How Expanding State PFAS Regulations Are Shaping Business Risk and Insurance Coverage

As federal regulation of per- and polyfluoroalkyl compounds (PFAS) stalls, states have increasingly implemented their own PFAS regulations. These regulations include PFAS drinking water limits, product restrictions, reporting obligations, groundwater standards, and remediation requirements, often exceeding federal requirements.

State Regulations Are Filling the Federal Gap

Last year, 19 states enacted 33 new PFAS laws. This year, 100 new state bills have been introduced in 17 states, while 280 bills carried over from last year across 23 states. Maine has enacted the most PFAS laws, with 24, followed by California and New Hampshire with 21. California is widely considered to have the nation’s strictest PFAS regulatory environment due to the broad scope of its laws.

For organizations operating in multiple states, the patchwork of regulations increases legal risk, operational complexity, and supply chain challenges. The laws also influence procurement decisions, product design, investment planning, and enterprise risk management programs as companies seek to maintain compliance. Consider these two examples:

Maine’s PFAS in products program created sales prohibitions for products with intentionally added PFAS and established a reporting program for products that have currently unavoidable use (CUU) determinations. Manufacturers that receive a CUU determination are required to submit PFAS notification forms and pay applicable fees to the state to continue selling PFAS-containing products.

California’s Assembly Bill 1200 targets PFAS in plant-based food packaging, dinnerware, and takeout containers. The law prohibits the use of intentionally added PFAS in these products. It also requires manufacturers to disclose the presence of PFAS and other hazardous chemicals on cookware labels. Noncompliance may result in injunctions, enforcement action, and civil penalties.

Why PFAS Remains a Challenging Insurance Exposure

PFAS exclusions have become increasingly common practice in the standard insurance marketplace. Broad PFAS exclusionary language is often added to general liability and property policy forms.

From an underwriter’s perspective, PFAS remains a challenging exposure. Long-tail uncertainty, the potential for bodily injury and property damage, and costly cleanups and remediations create a multitude of angles from which a claim can emerge. Increased regulatory enforcement adds to the complexity as states become more diligent about PFAS.

While PFAS exclusions are common, they are not always absolute. With the right type of underwriting information, some carriers may agree to remove PFAS exclusions. To consider removing a PFAS exclusion, underwriters are requesting detailed information on current and past operations to better understand PFAS exposure. Another potential risk transfer solution is to find this coverage in the environmental insurance space.

Carriers are increasingly using in-depth questionnaires to inform their decisions. They are asking for information such as:

• Historical property use
• Prior and current chemical usage
• Use, storage, and sale of PFAS-containing products
• Product characteristics (stain-resistant, wrinkle-resistant, etc.)
• Verification monitoring procedures
• Prior use of firefighting foam
• PFAS testing results and supporting documentation

Results of the questionnaires will influence the coverage outcome. Solid verification procedures and limited use of PFAS are more likely to result in coverage being granted or exclusions being removed. Types of coverage could include a PFAS sublimit, high PFAS retention, or a specific defined coverage grant, such as bodily injury only. Sites with significant PFAS exposures or adverse findings are less likely to qualify for coverage and may require exclusionary language.

Building a Proactive PFAS Risk Management Strategy

Given how frequently PFAS exclusions are applied, it is important to understand other methods for limiting PFAS exposure. Practical steps include:

• Conducting PFAS exposure assessments
• Understanding applicable state requirements
• Reviewing historical operations and product use
• Developing PFAS management and remediation strategies
• Engaging legal advisors and consultants early when an exposure is identified

As PFAS regulations continue to expand at the state level, a strong understanding of changing PFAS requirements is becoming increasingly important for business success. While many insurers are cautious about underwriting PFAS exposure, opportunities for coverage may still exist, depending on the current operations and site history. Whether through insurance solutions or broader risk mitigating strategies, a proactive approach can help reduce both future liabilities and insurance challenges.

Contact Hylant for additional guidance on environmental risk management.

Related Reading: Pollution Prevention Strategies

The above information does not constitute advice. Always contact your insurance broker or trusted advisor for insurance-related questions.