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PFAS Exposure: The Billion-Dollar Claims Category on the Horizon

PFAS is no longer a looming risk – it’s here. Litigation is mounting, the settlements are climbing into the billions, and the targets are multiplying. Chemical manufacturers and municipalities have absorbed the first wave of claims, but the tide is shifting. Insurers, who were once sitting on the sidelines, are about to find themselves in the direct line of fire. The legal and financial fallout from per- and polyfluoroalkyl substances, or PFAS, contamination will be massive, unrelenting, and for those unprepared, potentially catastrophic.

This article examines the escalating threat that PFAS, also known as “forever chemicals,” pose to liability carriers, excess insurers, and reinsurers. Regulators are tightening the screws, and litigation strategies are evolving; However, one thing is clear: PFAS is quickly becoming a billion-dollar claims category, and the insurance industry is directly in the crosshairs.

A Ubiquitous Chemical, a Universal Risk

Since their invention in the 1940s, PFAS compounds have been used in thousands of products, from nonstick cookware and waterproof clothing to firefighting foam and industrial solvents. Their resistance to water, oil, and heat made them a chemical marvel. But their resistance to breakdown in the environment and the human body has turned them into a public health crisis.

PFAS compounds accumulate in blood and tissue and have been linked to cancer, liver and kidney disease, thyroid dysfunction, and developmental disorders in children. These health risks, coupled with widespread environmental contamination, have triggered lawsuits across the country and massive regulatory momentum. The Environmental Protection Agency's (EPA) move to designate certain PFAS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, aka Superfund) is just the beginning. Cleanup mandates, class actions, and contribution claims will follow.

The Insurer’s Dilemma: Widespread Exposure, Limited Defenses

Insurers face a unique challenge as PFAS contamination can trigger multiple lines of coverage:

• General Liability (CGL) policies for bodily injury or property damage
• Environmental and Pollution Legal Liability policies for site remediation
• Product Liability coverage for manufacturers
• Directors and Officers (D&O) for alleged mismanagement or nondisclosure
• Excess and Reinsurance layers as losses mount

Many insurers believed that pollution exclusions would shield them. That assumption is proving dangerously optimistic. Courts across jurisdictions are applying inconsistent standards to the scope and enforceability of these exclusions, particularly when the policies in question are decades old. In some cases, policyholders are successfully arguing that exclusions were not intended to cover substances like PFAS, which were not widely known or regulated at the time of issuance.

In Suez Water N.Y. Inc. v. E.I. DuPont de Nemours & Co., for example, the court asserted jurisdiction over out-of-state PFAS manufacturers. It signaled that insurers could face broad liability even for historical policies. Similarly, in the New Jersey Department of Environmental Protection v. Solvay Specialty Polymers USA matter, the NJDEP used decades-old pollution statutes to compel cleanup and seek monetary damages, raising questions about how far back carriers’ exposure might reach.

 
Settlements in the Billions and Growing

The PFAS litigation machine is producing settlements of unprecedented scale, and the numbers are only getting bigger.

In August 2025, New Jersey secured a landmark settlement exceeding $2 billion with E.I. du Pont de Nemours and related entities, the most significant environmental settlement ever achieved by a single state. The deal resolved four lawsuits, including contamination claims at the company’s long-operating Chamber Works site in Salem County, and covered PFAS pollution at multiple sites statewide. Under the agreement, DuPont will pay $875 million in damages and abatement funds, commit up to $1.2 billion for remediation, and create a $475 million reserve to ensure cleanup obligations are met even if corporate entities fail.

This record-breaking resolution joins a growing list of PFAS settlements:

• In May of this year, 3M agreed to pay $285 million to New Jersey officials to resolve environmental claims tied to PFAS contamination at the Chamber Works facility in Salem County, as well as statewide claims through 2050. The deal included $210 million for the facility litigation and $75 million for current and future statewide claims, making it the largest statewide PFAS settlement in New Jersey’s history involving 3M.
• August 2023, the New York Attorney General announced a tentative $10 billion nationwide settlement, which has since been finalized, with 3M and other manufacturers to address PFAS contamination in public water systems.
• In March 2024, the NJDEP’s settlement with Solvay Specialty Polymers USA required nearly $400 million for remediation and compensation.

 
Why the Risk Is Rising Now

PFAS litigation isn’t only expanding but also accelerating. The following developments are pushing insurers into increasingly precarious territory:

1. Regulatory Designations

• In 2023, the EPA proposed strict limits for six PFAS chemicals in drinking water, and in 2024, finalized rules establishing enforceable maximum contaminant levels (MCLs). At the same time, the EPA’s designation of certain PFAS as hazardous substances under CERCLA created strict, joint-and-several liability. In practice, this means that even parties with a minimal connection to contamination, along with insurers, can be held responsible for clean-up costs.

2. Increased Public Awareness

• The general public now understands what PFAS are and what health risks they pose. This creates fertile ground for mass tort litigation, class actions, and personal injury claims.

3. Aggressive Plaintiff Bar Tactics

• Toxic tort firms are targeting not just chemical companies, but secondary actors: municipalities, product manufacturers, and distributors. These entities often carry layered insurance programs that plaintiffs view as revenue sources.

4. Uncertain Policy Language

• Policies written before 1986 may lack pollution exclusions entirely. Those written in the 1990s may include exclusions that are ambiguous or non-standard. Coverage litigation will center on interpretation, and uncertainty favors the plaintiff.

 
A Financial and Strategic Reckoning for Insurers

The insurance industry must now grapple with the uncomfortable truth that PFAS litigation may become its next asbestos, but with even broader applicability and a more modern litigation playbook.

Key considerations for insurers:

• How many in-force or expired policies contain potential PFAS exposure?
• Do those policies contain enforceable exclusions, and how have courts interpreted them?
• Are reserves appropriately structured to absorb potential PFAS liability?
• Have reinsurance programs accounted for the layered and long-tail nature of these claims?

Insurers that delay exposure assessment or fail to take proactive steps may find themselves overwhelmed by defense costs, settlement demands, and shareholder scrutiny. Worse, they may inadvertently create precedent-setting losses that reshape how environmental risk is underwritten going forward.

Conclusion: What Comes Next

There is no silver bullet for PFAS-related risk, and there is no “safe distance” from liability. Whether an insurer provided coverage for a chemical plant in the 1970s or wrote a product liability policy for a textile company in 2015, the possibility of being named in PFAS litigation is now real.

The billion-dollar claims category of the next decade is already being defined, and PFAS is at its center.

Insurers must act now:

• Audit legacy policies for PFAS exposure
• Develop clear underwriting guidelines for emerging risks
• Educate claims teams and underwriters on regulatory and scientific developments
• Prepare for complex litigation and policyholder pushback

PFAS may be invisible, but their impact will be anything but.