Per- and polyfluoroalkyl substances—known as "forever chemicals" due to their extreme persistence in the environment and human body—continue to fuel one of the largest and most complex mass tort waves in U.S. history. As of March 2026, the Aqueous Film-Forming Foams (AFFF) multidistrict litigation (MDL 2873) holds approximately 15,220 active personal injury claims, with municipalities facing critical Phase 2 settlement deadlines throughout 2026. While water contamination settlements have advanced, personal injury outcomes remain uncertain, placing significant pressure on umbrella and excess liability programs.

Current Market Conditions

The casualty insurance sector remains distinctly firm heading into mid-2026. Umbrella and excess liability rates increased 5–20% or more through late 2025 and into the first quarter of 2026, with carriers applying stricter underwriting and lower per-layer limits for any risk with potential PFAS exposure. High-hazard classes such as chemical manufacturing, firefighting equipment, airports, military contractors, and water utilities face the steepest pressure, often seeing capacity reductions and attachment points pushed higher. WTW's 2026 Casualty Outlook reports average lead umbrella increases exceeding 12%, with over a quarter of programs requiring restructuring due to limited carrier appetite. Emerging contaminants like PFAS, alongside social inflation and nuclear verdicts (awards exceeding $10 million), rank among the top drivers of loss reserve increases and highly selective underwriting. Over 1.2 million new commercial umbrella policies were issued in 2025, yet many carriers now routinely add specific PFAS exclusions or sub-limits, shifting more risk back to insureds or requiring specialized environmental or pollution liability placements.

Key Emerging Issues

Emerging issues center on PFAS's ubiquity and long-tail nature.[1] These chemicals appear in firefighting foams, consumer products, industrial processes, and even food packaging, leading to widespread groundwater, surface water, and bodily injury claims. Litigation has bifurcated into water provider suits (often settling) and personal injury claims alleging links to cancers (testicular, kidney), ulcerative colitis, thyroid disease, and other conditions. Related emerging contaminants—microplastics, certain phthalates, and formaldehyde—are gaining traction in parallel suits, potentially mirroring PFAS trajectories with continuous exposure triggers[2] spanning decades. Pollution exclusions remain the primary battleground in coverage disputes. Courts continue to split on whether PFAS qualifies as a "pollutant," how continuous injury triggers apply across multiple policy periods, and whether indirect environmental migration falls within exceptions to absolute pollution exclusions[3].

Major Lawsuits and Recent Developments

Key developments and lawsuits underscore the mounting pressure on excess layers. In August 2025, New Jersey secured a landmark $2.5 billion settlement with DuPont, Chemours, and Corteva for contamination at the Chambers Works site—the largest single-state environmental recovery to date—following bench trials on liability. A separate $450 million agreement resolved additional 3M-related state claims. On the personal injury side, no global settlement has materialized despite growing plaintiff numbers. Projections for individual payouts range from $20,000 to $500,000 or more, depending on diagnosis severity, exposure proof, and legal jurisdiction.

Insurance coverage actions now exceed sixteen cases across at least eleven states, testing core policy provisions. In Nat'l Foam, Inc. v. Zurich Am. Ins. Co. (N.D. Cal. 2025), the court held that a pollution exclusion barred coverage for indirect environmental exposure claims while finding a duty to defend one direct-exposure suit alleging post-policy-period injury. Conversely, Town of Harrietstown v. Westchester Fire Ins. Co. (N.D.N.Y. 2025) recognized a duty to defend an environmental contamination claim falling within a "crash, fire, explosion or collision" exception to the pollution exclusion. These split decisions highlight the fact-specific, jurisdiction-dependent nature of PFAS coverage battles. Underlying insurer insolvencies or exhausted limits frequently trigger disputes over whether excess policies must "drop down,"[4] often resolved by clear post-1986 wording stating that the policy will not replace uncollectible underlying insurance. Ambiguous maintenance or "other insurance" clauses can still lead to costly litigation over defense cost allocation in continuous-exposure scenarios.

Expected Changes and Regulatory Outlook

Expected changes in 2026 include a more measured federal approach under the current administration. The EPA has delayed compliance deadlines for certain PFAS drinking water standards to 2031 and signaled plans to rescind or reexamine rules for additional compounds, while preserving limits for PFOA and PFOS. State-level activity remains aggressive: Minnesota continues its phase-in of broad PFAS product bans through 2032, and other states are advancing biosolids restrictions and groundwater standards. Tort reforms in judicial hellholes such as Florida, Georgia, and Louisiana—capping non-economic damages and requiring greater litigation funding transparency—may moderate overall severity and ease some social inflation pressure. However, PFAS's long-tail character means these reforms will have limited immediate impact on legacy exposures. The NAIC continues monitoring environmental coverage issues, with potential model language updates addressing emerging contaminant exclusions.

Practical Guidance for Policyholders

Policyholders facing PFAS or similar emerging contaminant risks can take several concrete actions to strengthen their umbrella and excess programs. First, conduct a comprehensive policy archaeology review[5] to identify historical CGL policies (especially pre-1986 "sudden and accidental" forms) that may respond to long-tail claims under favorable state law. Second, negotiate targeted endorsements at renewal that clarify PFAS treatment, continuous trigger application, and allocation methodology across towers. Third, ensure strict concurrency of policy periods and follow-form language[6] to prevent gaps when underlying limits are impaired by insolvency or exhaustion. In quota-share arrangements—now more common due to capacity fragmentation—establish explicit protocols for settlement authority, defense cost sharing, and handling disagreements when one carrier invokes a PFAS exclusion while another does not; this reduces bad faith exposure significantly. Fourth, perform rigorous financial due diligence on all carriers using A.M. Best and other ratings, diversifying the tower to limit single-carrier failure impact. Guaranty funds offer only capped relief (typically $300,000–$500,000 per claim) and frequently exclude punitive damages, so excess-of-guaranty options or captive structures should be evaluated for high-exposure operations. Finally, integrate robust risk management: document PFAS usage history, implement substitution plans where feasible, and maintain detailed exposure data to support underwriting submissions and future claims.

Conclusion and Recommended Actions

In conclusion, PFAS and emerging contaminants represent a persistent, high-stakes challenge for excess insurers throughout 2026 and beyond. With thousands of personal injury claims still pending, municipal deadlines looming, and coverage litigation testing the boundaries of pollution exclusions, the potential for nuclear verdicts and allocation disputes remains elevated. Market firming, capacity constraints, and expanding exclusions mean many insureds will retain more risk than in prior years.
To mitigate these exposures, policyholders should immediately:

  • Perform a full policy archaeology and gap analysis with coverage counsel.
  • Negotiate clear PFAS-specific endorsements and allocation language at the next renewal.
  • Synchronize all layers and strengthen quota-share coordination protocols.
  • Diversify carriers and evaluate captives or excess-of-guaranty solutions.
  • Enhance internal documentation of PFAS usage and risk controls to support both underwriting and claims defense.

Organizations that act decisively now, in close coordination with brokers and coverage counsel, will be far better prepared to weather the next wave of PFAS-driven claims and maintain resilient umbrella and excess protection.
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[1] Insurance claims that develop or are reported many years (sometimes decades) after the policy period ends, common with environmental and product liability exposures.

[2] Policy language that treats ongoing or repeated exposure to a harmful condition as a single occurrence spanning multiple policy periods, often leading to complex allocation among insurers.

[3] Policy provisions that broadly exclude coverage for any claim involving the discharge, dispersal, release, or escape of pollutants, with extremely limited exceptions; widely used in post-1986 CGL forms.

[4] When an excess or umbrella policy is required to begin paying claims at a lower attachment point because the underlying insurance is unavailable or uncollectible (e.g., due to insurer insolvency or exhaustion).

[5] The process of locating, organizing, and analyzing historical insurance policies (sometimes decades old) to determine available coverage for long-tail claims.

[6] Contract wording in an excess or umbrella policy that mirrors ("follows") the terms, conditions, and exclusions of the underlying primary policy, subject to any specific overrides.