Since January 2021, the U.S. Environmental Protection Agency (EPA) has taken bold actions to alleviate both the past and future impacts of per- and polyfluoroalkyl substances (PFAS). These “forever chemicals," of which there are over 9,000 different types, have been determined to pose significant harm, both to the environment and human health.

“They do not break down and move through surface water, groundwater and soils. They also bio-accumulate in fish and wildlife, all which cause significant exposures to humans," says Beth Linton, vice president, environmental brokerage, EUS, a division of Burns & Wilcox. “Therefore, the EPA has established limits for PFAS and is in the process of setting guidelines for regulating this family of chemicals."

In April 2024, the EPA announced the first ever legally enforceable National Primary Drinking Water Regulation (NPDWR), covering six PFAS. The new rule will significantly reduce the level of PFAS in drinking water across the U.S., with regulated public water systems given three years to complete their initial monitoring for these chemicals and will be required to include the results in their Annual Water Quality reports to customers, according to the EPA. 

The EPA also designated two widely used PFAS—PFOA and PFOS—as hazardous substances under the “Comprehensive Environmental Response, Compensation, and Liability Act" (CERCLA). In addition, the EPA issued a separate CERCLA enforcement discretion policy that makes clear that the EPA will focus enforcement on parties who significantly contributed to the release of PFAS into the environment.

“The U.S. government is considering a comprehensive ban on the PFAS chemicals," says Jayne Cunningham, focus group leader, environmental, Beazley. “And this means people hedging for that eventuality by buying environmental insurance."

Yet, the uncertainty around the future of PFAS regulations has “caused most environmental insurance carriers to include a total PFAS exclusion on all types of insurance policies," Linton says. “In 2024, however, some carriers were willing to offer PFAS coverage on a limited basis, depending on the individual risk."

For now, “carriers are addressing PFAS much like they did mold a couple of decades ago when it became a hot topic," says Chris Bunbury, president, Environmental Risk Managers Inc. (ERMI). “Each carrier has their own way of addressing the issue, with the majority adding PFAS exclusions to their policies." 

In the early 2000s, carriers limited and excluded mold, while in the 1980s they adopted the same treatment for the carcinogenic chemical asbestos, a chemical that cost the U.S. property & casualty industry approximately $100 billion in losses and $46 billion in environmental losses, according to AM Best.

“In 2024, we have seen a stronger stance on specific PFAS exclusions both on general liability, commercial property policies and environmental insurance," says Kari Dybdahl Kohal, president, American Risk Management Resources Network LLC (ARMR), who warns that “trusting the pollution endorsements on general liability, commercial property and business automobile policies gives agents and insureds a false sense of protection, and they might find out too late that those endorsements do not respond the way a true environmental insurance policy would."

To assist their clients, agents with environmental expertise can convey the gaps in liability coverage as opposed to a true environmental insurance policy. “Going forward, we expect to see an increase in placements where agents and insureds want to try and make sure they do not leave an environmental coverage gap on their operations," Kohal says.

Many organizations have used or are continuing to use PFAS in their processes. For many carriers, “that would possibly generate an exclusion or maybe a high deductible or sublimit," Cunningham says.

“Today, because science has improved so much, we have the technology to discover something in the soil, in the groundwater and the science to be able to detect more precisely health issues in a human," Cunningham explains. “Something that's been in our environment since the '40s is now detectable and we're going through that process of deciding if it's harmful and to what degree it should be regulated."

Olivia Overman is IA content editor.