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Federal PFAS changes open floodgates to liability, exclusions


SAN DIEGO Coming to an insurance renewal near you: “PFAS exclusions.”

So predicts Joseph Saka, Washington D.C.-based partner at Nossaman LLP, which represents businesses in insurance disputes over covering historic and current damages over so-called forever chemicals, also known as PFAS, an abbreviation for perfluoroalkyl and polyfluoroalkyl substances.

Mr. Saka presented Monday at Riskworld, the Risk & Insurance Management Society Inc.’s annual conference in San Diego, weeks after two major crackdowns on PFAS by the U.S. Environmental Protection Agency made the subject timely, he said, affecting many industries and their insurance programs, both current and historic. 

In April, the EPA established safe levels of so-called forever chemicals in drinking water and designated a pair of widely used industrial chemicals as hazardous substances under the country’s Superfund program aimed to mitigate chemical waste at historical sites.

The Superfund changes, in particular, will change the risk landscape, he said. 

“We’re anticipating new investigations, new monitoring, new consideration of what remediation is going to be required,” he said. “If actionable levels are found at certain sites it could also lead to reallocation among potentially responsible parties.”

Expect insurance disputes and deep dive into state regulations, as an environmental claim on one state could translate differently in another, he said.

While the issue has its place in general liability policies, emerging environmental-specific policies and event D&O coverages could be triggered, Mr. Saka added.

It is going to “require companies to dig into historic policies that may be in storage or that may be missing,” he said. “A lot of companies are going to throw in the towel and say, I don’t know where it is. What can you do? And I would say that’s a big mistake because when you think about it, you’re dealing with an investment of several thousand at the potential risk of billions in liability.”