PRODUCT | PFAS risks: regulation, litigation and insurance considerations

What are PFAS?

Per- and polyfluoroalkyl substances (PFAS) are a group of over 12,000 synthetic chemicals known for their strong carbon-fluorine bonds, making them resistant to heat, water, oil, and degradation. These properties have led to their widespread use across industries and products including food packaging, non-stick cookware, firefighting foam, clothing, cosmetics, electronics, medical and military equipment, and construction materials.

However, PFAS have varying bio-accumulative, persistent and toxicological properties, leading to increased regulatory scrutiny and litigation. Consequently, for those involved in the manufacture, use or distribution of PFAS – currently or historically – potential liabilities may exist. These include litigation risks, such as environmental contamination claims, personal injury actions, and allegations of false or misleading product advertising, as well as regulatory non-compliance risk, particularly as jurisdictions increasingly tighten PFAS controls. These risks are dynamic and continue to evolve.

This article considers these risks and examines how stakeholders who may be exposed to PFAS liability can proactively manage and mitigate the risks associated with PFAS through insurance. Insurance can serve as a risk transfer mechanism. By understanding the scope and limitations of various policies, stakeholders can better position themselves to respond to PFAS exposures, evaluate coverage, and engage in informed discussions around risk allocation.

Regulatory landscape considerations

There is no uniform approach to the regulation of PFAS across the globe. At an EU-level (and, at least for now, similarly in the UK, though post-Brexit divergence may emerge), there is limited harmonisation legislation which standardises regulatory requirements for PFAS across the board. Different types of PFAS are regulated by different legislative regimes – for example, under the EU Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation, the Persistent Organic Pollutants (POPs) Regulation and the Regulation on Classification, Labelling and Packaging (CLP) of substances and mixtures, to name a few – but there have been movements to change this.

Of particular note, the European Chemicals Agency (ECHA) is in the process of assessing a proposal to restrict the manufacture, placing on the market and use of PFAS under the EU REACH regime. The initial proposal, which was submitted at the beginning of 2023 and followed an extensive stakeholder consultation, has recently been updated on 20 August 2025, to introduce alternative regulatory options beyond a full ban and include conditional use allowances aimed at better balancing environmental protection with industrial feasibility.

The updated proposal, which follows detailed evaluations of potentially impacted sectors not covered in the original 2023 submission, now considers three PFAS restriction options:

• a full ban with an 18-month transition period (RO1);
• a ban with use-specific, time-limited derogations (5 or 12 years) also with an 18-month transition period (RO2); and
• an additional regulatory option that allows continued use under strict conditions that minimise emissions over the full life cycle, where risks can be adequately controlled other than by a ban (RO3).

The final decision on the restriction proposal will rest with the European Commission and will be informed by opinions from ECHA’s scientific committees: the Committee for Risk Assessment (RAC) and the Committee for Socio-Economic Analysis (SEAC), which are expected by the end of the 2026. Given the widespread use of PFAS across a multitude of industries, it is undisputed that the restriction proposal, in whichever form it progresses, will impact a host of businesses operating in the EU.

While the EU leads the charge in terms of more restrictive PFAS regulation, PFAS litigation is also on the rise worldwide, with significant civil claims activity, particularly in the U.S. Although rules across jurisdictions differ on proving PFAS exposure, causation and harm, as well as the ability to bring group actions, liability trends in the US have often been a good indicator of things to come in the EU and UK, meaning PFAS liability exposure is an issue that requires careful consideration.

Insurance considerations

Stakeholders from affected industries should be aware of key considerations when assessing and managing their insurance coverage position:

• Applicable insurance policies: A variety of insurance policies may provide cover for elements of PFAS liability. Current and historic policies may be relevant given the long-term nature of PFAS exposure. While coverage will ultimately depend on the specific policy wording, the following types of insurance policy may be relevant.
  • Environmental Liability Insurance: May cover clean-up costs, third-party claims for environmental damage, and regulatory enforcement actions related to PFAS contamination. Coverage may respond to both sudden and gradual pollution events.
  • Product Liability Insurance: Addresses claims that PFAS-containing products caused harm, including personal injury, property damage, and failure to warn or false and misleading advertising. This type of policy will be relevant for both manufacturers and distributors (but watch out for any PFAS exclusions).
  • General Liability Insurance: Provides broad coverage for third-party bodily injury and property damage. PFAS claims may be covered if pollution exclusions are absent or limited, especially in older policies.
  • Employers Liability Insurance: Covers claims from employees alleging illness or injury due to occupational PFAS exposure. Includes compensation and legal defence costs.
  • D&O (Directors and Officers) Insurance: Protects executives against claims of mismanagement or failure to disclose PFAS-related risks. May cover regulatory investigations into director conduct and shareholder actions.
• Trigger basis:Understanding how coverage is triggered under an insurance policy is essential to understand the cover you have. Older insurance policies may provide cover for to exposures stakeholders face now depending on the way in which cover is “triggered”. There are three types of trigger basis:
  • Occurrence Basis: Coverage is provided 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 from decades ago if 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 as both the incident and 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 the exposure occurred after any specified retroactive date. Whether such polices would cover new claims for historic PFAS exposures are likely to depend on how far back the retroactive date is set.
• Policy limits: Given the changing nature of PFAS regulation and litigation, forecasting financial exposure is challenging. However, stakeholders should ensure that as far as possible policy limits are set to offer maximum protection. They should consider negotiating higher limits or additional coverage if necessary.
• Exclusion clauses: Exclusion clauses can significantly impact the availability of coverage. Stakeholders should carefully review exclusion clauses at purchase or renewal and pay particular attention to whether policies include pollution exclusions and/or PFAS-specific exclusions.
  • Pollution exclusions: Pollution exclusions are a common feature in insurance policies, though they may not apply to PFAS-related personal injury claims relating to PFAS exposure through product use rather than environmental release. In the UK, 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, stakeholders 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 such as the Lloyd's Market Association and the German Insurance Association have published broad model PFAS exclusion clauses. However, while these exclusions reflect growing caution in the market, they are not yet universally adopted as standard and may not be included in older policies.

Key takeaways for stakeholders

• Compliance audit: Consider your current compliance procedures in place, including within your supply chain. Evolving restrictive regulations may impact operations, supply availability, costs, as well as product design.
• Assess exposure: Assess your potential exposure to PFAS liability. This includes estimating the potential financial value and scope of exposure across operations and products.
• Understand current coverage: Examine both current and historic policies to determine the extent of coverage available for PFAS liabilities. Pay close attention to trigger basis, policy limits, and exclusions. Seek a legal review of policy terms.
• Examine policies on purchase and renewal: Review policies on purchase and renewal to determine whether they provide PFAS coverage, seeking external legal advice. Securing new policies that cover PFAS risks may become increasingly difficult, however, you should work with brokers and other experts to negotiate terms, avoid coverage gaps or double coverage and optimise protection.

How we can help

We can help businesses navigate the evolving PFAS regulatory landscape across the globe, advising on current compliance requirements, horizon scanning potential developments, as well as assessing and mitigating PFAS litigation risks.

We can also help stakeholders by reviewing their insurance policies, advising on coverage for PFAS-related risks, flagging any problematic exclusions or other terms, as well as assisting when claims arise and in situations where insurance claims are denied.

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, Valerie Kenyon, Sara Bradstock, Magdalena Bakowska, Lorena Baltazar, and Erin Davies.