PFAS

PFAS and other emerging contaminants litigation: Mitigating risk through insurance

In recent years, the United States has experienced a surge in litigation relating to polyfluoroalkyls and perfluoroalkyls substances (PFAS). These chemicals are slow to break down and can remain in the environment over many years. PFAS is a group of synthetic chemicals that are used to make a variety of products, including water and stain-repellents, lubricants and packaging materials, electronic devices, and firefighting foams.

Recently, there have been questions raised as to whether PFAS are a concern for the environment and if PFAS may pose a health risk to humans. High-profile lawsuits in the US have prompted states to pass laws that restrict certain PFAS usage. Minnesota has, for instance, given state agencies the authority to ban PFAS from a variety of products. They have also phased out PFAS packaging in food and imposed restrictions on PFAS use in consumer products such as carpets, rugs and cosmetics. The US Environmental Protection Agency has announced drinking water limits that are legally enforceable for a group PFAS compounds that they claim to be most dangerous.

Consumer groups and regulators are likely to be more active outside the US. This will lead to increased litigation against manufacturers, retailers and other parties in the supply chain. Businesses in the UK and European Union (EU) will need to respond with a variety of solutions, including an emphasis on how insurance policies can be adapted to address these new risks.

Recent Actions by UK and EU Regulators

The UK REACH regulations (registration evaluation authorisation and restrictions of chemicals) apply to most chemical substances manufactured or imported in Britain. There are currently only two UK REACH restrictions on PFAS, which relate to PFOA and its salts, and perfluorinated sililane substances. These chemicals are used in coatings to resist heat, oil and grease. The HSE added PFAS to its Rolling Action Plan, as substances that are prioritised under UK REACH 2. It is therefore possible that more restrictions could be implemented in the near future.

As part of its retained EU law, the UK has regulations governing persistent organic pollutants (POPs) resulting in the ban of PFHxS (perfluorohexanesulfonic acid). These regulations also state that anyone who violates the prohibition on manufacture, sale or use of a POP (such as PFOS or PFOA) by producing, placing it on the market or using it is guilty of strict liability. Corporates as well as responsible individuals (such a directors) are liable for a fine or a jail term.

The EU’s current PFAS law includes restrictions on PFOS and PFOA. Denmark, Germany Norway, Sweden and the Netherlands submitted a joint EU PFAS Restrictions Proposal in 2023, aiming to ban all (about 15 000) PFAS chemicals. The EU PFAS Restriction Proposal (the Proposal) is currently at the consultation stage. A final decision from the European Commission can be expected in 2025. There are some exceptions in the Proposal, such as PFAS found in biocides and medicines, or plant protection products. Companies operating in the EU have between one-and-a half and twelve years to find alternatives if the ban is implemented. It is possible that EU companies will stop using and producing PFAS.

The Spread of Litigation

In the US, the number of PFAS litigations has increased significantly over the past decade. US courts are also seeing an increase in class action lawsuits filed by consumers against companies that manufacture dental floss, feminine products, waterproof fabrics, and cosmetics that contain PFAS. These lawsuits are not limited to PFAS, but also include other emerging contaminants, such as benzene, titanium dioxide, chlormequat, or other pesticides found in oat products, formaldehyde, and other chemicals, in hair relaxers, and microplastics used in water bottles, among other products. All of these alleged contaminants are restricted or banned by the EU. The UK, however, has only banned the use benzene and formaldehyde as cosmetics.

PFAS litigation in the UK and Europe is expected to grow. In Belgium, for example, the government settled a claim with the owner of a plant after finding that the manufacturer contaminated the surrounding land and caused high levels of the PFAS to be found in the bloodstreams local residents.

It is only a question of time until we see a steady stream of claims and class actions in the UK related to PFAS, and other emerging alleged contaminants. In theory, such claims could be brought for a variety of reasons, ranging from personal injuries, where claimants allege exposure to PFAS caused health problems, to product liability where the presence PFAS was alleged to render the product unsafe. Property damage claims could also be made if there is an allegation of contamination of groundwater or land. Even if the discharge of industrial waste is permitted by licence, it may still be challenged on the grounds of potential risks to the human health or the environment.

Identification of Potentially Responsive Policies

Insurance policies may cover the costs associated with defending PFAS-related claims and liabilities. Depending on the nature and severity of the claim, the following policies could be relevant:

Public Liability Insurance or Commercial Liability Insurance

In general, public liability or commercial liability policies cover third-party liability for bodily injury or property damage arising out of the conduct or business. These policies are usually based on “events happening” or “losses occuring” bases. Losses-occurring policies provide liability coverage for injury or damage sustained during the period of the policy. When bodily injuries are caused by exposure, the liability usually begins not at the moment of exposure but rather when the illness appears. 5

Employers Liability Insurance

Employers in the UK are required to obtain employers’ liability coverage. This insurance protects them against any liability for injuries or diseases that employees may suffer in the course and scope of their employment. Coverage is provided for illness or diseases that occur during the period of the policy, even if symptoms do not appear until later. 6 In other words, historic policies of employers’ liability may be involved in the case of workplace exposures.

Insurance against Product Liability

The product liability insurance covers third-party liability for damage to property or injury to persons caused by the products themselves. It may cover property damage caused by a third-party product being contaminated as a result or the insured product being introduced into the mix.

Environmental Liability Insurance

Environmental liability insurance covers you against certain risks of pollution and environmental damage, such as pollution from industrial or manufacturing facilities.

How to improve coverage

When faced with a PFAS claim or any other alleged contamination related claim or potential claim, corporate policyholders can take a few steps to protect themselves.


Notify Insurers Promptly

Most liability policies require that you give written notice as soon as possible, or within a specified time frame, of any incident or occurrence which could lead to a claim being made against the insured, and any legal proceedings or claims. It is important to notify the insurer as soon as possible. This will allow them to cover any costs that may have been incurred before legal proceedings were issued.


Early Coverage Analysis

A consultation with an experienced coverage lawyer will help you identify and analyse policies that are responsive and anticipate any coverage issues the insurers may raise. Coverage counsel can help combat insurers’ arguments early on if they impose reservation of rights or rely upon coverage defences or exclusions.


Collect and preserve relevant documents

Insurance companies (as also third-party claimants) can request extensive documentation. It is important to act early to locate and preserve any potentially relevant documents.


Defence of Claims

Certain liability policies stipulate that the insurer is entitled to defend third-party claims, but this clause does not oblige the insured to use the chosen lawyers of the insurer. Insureds can negotiate with insurers to have lawyers appointed who are experienced and loyal to the policyholder.


Terms of Policy Negotiation

Policyholders, even if no claims have yet been made, should be proactive in their approach to liability insurance. They should take action at renewal time to ensure their coverage is sufficient to cover any potential claims. Negotiate policy terms if the insurers have pollution exclusions, or exclusions that are specific to claims related to PFAS and other contaminants. The Lloyd’s Market Association already has model PFAS-related exclusions that can be used in liability insurance policies. However, these exclusions are generally worded. Policyholders who are proactive may be able negotiate better terms.

1 hse.gov.uk/REACH/assets/docs/pfas-rmoa.pdf

2 UKREACH: Rolling Action Plan for UKREACH 2023-2025 – REACH-HSE

3 3M Belgian Settlement Signals Increased Risk of ‘Toxic Torts’ in Europe (insurancejournal.com)

NL Times

5 Bolton Metropolitan Borough Council V Municipal Mutual Insurance Ltd (2007) Lloyd’s Rep. IR 173

6 Lloyd’s Rep. IR 371BAI (Run Off) Ltd. v Durham, [2012] Lloyd’s Rep. IR 371.