The metal finishing industry is under intense regulatory scrutiny over a new chemical of concern: PFAS/PFOS — per- and poly-fluoroalkyl substances. These chemicals are ubiquitous in the environment and in people’s blood streams, and there is increasing concern about their impact on human health. USEPA announced a “PFAS Action Plan” detailing the actions it will take to protect public health. The California State Water Resources Control Board (“SWRCB”) also announced a proactive sampling program aimed at defining the scope of PFAS contamination in California.

Insurance Coverage

Insurance policies written today typically exclude coverage for this type of pollution claim. But that was not always the case. In the 1960s, liability insurance policies did not contain pollution exclusions. It was not until the early 1970s that the insurance industry started writing policies containing pollution exclusions, but with a glaring exception — the so-called “sudden and accidental” exception. An “absolute pollution exclusion” was added in the mid-1980s. Most importantly, investigation costs may be included as a defense cost, meaning hundreds of thousands of dollars in investigation costs can be accomplished without reducing policy limits. Every metal finisher needs to prepare now by proactively identifying and understanding historic insurance assets.