19257_Authority_June_2026

municipalauthorities.org │ 33 Pfas and the e voLving i nsurance L andscaPe What Public Authorities Need to Know By Tim Schantz, Vice President, Weiss Schantz Agency, a division of HUB International Three Rivers m emBer B enefit P rogram The Pattern We’ve Seen Before T he insurance industry has a long history of excluding emerging exposures from standard General Liability policies. Pollution, asbestos, lead, sexual abuse, silica, and cyber liability all followed the same pattern—once covered under a CGL policy, then excluded as claims grew. Each time, public authorities had to purchase standalone coverage to fill the gap. PFAS is next in line. Most insurance carriers are now rolling out specific PFAS exclusions on CGL policies for 2025 and 2026 renewals. If you haven’t already received notice, expect a letter from your carrier before your next renewal. What Are PFAS? PFAS (per- and polyfluoroalkyl substances) are synthetic chemicals used since the 1940s in products like nonstick cookware, stain-repellent fabrics, firefighting foams, and industrial coatings. Because they never break down in the environment or the human body, they’re known as “forever chemicals.” PFAS have been linked to serious health conditions. Why Is This Happening Now? Two key regulatory developments are driving this shift: 1. Superfund Designation: The EPA designated two major PFAS compounds (PFOA and PFOS) as hazardous substances under CERCLA (Superfund), triggering strict liability for contamination. 2. Drinking Water Standards: The EPA finalized enforceable drinking water limits for several PFAS compounds in 2024—as low as 4 parts per trillion. Just as cyber exclusions pushed public authorities into buying standalone cyber policies, PFAS exclusions are now pushing authorities toward dedicated pollution liability coverage. Three Key PFAS Exposures for Public Authorities A properly written pollution policy can respond to each of the following scenarios. Here’s what you need to know: 1. Bodily Injury Claims If PFAS is discovered in a community’s drinking water, the water authority is a likely defendant in bodily injury lawsuits. These claims can be massive—potentially involving thousands of consumers—and because health effects may take years to appear, the claims period can stretch for decades. A pollution policy should cover both defense and settlement costs for these claims. 2. Regulatory Compliance and Enforcement Meeting the EPA’s new drinking water standards may require expensive treatment upgrades. While a pollution policy won’t cover the cost of those upgrades, it can cover site-specific cleanup costs if a regulatory agency orders remediation at a specific facility— such as contaminated wells, treatment plants, or biosolids disposal areas. The key distinction: cleanup of existing contamination is typically covered; infrastructure upgrades to meet new standards are not. 3. Superfund (CERCLA) Liability Under CERCLA, public authorities can be pulled in as potentially responsible parties through several avenues: 1. Arranger Liability – A wastewater plant that received PFAS-containing influent could be deemed to have “arranged for disposal” of a hazardous substance. 2. Owner Liability – Owning land where PFAS contamination occurred can trigger cleanup obligations. Continued on page 56.