PFAS: Forever Chemicals and Construction Pollution Liability Risks

According to the US Environmental Protection Agency (EPA), polyfluoroalkyl substances (PFAS) — also known as forever chemicals — are one of the most significant emerging contaminants of concern. The potential for PFAS-related lawsuits could be staggering, with more than 6,400 lawsuits already filed in federal courts from 2005 to 2022, according to Bloomberg Law.¹

What Are PFAS?

PFAS are a group of over 12,000 chemicals used in industry and consumer products worldwide, including in the construction industry. In the construction industry, PFAS are used in everything from coating and sealants in architectural coatings, roofing membranes and exterior facades for weather resistance to wood treatments; insulation and weather barriers; electrical and plumbing components; carpet and flooring treatments; and adhesives and caulks.

Because of their long-lasting nature, resistance to degradation and potential health risks, the use of PFAS in construction is under increasing scrutiny, with potential legal liabilities.

The Dangers of PFAS

The chemicals have been found in soil, drinking water, lakes, oceans, the air, rainwater, food, fish, animals and humans. Studies have linked PFAS exposure to a high number of adverse health effects, including liver damage, immune system disorders, reproductive impacts and increased risk of cancer.

As a result, companies with PFAS-related liabilities are transitioning away from their use. Some manufacturers are reformulating products to replace PFAS with safer alternatives, particularly in waterproofing, coatings and fire suppression systems.

Will Environmental/Pollution Liability Insurance Respond to PFAS Claims?

"Despite the exploration of safer alternatives, the liability exposure remains, and construction firms should explore coverage within their Environmental/Pollution Liability policy in the event of a liability claim, as General Liability policies exclude coverage for claims related to pollution events," explains Sarah Wirtz, RPS area executive vice president and casualty manager, National Environmental Practice leader.

An Environmental/Pollution Liability policy typically covers liability for third-party bodily injury, property damage and cleanup costs resulting from pollution events. It's important to note that as PFAS contamination cases rise, insurers face challenges managing and underwriting these risks. Coverage for PFAS-related claims will depend on the policy language and specific endorsements. Newer policies may have limitations and stricter language, subject to specific conditions and sublimits.

"Many carriers seek to exclude PFAS exposures, and some are making the form a mandatory requirement," says Wirtz. "We are seeing this on both Pollution placements as well as General Liability and Excess placements. For carriers to consider removing the exclusionary language, additional information needs to be provided to demonstrate that there is no PFAS exposure present.

"Unfortunately, it has been difficult to identify any carriers who are able to provide affirmative PFAS insurance coverage. The most likely solution would be to have a carrier who is not specifically excluding and as a result is silent on their response to this exposure."

PFAS Safety Is Vital

In addition to reviewing the Environmental/Pollution Liability policy, contractors must be familiar with the products and materials they're handling that may potentially contain PFAS.

"Insureds who are aware of the PFAS presence in their materials must use them with caution and precision in an effort to mitigate potential claims," says Wirtz.

Knowledge Is Power

Unfortunately, PFAS aren't going anywhere, and construction professionals need to make sure they understand their exposures, practice safe handling and ensure that their insurance coverage is adequate. Understanding the issue and what it takes to minimize the risks is the first line of defense to avoiding problems.