PFAS Exclusion: Definition and How It Works

A PFAS exclusion is a policy endorsement that removes coverage for bodily injury, property damage, and cleanup costs arising from per- and polyfluoroalkyl substances (PFAS) from a commercial insurance policy. The exclusion applies most commonly to commercial general liability (CGL), umbrella, and excess liability policies and is triggered by EPA's April 2024 designation of PFOA and PFOS as CERCLA hazardous substances — a regulatory action that exposed carriers to potentially unlimited cleanup liability across thousands of industrial sites and activated a wave of judicial verdicts and settlements in the hundreds of millions of dollars. PFAS exclusions are now standard on new and renewed CGL policies for industrial accounts and are increasingly appearing on policies for businesses with only incidental PFAS exposure.

Background: What PFAS Are

Per- and polyfluoroalkyl substances are a class of approximately 12,000 synthetic chemicals characterized by carbon-fluorine bonds — among the strongest in organic chemistry. That bond strength prevents PFAS from breaking down in soil, water, or the human body, which is why they are widely called "forever chemicals." PFAS were used for decades in aqueous film-forming foam (AFFF) for firefighting, non-stick cookware coatings, water-resistant textile treatments, food packaging grease barriers, semiconductor fabrication processes, and paper mill sizing agents.

The insurance industry's PFAS problem stems from the convergence of three developments:

  1. EPA CERCLA designation (April 2024). The EPA finalized a rule designating PFOA (perfluorooctanoic acid) and PFOS (perfluorooctane sulfonate) as CERCLA hazardous substances (40 CFR Part 302). CERCLA imposes strict, joint, and several liability on potentially responsible parties (PRPs) for cleanup costs without proof of negligence — meaning a manufacturer whose product was used at a contaminated site decades earlier can face full cleanup liability today.

  2. Federal drinking water standards. The EPA's first National Primary Drinking Water Regulation for PFAS (89 Fed. Reg. 32532) set maximum contaminant levels of 4 parts per trillion for PFOA and PFOS. Water utilities now have a regulatory mandate and a litigation pathway to recover remediation costs from upstream industrial dischargers.

  3. Litigation pipeline. The AFFF multidistrict litigation (MDL 2873, D.S.C.) produced landmark settlements — 3M settled for $10.3 billion in June 2023 and DuPont/Chemours for $1.185 billion — that established templates plaintiff firms are replicating against manufacturers, distributors, and users of other PFAS-containing products.

How the ISO CG 33 64 Endorsement Works

ISO filed endorsement CG 33 64 — Exclusion — Per- and Polyfluoroalkyl Substances in 2022 to address PFAS on commercial general liability policies. Most participating carriers have since adopted CG 33 64 or a proprietary form modeled on it.

The endorsement:

  • Defines PFAS broadly — the definition covers the entire chemical class, not just PFOA and PFOS. Substances like PTFE (polytetrafluoroethylene), PFNA, PFHxS, and HFPO-DA (GenX) fall within the definition even if they are not currently designated as CERCLA hazardous substances.
  • Excludes bodily injury and property damage arising from PFAS at any point in the chain of manufacture, distribution, use, or disposal.
  • Varies by carrier on defense costs — some carrier-specific endorsements exclude the duty to defend PFAS claims from inception; others reserve the duty to defend until a final determination is made. This distinction is consequential: defense costs in complex environmental litigation routinely exceed indemnity payments in the early years of a claim.

Umbrella and excess carriers generally follow form, meaning if the underlying CGL excludes PFAS, the umbrella does as well. However, some umbrella carriers have written standalone PFAS exclusions broader than the underlying policy, creating a vertical coverage gap where neither layer responds.

What the Exclusion Does Not Cover

The PFAS exclusion is separate from the standard pollution exclusion found in most CGL forms. A policy may have both. The pollution exclusion has a longer litigation history and more developed case law, but carriers argue it also applies to PFAS as a "pollutant." In jurisdictions where courts have narrowly construed pollution exclusions (limiting them to "traditional environmental pollution" rather than all chemical exposures), carriers have added explicit PFAS exclusions to eliminate any ambiguity in coverage disputes.

Related Terms

How Brokers Use This Term

Insurance brokers encounter PFAS exclusions most commonly when reviewing policy endorsement pages at renewal. The practical questions are: (1) Is the CG 33 64 or a proprietary PFAS exclusion present on the current-term policy and was it also on the prior-term policy? (2) Does the client have any PFAS exposure — historical use of AFFF, manufacturing of PFAS-containing products, or proximity to a contaminated site? (3) If both answers are yes, is there a specialty pollution liability or site pollution liability policy in place to fill the gap?

Brokers who fail to identify a mid-term PFAS exclusion addition and document the coverage gap in writing to the client face E&O exposure. Environmental underwriters typically require a Phase I Environmental Site Assessment, five years of loss history, and a description of PFAS-containing materials used at the site before quoting specialty PFAS pollution liability coverage.