Polyfluoroalkyl substances (PFAS) are used in a wide variety of products and are posing the risk of environmental liability to many companies. These substances have become known as “forever chemicals,” as they can take hundreds or even thousands of years to break down in the environment and can build up in the human body.
With the continued increase in lawsuits filed against manufacturers by individual users of these products, state attorney generals and water providers, companies are looking to their historic general liability and pollution liability insurance policies to help cover some of the costs.
A recent article in Risk Management Magazine provides an excellent overview. The authors are Robert D. Chesler and Robert M. Horkovich. Chesler is a shareholder in Anderson Kill's New Jersey office and represents policyholders in a broad variety of coverage claims against their insurers and advises companies with respect to their insurance programs. Horkovich is managing partner in Anderson Kill’s New York office and chair of the firm’s insurance recovery group.
They write: “PFAS liability can be massive. Under the Biden administration, many expect the EPA will aggressively pursue PFAS cleanups. Thus, companies should look to valuable old general liability policies to ameliorate this exposure.”
The full text can be found at Risk Management’s website.
Here is an excerpt:
“A company facing PFAS exposure should act quickly to preserve its insurance rights. First, it should determine whether it is possible that the contamination started prior to 1986 [when the insurance industry added the absolute pollution exclusion]. If so, the company should immediately give notice to any pre-1986 insurance companies of which it has knowledge. Notice is a critical first step—in some states, late notice for policies applicable to PFAS might foreclose coverage as a matter of law.
A company should not wait until it is sued to provide notice. Insurance coverage can be triggered by regulatory or administrative actions, and even voluntary cleanups—a suit does not have to be filed against the policyholder. Companies should give notice as soon as they learn that they may be liable for PFAS cleanup.”
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Jonathan Terrell is the Founder and President of KCIC. He has more than 30 years of international financial services experience with a multi-disciplinary background in accounting, finance and insurance. Prior to founding KCIC in 2002, he worked at Zurich Financial Services, JP Morgan, and PriceWaterhouseCoopers.Learn More About Jonathan