Navigating PFAS Liability: Emerging Regulations, Litigation Risks, and Insurance Coverage Strategies

Per- and poly-fluoroalkyl substances (PFAS)—sometimes referred to as “forever chemicals”—have garnered significant attention in recent years, becoming a focus of government regulation and a deluge of civil litigation targeting a wide array of industries. As with any developing area of risk, it is critical that companies assess what insurance coverage they have for PFAS-related risks; allegations of PFAS exposure can trigger decades of potentially available insurance coverage. Policyholders across industries are taking steps to assess their exposure to PFAS liability and to evaluate the insurance coverage that may respond to any PFAS-related claims.

Recent Developments

The science concerning the human health and environmental effects of PFAS has progressed significantly over the last two decades. For example, in 2024, environmental and other regulators took significant action on PFAS:

• In February, the Food and Drug Administration announced a voluntary ban on PFAS-containing food packaging, such as takeout containers, microwave popcorn bags, and fast-food wrappers, in the U.S.
• In April, the Environmental Protection Agency set its first regulatory limits on six types of PFAS in drinking water. The EPA also designated two types of PFAS as CERCLA hazardous substances, paving the way for future contribution actions under environmental cost-recovery statutes.

This increased regulatory activity has coincided with an influx of civil lawsuits targeting both manufacturers and sellers of products that allegedly contain or degrade into PFAS, as well as the companies that manufacture or distribute PFAS. While those lawsuits have met mixed success, they continue to be filed at a rapid pace—to name just a few:

• In January, kombucha manufacturer Health-Ade was sued in New York federal court by a consumer alleging that its drinks contain PFAS. See Morton v. Health-Ade, LLC, Cas. No. 7:24-cv-00173 (S.D.N.Y.).
• In May, BIC was sued for failing to warn consumers that it allegedly uses PFAS in its disposable shaving razors. See Butler v. BIC USA INC., No. 24-cv-2955 (N.D. Cal.).
• In June, natural toothpaste company RiseWell LLC was sued by a putative class of consumers, alleging that its toothpaste—advertised as “natural” and “safe to swallow”—contained PFAS. See Watkins et al. v. Illuminati Labs LLC et al., Case No. 5:24-cv-03529 (N.D. Cal.).

Dozens of similar lawsuits have been filed in recent years, alleging the presence of PFAS in fruit juice, cosmetics, hygiene products, school uniforms, and food packaging, among many other products. Because PFAS has been used in a wide variety of products and industries since the 1940s (including nonstick pans, stain-resistant clothes, carpeting, furniture, dental floss, and food packaging, to name only a few), companies in virtually every industry may have exposure to such lawsuits.

PFAS Insurance Implications

PFAS liability presents unique and sometimes novel issues for insurance coverage. While there are few judicial decisions applying key insurance concepts to this new and growing form of liability, there are insurance issues that policyholders can consider and prepare for even before a claim arises.

• Assessing PFAS Exposure: PFAS claimants may allege exposure to PFAS over many decades, potentially from commercial activities or businesses that the policyholder exited long ago. Identifying PFAS used in the policyholder’s current and past commercial activities, by its suppliers or subsidiaries, and by any of other entities for which it might be responsible, is a key component of assessing the company’s overall PFAS exposure.
• Preparing for Potential Insurance Claims: Coverage for PFAS-related liability may be provided by policies that are no longer easily accessible, either because they were issued to now defunct entities or by the sheer passage of time. Identifying historical policies, as well as insurance policies to which the policyholder may have been designated as an “additional insured” (such as those purchased by vendors or other contractual counterparties), can provide access to significant insurance. Reviewing potentially applicable policies before a claim arises also may help to ensure compliance with any potential notice and cooperation conditions, which may be necessary to preserve recovery.
• Assessing Available Coverage and Pollution Exclusions: Many insurers have denied coverage for their policyholder’s PFAS liability on the ground that PFAS is a “pollutant” subject to their policies’ pollution exclusions. While the case law applying such exclusions to PFAS is still developing and varies by State, under most pollution exclusion language, policyholders may have strong arguments for coverage of their PFAS-related liability. For example, such exclusions may not apply where the policyholder’s PFAS liability arises from the intended use of its product, rather than waste emissions from industrial facilities.

Covington’s Insurance Practice

Whether your company is currently responding to PFAS claims or is considering how to assess and prepare for potential claims in the future, Covington’s award-winning insurance recovery team can help. Covington is the leading policyholder firm assisting clients with PFAS-related coverage and represents companies facing all manner of potential PFAS liabilities.

• Covington represents Tyco Fire Products in PFAS coverage litigation. Although this litigation is ongoing, Covington has already negotiated a number of coverage settlements together totaling hundreds of millions of dollars and secured key rulings in favor of coverage for Tyco, including “all sums” allocation across client’s coverage and a ruling that the scope of a prior release did not apply to PFAS claims.
• Covington has been selected as special insurance coverage counsel in connection with the bankruptcy of Kidde-Fenwal in an adversary proceeding seeking coverage for claims arising out of AFFF. 
• Covington represents clients in several confidential PFAS matters seeking to secure insurance coverage without the need for litigation.

Although Covington’s multi-disciplinary team is uniquely prepared to litigate the largest and most complex coverage actions across the country, Covington also boasts a track record of obtaining significant recovery for those liabilities without costly and public litigation. Covington’s success in these and many other insurance disputes has led to its insurance practice group being ranked by Chambers and Partners as the only “Band 1” insurance practice group in the nation for 18 straight years, and to the group being recognized as Law360’s 2023 “Practice Group of the Year” and Business Insurance’s 2023 “Legal Team of the Year.”

If you have any questions concerning the material discussed in this client alert, please contact the members of our Insurance Recovery practice working on PFAS-related matters.