Case Study: Securing Environmental Coverage for PFAS Exposure

Chris Alviggi, Managing Director, Environmental

The Story

Fully understanding a client’s exposure to environmental risk is best compared to peeling back the onion. It’s sometimes painful and often tedious but always beneficial because the deeper we dig, the more we learn. This was the case when Jared Dubrowsky and Emily Bourdeau were presented with an opportunity to assist a client in need. Our client was on the verge of inking a deal to acquire assets and liabilities of a company that sold, installed and serviced fire suppressant systems which utilized foam. After numerous discussions and careful review of the deal documents, we learned foam suppressant contained PFAS. Liabilities resulting from PFAS are in the forefront and creating much balance sheet uncertainty for those who find themselves in chain of custody. Our client was concerned this contractually assumed obligation could result in significant liabilities causing financial harm to the company.

What was at stake? Post-close balance sheet uncertainty resulting from possible lawsuits brought by former employees for toxic torts associated with exposure to the foam. How? By only covering PFAS liability associated with fire foam remediation.

Recognizing the need to find a viable environmental insurance solution, an NFP colleague contacted Emily Bourdeau and Jared Dubrowsky.

The Challenge

Our client entered into a definitive agreement to acquire the assets and liabilities of the seller. The client and its representatives identified two specific causes of concern: 1) third-party liability arising from sales, service and installation of fire retardant systems containing PFAS and 2) liability arising from former employees’ exposure to PFAS knowing current employees are statutorily protected under workers’ compensation, while former employees are not.

Our Strategy

Upon sending our submission out to a few select markets, we identified one that understood the task at hand and how to structure coverage accordingly. Our underwriter discussed the risk with client and counsel, appreciated client’s approach to mitigating potential risks and provided satisfactory terms.

Outcome

Despite the challenges, our strong market relationships provided a solid footing for success. By partnering with the client, its representatives and insurer, our NFP Environmental team delivered. Without a collaborative approach and strong market relationships, we might have failed to secure appropriate coverage.

This case highlights the importance of strong professional relationships and proactive communication. Our team's swift and strategic actions ensured the client received comprehensive coverage, emphasizing our expertise and commitment to client needs.