The New Jersey Association of Licensed Site Remediation Professionals (LSRPA) issued a statement on insurance exclusions regarding PFAS claims.

Recently, the New Jersey Association of Licensed Site Remediation Professionals (LSRPA) issued a statement on insurance exclusions regarding PFAS claims. According to Environmental Health news, Per- and polyfluoroalkyl substances (PFAS) are a group of human-made chemicals that have been used in consumer products and industrial processes since the 1940s.

“The LSRPA advises members to consult legal and insurance experts to verify PFAS coverage. In 2023, the Insurance Services Office published endorsements excluding PFAS claims, which may be on some CGL or PLL policies. LSRPs should assess risks and negotiate exceptions… These exclusions cover bodily injury and property damage resulting from PFAS exposure. Members have also reported seeing this exclusion in pollution legal liability (PLL) policies, which provide coverage for pollution-related events, including cleanup costs and third-party property and bodily injury claims related to pollution.”

How worried should an environmental consultant be about these exclusions and what can we do about it? Like all things insurance, well, it depends.

First, some definitions to help us set some ground rules: A typical Environmental Consultant will carry a Professional Liability/General Liability/Contractors Pollution Liability combination policy. Professional Liability covers claims of errors or omissions of professional judgement. General Liability covers bodily injury or property damage that results from your operations. Contractors Pollution covers claims arising from unintentional pollution events. The reason an insurance professional will recommend this type of combination policy is to prevent two separate carriers from being in opposition to one another during a claim event. If an event is deemed a professional error, but there is also property damage or loss, the last thing an environmental consultant needs to do is worry about two insurance companies fighting with one another to determine coverage. One carrier, one form, fewer disputes is the hope driving the creation and adoption of this policy form.

Next, onto the common exclusions. Not every carrier excludes PFAs claims, but for those that do, the exclusion is typically on the General Liability or Contractors Pollution side. But that means that coverage continues or may be available on the professional liability line. There are other similar exclusions on this type of policy form, designed to funnel claims and loss to one side of the policy over another. So the critical point is understanding the coverage triggers for professional liability, and talking with a knowledgeable risk manager who can walk you through your business and the coverage responses. There are cases where moving your coverage to a different carrier makes sense. There are cases where leaving the exclusion makes sense.

Finally, the case law on this type of loss is not there yet. In reality, we don’t yet know how the GL exclusion will affect the industry. We don’t know whether the cases will remain as professional liability lawsuits. We don’t know if some future environmental laws will deem property damage the result of a poor remediation plan. Simply put, there are more unknowns than knowns at this point.  So, yes, be aware of the exclusions. Understand your options. Make a business decision on coverage form over price. And most importantly, work with an agent who has experience in this field, and can share real world claims experience so you are an educated, prepared business owner.