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Addressing product pollution liability: Five recommendations to reduce coverage gaps

Learn more about risk management strategies to protect against product pollution issues, including potentially harmful chemicals such as PFAs.

04/28/2025 · 6 minute read

Product pollution is an issue that has gained significant attention in recent years, particularly with the emergence of high-profile cases involving industrial chemicals such as PFAS and the rise of nuclear verdicts. The potentially harmful impact of chemicals, both on the health of individuals and to the environment, has led to increased awareness, scrutiny, and litigation directed at organizations, namely manufacturers, suppliers, and retailers.

However, exclusions in general liability (GL) policies may leave many of these organizations underinsured or exposed to significant risks. To navigate the complex and changing landscape, it is imperative for organizations to implement robust risk management strategies and insurance programs that offer adequate protection for product pollution liability. Doing so can not only better protect their businesses, but also the communities and environments they serve.

Wide range of products, multifaceted risks

While any product that could cause a release of pollutants into the environment should be carefully evaluated, manufacturers of critical components used in utility and energy infrastructure, chemicals, agricultural supplies, and both topical and ingestible products face increased risks. Product pollution risks are multifaceted and can arise from various products used across industries. 

For example, fertilizers and pesticides used in residential and commercial settings can lead to unintended runoff that contaminates local water sources, while defective products containing harmful chemicals may lead to exposure to people and wildlife, often resulting in toxic tort claims. 

Critical components not designed for consumer end use also pose environmental risks. For instance, if a chemical dosing pump used in a municipal water treatment facility were to malfunction and inadvertently release an excessive amount of chlorine into the water supply, it could lead to catastrophic contamination of the drinking water. Such an incident could result in severe public health crises, regulatory penalties from environmental agencies for violating safety standards, and irreparable reputational damage to the water utility.  This, in turn, could result in subrogation efforts and lawsuits against manufacturers of the critical components.

Products can lead to environmental damage or injury in various ways. The product itself may serve as a direct source of exposure, or a failure of the product can result in unintended exposure. Depending on the environmental pathways involved — such as drinking water sources, waterways, or wetlands — these risks can become increasingly financially significant. 

The risks associated with product pollution tend to fall into the following two distinct categories:

  1. Short-term exposures can occur when individuals or communities come into contact with pollutants following specific incidents, such as the sudden and identifiable release of pollutants.
  2. Long-term, gradual exposures, on the other hand, often result from the cumulative effects of pollutants over time. These can stem from the long-term exposure to or use of specific products. 

Potential gaps in existing casualty coverage programs

For many organizations, product pollution liability presents significant — and often costly — risks that may unknowingly be unaccounted for in their insurance programs. Many organizations may not have adequate coverage for product pollution liability under their broader liability insurance programs for the following reasons:

  • Many traditional GL policies covering product liability include a policy-wide pollution exclusion.
  • Some GL policies may offer limited exceptions to the pollution exclusion for sudden and accidental releases, covering third-party bodily injury and property damage claims, but they generally exclude gradual releases and cleanup costs.
  • Monoline site pollution legal liability and contractor’s pollution liability policies contain exclusions for products once they are sold or relinquished to a third party.

A common approach to addressing product pollution is through a combined GL and pollution policy. However, the number of insurers offering these policies may be more limited than the traditional GL marketplace and, depending on the size of the company or type of business, a combined policy may not be the best fit. Alternatively, coverage for product pollution can be obtained through a standalone program or by adding the coverage as an endorsement to a site pollution program.

Five recommendations to address product pollution coverage gaps

Given the potential exposures related to product pollution, it is important for organizations to take proactive measures to protect their operations and balance sheets, including through:

Collaborate with your insurance advisor or broker to understand your existing insurance policies. A gap analysis can help identify where coverage applies, and where potential gaps may exist. Be sure to reevaluate your policies annually, as exclusions could be different at your next renewal.

Pinpoint the specific risks associated with your product and identify potential impacts, as the product you sell may have unique exposures depending on what it is, how it is applied, and its usage over time. Staying informed about the constantly evolving regulatory landscape is important for facilitating compliance and safety.

Empower users with clear, effective education and literature around best practices for product usage, the risks associated with improper use, the lifespan of the product, and any additional information that could help them use the product safely. Update these resources regularly, especially if your product changes or new risks arise.

Conduct a comprehensive supply chain review to assess the materials you are using, evaluate supplier indemnities and insurance, and examine customer warranties to mitigate product pollution risks. A proactive approach to supply chain management should embrace technological innovation, including AI-powered analytics and advanced monitoring platforms, to enhance transparency with suppliers.

Working with your insurance advisor or broker, develop a bespoke product pollution insurance program that is tailored to your specific risk profile and product, including where and how it’s used and your short- and long-term exposures. 

Product pollution incidents are affecting individuals and organizations across sectors, from those selling everyday essential items to specialized chemical supplies. With public awareness around environmental issues similarly in the spotlight, organizations must consider the risk implications of their products on people and the environment.

By proactively identifying potential risks, addressing coverage gaps, and committing to ongoing improvement, organizations can better mitigate product pollution risks, enhance product safety, and contribute to healthier, more sustainable communities.

Learn more

To learn more about mitigating product pollution liability risk, please contact your Marsh representative.

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