environmental Liability, Product Liability, General Liability, Employer's Liability and D&O Insurance. Both current and historic policies should be reviewed.
• Trigger basis: Older insurance policies may be relevant depending on their terms and the way in which cover is “triggered” under them. There are three types of trigger basis:
  • Occurrence Basis: An occurrence basis insurance policy may provide coverage if the exposure to PFAS occurred during the policy period, regardless of when the claim is made. Such policies could cover claims related to PFAS exposure that happened decades ago as long as the exposure occurred while the policy was active. This makes them a critical consideration for entities facing long-term environmental liabilities.
  • Occurrence-Reported Basis: Coverage is provided only if both the PFAS exposure and the claim occur within the policy period. If a claim is made after the policy expires, it will not be covered unless an extended reporting period (tail coverage) is in place. These policies may be less relevant for PFAS-related claims due to the requirement that both the incident and the claim must occur within the policy period.
  • Claims-Made Basis: Coverage is triggered when a claim is filed during the policy period, regardless of when the exposure occurred, provided it is after the retroactive date. Older claims-made policies may be applicable if the retroactive date is set far enough back to cover the historic PFAS exposures.
• Policy limits: The changing nature of PFAS regulation and litigation makes it challenging to forecast the financial impact. However, companies with significant exposure to PFAS should pay particular attention to the policy limits of their insurance policies. Policyholders should assess whether their current limits are sufficient to cover potential liabilities and should consider negotiating higher limits or additional coverage if necessary.
• Exclusion clauses: Policyholders should read exclusion clauses in all insurance policies on purchase or renewal. Policyholders should particularly look out for pollution exclusions and PFAS-specific exclusions. Leveraging older policies without PFAS exclusions may be beneficial, and consulting with experts can help to secure adequate coverage.
  • Pollution exclusions: Pollution exclusions are a common feature in insurance policies, though may not apply to personal injury caused by PFAS exposure through products themselves, rather than environmental release. In the UK, insurance exclusion clause interpretation depends on the ordinary meaning of the policy terms and their context. If a policy's pollution exclusion is ambiguous or does not explicitly mention PFAS-related liabilities, policyholders may be able to argue against its applicability.
  • PFAS exclusions: The insurance industry is already alive to the increasing risk of exposure to PFAS related claims, and underwriters are adopting a cautious approach. Industry bodies in more than one jurisdiction have published model PFAS exclusion clauses. The Lloyd's Market Association has introduced model clauses LMA5595 and LMA5596, applicable to insurance and reinsurance policies, respectively. Similarly, the German Insurance Association (GDV) has added PFAS exclusion clauses to its non-mandatory model terms and conditions.

Securing new policies that cover PFAS risks is becoming increasingly difficult, however, policyholders should work with specialist brokers and other experts to optimize insurance coverage, prevent double coverage and negotiate changes to terms such as limits and exclusions.

Key practical tips for policyholders

• Assess exposure: If you are a corporate in a PFAS-exposed sector, you should assess your exposure to PFAS liability.
• Review historic policies: You should review old policies to determine the extent of coverage available for PFAS liabilities. Considerations such as the type of trigger basis (occurrence, occurrence-reported, or claims-made), policy limits, and any applicable exclusions or endorsements should be carefully evaluated to understand the potential for coverage of historic liabilities.
• Examine policies on purchase and renewal: You should also examine policies on purchase and renewal to determine whether they provide coverage for PFAS liabilities. Securing new policies that cover PFAS risks is becoming increasingly difficult, however, you should work with brokers and other experts to determine whether liabilities can be covered, negotiate changes in insurance coverage and to prevent double coverage.

How we can help

We can help corporate policyholders by reviewing their insurance cover, advising on coverage, assisting on claims notifications and acting in situations where insurance claims are denied by insurers.

Please visit our dedicated insurance hub InCrowd where you will find a collection of ‘Insurance Essentials' short videos explaining how insurance can help your business thrive, covering topics such as political risk insurance, embedded insurance, and insurance for directors and information about how we can help you with your insurance issues.

Authored by Lydia Savill, Sara Bradstock and Erin Davies.