Carriers in the environmental liability space are increasingly growing cautious and restrictive in their coverage when it comes to per- and polyfluoroalkyl substance (PFAS) risks in construction and redevelopment projects.
This growing vigilance comes amid growing public awareness of the health and environmental impacts related to these persistent compounds, often called “forever chemicals” due to their resistance to breaking down naturally in the environment.
The presence of PFAS at a construction site can increase costs, create health hazards, and compromise project timelines.
Dennis Willette (pictured), head of environmental at Westfield Specialty, pointed to a clear tightening of coverage terms and policy exclusions across the industry as awareness grows around remediation costs, health impacts, and evolving regulations.
“There’s no one way that people are approaching it, but I would say the general theme is that coverage is tightening,” Willette told Insurance Business. “PFAS is becoming ubiquitous across many different areas. You’re seeing it in sites that don’t traditionally carry PFAS-generating materials in mass quantities.”
PFAS compounds have been used in numerous building materials, including fire-resistant products, roofing, coatings and paints. Consequently, many sites may harbor legacy PFAS without their knowledge, adding complexity to ongoing operations and future redevelopment. Long-term exposure to PFAS has been linked to serious health issues, including certain cancers, developmental disorders, and immune system problems.
There are two main high-risk scenarios in the construction sector, according to Willette: sites where firefighting foams are used and wastewater treatment facilities that enable the accumulation of these compounds.
Disposal sites for soil and other materials can pose additional complications if regulators later identify previously unknown PFAS contamination. “If that soil is disposed of off-site, what are the long-term implications? What are the implications of sending that waste to a facility that may not be checking for PFAS now but may be checking for it later?” Willette asked.
Regulators are increasingly focused on understanding and mitigating the effects of these compounds. Earlier this year, the US Environmental Protection Agency (EPA) set health advisories for PFAS in drinking water, reflecting growing awareness about their persistence in the environment and potential health impacts.
For insurers, this growing knowledge introduces a range of new underwriting and coverage questions. The main challenge, Willette said, lies in assessing the potential for future liability stemming from historical use of or disposal of PFAS, which may manifest years after a policy’s expiration.
As a result, carriers are adapting their coverage to account for PFAS risks. Some are adding specialized endorsements or developing policy wording that expressly covers certain PFAS-related scenarios while retaining strong controls through policy exclusions, sub-limits, or other mechanisms.
Insurers are also employing sophisticated data and underwriting strategies to aid their policyholders in assessing and mitigating their PFAS-related risks. This might include reviewing historical site usage, deploying specialized testing, and requiring insureds to implement mitigation measures.
Westfield Specialty, for its part, offers a non-owned disposal site coverage on an occurrence basis. Willette said their tailored approach enables a policy structure that can account for a range of eventualities related to PFAS.
“We’re evaluating the risk and applying coverage based on what we see and what we know, not general rules or blanket statements,” he said.
To help construction clients address PFAS risks, brokers should adopt a proactive approach, Willette said. This begins with asking detailed questions about clients' specific project sites and potential PFAS exposures, homing in on high-risk sectors such as fire suppression systems, wastewater treatment facilities, and industrial manufacturing sites.
Staying continuously informed is also key. Brokers should track evolving state and federal PFAS regulations, monitor the latest technical developments in PFAS risk assessment, and understand ongoing changes in the insurance market's approach to these forever chemicals.
Willette also highlighted the importance of a strong consultative approach between carriers, brokers and insureds to help contractors mitigate risks more effectively. “We’re really looking to develop partnerships with our insureds, not just provide a policy,” he said.
Willette believes liability policy structures will continue to reflect the growing complexity and significance of these hazardous compounds. He sees PFAS risks instigating broader changes in the marketplace.
“A market that used to support 10-, 20-, or 30-year policy terms is now shifting toward a more traditional approach: annual, renewable, or two- or three-year term deals,” Willette said.
“There are still markets that provide long-term coverage, when you’re dealing with an issue like PFAS, it highlights how quickly regulations can evolve and how much an account can change over a short time. All of that helps demonstrate why the market is shifting in this direction.”
