BOSTON, MA – Per- and polyfluoroalkyl substances (PFAS) contamination liability is estimated to reach $400 billion across manufacturing, water utilities, airports, military sites, and other responsible parties, according to October 2025 environmental litigation forecasts and EPA remediation cost projections. This emerging liability—comparable to asbestos in scale and complexity—is creating chaos in the environmental insurance market, with premiums increasing 35-60% and carriers implementing broad PFAS exclusions or exiting environmental coverage entirely.
PFAS, known as "forever chemicals" because they don't break down in the environment or human body, have been used since the 1940s in firefighting foam, non-stick cookware, water-resistant fabrics, food packaging, and thousands of industrial processes. Now detected in the blood of 98% of Americans and in drinking water serving 200+ million people, PFAS contamination has triggered thousands of lawsuits against manufacturers, polluters, and property owners—with insurers facing massive claims under pollution liability and general liability policies.
The insurance industry's PFAS problem mirrors the asbestos crisis: policies written decades ago without knowledge of the risk now generate billion-dollar claims, reserve inadequacy is widespread, and insurers are desperately trying to limit future exposure through exclusions and coverage restrictions. For businesses with PFAS exposure, finding affordable environmental insurance is increasingly difficult, while those without coverage face existential liability risk.
What Are PFAS and Why Do They Matter?
PFAS (per- and polyfluoroalkyl substances): A family of over 12,000 synthetic chemicals characterized by strong carbon-fluorine bonds that resist breaking down in the environment or human body.
Common PFAS uses:
- Aqueous film-forming foam (AFFF) used in firefighting
- Non-stick coatings (Teflon, etc.)
- Water, stain, and grease-resistant treatments for textiles, carpets, food packaging
- Metal plating, electronics manufacturing
- Cosmetics and personal care products
- Pesticides and agricultural chemicals
Why PFAS are problematic:
- Persistent: Don't degrade naturally, accumulate in environment and organisms
- Bioaccumulative: Build up in blood, organs over time
- Mobile: Contaminate groundwater, surface water, soil over large areas
- Toxic: Linked to cancer, thyroid disease, immune system damage, reproductive issues, developmental delays
Contamination extent:
- 98% of Americans have detectable PFAS in blood
- 200+ million Americans served by water systems with PFAS contamination
- Tens of thousands of contaminated sites (airports, military bases, industrial facilities, landfills)
The Liability Landscape: Who's Getting Sued
$400 billion estimated total liability breaks down across:
1. PFAS Manufacturers ($180-200 billion)
Primary targets: 3M, DuPont/Chemours, Daikin
Liability theories:
- Product liability (manufactured dangerous chemicals)
- Failure to warn (knew of dangers, didn't disclose)
- Environmental contamination (manufacturing sites leaked PFAS)
Major settlements already:
- 3M: $10.3 billion settlement with water utilities (2023)
- DuPont/Chemours/Corteva: $1.19 billion settlement with water utilities (2023)
- Additional personal injury lawsuits pending: 4,000+ cases
2. Military Sites and Airports ($120-140 billion)
AFFF firefighting foam contaminated hundreds of sites:
- 700+ military bases with PFAS contamination
- 600+ airports with AFFF training areas
- Surrounding communities' drinking water contaminated
Who pays?
- Federal government (military bases): Likely taxpayer-funded cleanup
- Airport operators: Insurance claims + self-funding
- Municipalities: Insurance claims or taxpayer burden
3. Industrial and Manufacturing Sites ($60-80 billion)
Thousands of facilities used PFAS in production:
- Chemical plants
- Metal plating operations
- Textile manufacturing
- Electronics production
- Landfills accepting PFAS-contaminated waste
Liability: Current/former property owners and operators
4. Water Utilities ($30-40 billion)
Water utilities must treat PFAS to meet EPA standards:
- New EPA maximum contaminant levels (MCLs): 4 parts per trillion
- Treatment costs: $10-50 million per water system
- 20,000+ water systems potentially affected
Who pays?
- Rate increases (passed to consumers)
- Insurance claims against polluters
- Government grants (limited)
5. Municipal Landfills and Wastewater Treatment ($10-20 billion)
Landfill leachate contains PFAS:
- AFFF waste, consumer products, industrial waste
- Contaminating groundwater around landfills
Municipalities face: Cleanup costs + liability for downstream contamination
How PFAS Affects Insurance
Historical Coverage Issues: Did Policies Cover PFAS?
The asbestos playbook is repeating:
1950s-1990s general liability and pollution policies:
- No PFAS exclusions (risk unknown)
- "Sudden and accidental" pollution coverage
- Some policies had broad pollution coverage before exclusions became standard
Coverage disputes:
- Policyholders argue: PFAS contamination covered under old policies
- Insurers argue: "Sudden and accidental" requirement not met (contamination was gradual)
- Pollution exclusions (post-1986) bar coverage
- "Known loss" doctrine (policyholder knew of contamination before buying policy)
Result: Massive litigation over whether policies cover PFAS liability, similar to asbestos coverage fights that lasted decades.
Current Environmental Insurance Market Impact
Environmental insurance (pollution legal liability) is experiencing crisis:
Premium increases (2024-2025):
- Accounts with known PFAS exposure: 45-75% increases
- Accounts with potential PFAS exposure: 25-40% increases
- "Clean" accounts with no PFAS risk: 15-25% increases (market-wide pressure)
Coverage restrictions:
- Absolute PFAS exclusions (no coverage for any PFAS-related claims)
- PFAS sublimits (limited coverage, e.g., $1 million max for PFAS vs. $10 million policy limit)
- Increased retentions (higher self-insured amounts before coverage applies)
- Reduced policy limits (carriers won't offer high limits on PFAS-exposed properties)
Capacity reduction:
- Several major environmental insurers exited market entirely
- Remaining carriers dramatically reduced PFAS-exposed account writings
- Layered placements (multiple carriers sharing risk) harder to obtain
Example: Manufacturing company with potential PFAS exposure (used PFAS-containing materials 1990-2015):
- 2023 pollution liability insurance: $5 million limit, $25,000 retention, $180,000 premium
- 2025 renewal options:
- Option 1: $3 million limit with $1 million PFAS sublimit, $100,000 retention, $340,000 premium (89% increase)
- Option 2: $5 million limit with absolute PFAS exclusion, $50,000 retention, $285,000 premium (58% increase)
- No carrier would offer full $5 million coverage including PFAS
General Liability Implications
PFAS claims could potentially trigger general liability coverage:
Coverage theory: PFAS exposure causes bodily injury (cancer, immune disorders), covered under CGL policies
Insurer defenses:
- Pollution exclusion (PFAS is pollutant)
- Expected or intended injury
- No "occurrence" (gradual contamination not sudden accident)
Current status: Early-stage litigation, unclear how courts will rule on CGL coverage for PFAS bodily injury claims.
Who Has PFAS Liability Exposure
Industries facing significant PFAS liability risk:
1. Airports and Aviation
Why: AFFF firefighting foam used for decades in training and emergency response
Exposure: Contaminated soil, groundwater at airports; potential liability for neighboring properties' contamination
Insurance impact: Environmental insurance increasingly difficult to obtain, 40-60% premium increases
2. Military Contractors
Why: Provided services at contaminated military bases, potentially responsible for contamination contribution
Exposure: Defense contractors, construction firms, waste handlers
3. Chemical Manufacturing
Why: Produced or used PFAS in manufacturing processes
Exposure: On-site contamination, off-site migration, product liability
4. Metal Plating and Finishing
Why: Used PFAS-containing agents in plating processes
Exposure: Facility contamination, wastewater discharge
5. Textile and Carpet Manufacturing
Why: Applied PFAS-based stain/water repellents
Exposure: Manufacturing site contamination
6. Waste Management and Landfills
Why: Accepted PFAS-contaminated waste, leachate contaminating groundwater
Exposure: Cleanup costs, third-party liability for off-site contamination
7. Real Estate (Commercial/Industrial Properties)
Why: Property owners can inherit liability from previous operations
Exposure: Brownfield properties, former industrial sites, properties near airports/military bases
What Businesses Should Do
Step 1: Assess PFAS Exposure
Evaluate whether your business has PFAS risk:
Historical questions:
- Did you manufacture, use, or dispose of PFAS-containing materials?
- Did you use AFFF firefighting foam?
- Did you operate near sources of PFAS contamination?
- Did previous property occupants use PFAS?
Current questions:
- Do you currently use PFAS in operations?
- Is your property contaminated with PFAS?
- Are you located near potential PFAS sources (airports, military bases, industrial facilities)?
Action: Conduct Phase I environmental site assessment specifically evaluating PFAS risk
Step 2: Conduct Environmental Testing (If Warranted)
If Phase I indicates potential exposure, test:
- Soil samples
- Groundwater samples
- Surface water if applicable
- Building materials (if PFAS-containing products used)
Cost: $5,000-$25,000 depending on site size and sampling extent
Why test?
- Know your risk exposure
- Identify contamination early (lower cleanup costs)
- Insurance underwriting (some carriers require testing)
- Potential regulatory obligations
Step 3: Review Current Insurance Coverage
Examine policies for PFAS exposure:
Key questions:
- Do you have pollution legal liability insurance?
- Does it exclude or limit PFAS coverage?
- Do you have historical general liability policies that might cover PFAS claims?
- What are your self-insured retentions?
Action: Work with broker to understand coverage gaps and options
Step 4: Secure Coverage Before Exclusions Apply
If you don't have environmental insurance with PFAS coverage, obtain it NOW:
Market dynamics: Carriers are adding PFAS exclusions rapidly. Coverage available today may be unavailable in 6-12 months.
Even if you have potential PFAS exposure, some coverage may be available (with sublimits or higher retentions). Better to have limited coverage than none.
Step 5: Implement Risk Management
Reduce future PFAS exposure:
If you currently use PFAS:
- Identify PFAS-free alternatives
- Phase out PFAS-containing materials
- Implement containment measures to prevent environmental release
If you have historical PFAS use:
- Conduct voluntary cleanup (often cheaper and more controllable than regulatory-forced cleanup)
- Install monitoring wells to track contamination
- Implement institutional controls (prevent exposure pathways)
Step 6: Consider Business Transaction Implications
PFAS exposure affects:
Property sales/purchases:
- Due diligence must include PFAS assessment
- PFAS contamination reduces property value
- Buyers demanding indemnification for PFAS liability
- Representation and warranty insurance increasingly excluding PFAS
Mergers and acquisitions:
- Target companies with PFAS exposure face valuation discounts
- PFAS liability reserves required
- Environmental insurance required as condition of sale
Example: Commercial property listing $12 million. Phase I reveals potential PFAS contamination from historical operations. Buyer demands: $1.5 million price reduction, seller retain PFAS liability, $5 million pollution liability insurance with PFAS coverage. Seller unable to obtain insurance (PFAS exclusions), sale falls through.
Regulatory Landscape: EPA Final Rule
EPA issued final PFAS drinking water regulations (April 2024):
Maximum Contaminant Levels (MCLs):
- PFOA: 4 parts per trillion (ppt)
- PFOS: 4 ppt
- Three other PFAS: Various limits
- Hazard Index for PFAS mixtures
Water system compliance deadline: 2029 (5 years to meet standards)
Treatment costs: $1.5 billion annually across all U.S. water systems
Impact: Drives increased PFAS litigation as contamination extent becomes clear, water systems sue to recover treatment costs from polluters
The Insurance Industry Response
Carriers implementing aggressive risk management:
1. Broad exclusions: Many carriers now exclude all PFAS coverage
2. Sublimits: Carriers offering coverage cap PFAS exposure (e.g., $1-2 million max)
3. Site-specific underwriting: Requiring Phase I and II environmental assessments before quoting
4. Increased retentions: Higher self-insured amounts for PFAS-exposed accounts
5. Premium increases: 35-75% for exposed accounts
6. Reinsurance restrictions: Reinsurers limiting PFAS coverage, forcing primary insurers to retain risk or reduce exposure
Long-term industry view: PFAS is "long-tail" liability that will generate claims for decades, similar to asbestos. Insurers are protecting balance sheets by limiting future exposure.
Conclusion: PFAS as the Next Asbestos
Historical parallel:
Asbestos (1970s-present):
- Widely used industrial material
- Health hazards emerged
- Massive litigation ($85+ billion in claims)
- Insurance industry crisis (major insolvencies)
- Decades of coverage disputes
PFAS (2020s-present):
- Widely used industrial chemicals
- Health and environmental hazards emerging
- Massive litigation beginning ($400 billion projected)
- Insurance industry crisis developing (exclusions, exits, premium spikes)
- Coverage disputes starting
Key difference: Insurers learned from asbestos. They're implementing exclusions and limits earlier, protecting balance sheets but leaving businesses with less coverage.
For businesses with PFAS exposure: Act now. Insurance is still available but narrowing. Environmental liability could be existential. Those who address PFAS proactively will manage risk; those who ignore it may face bankruptcy from cleanup costs and litigation.
Concerned about PFAS liability exposure? Understanding whether your business has PFAS risk, securing appropriate environmental insurance coverage, and implementing risk management strategies is critical for protecting against potentially massive environmental liability.
Sources: EPA, Environmental Protection Agency PFAS regulations, Insurance Information Institute, Zurich Environmental Risk Report, Munich Re Emerging Risk Report, Environmental Insurance News, American Bar Association PFAS Litigation Tracker