Athens Services, a Southern California waste hauler, is suing AIG over denied pollution liability coverage and a PFAS exclusion it says should never have applied.
The lawsuit, filed on March 24, 2026, in the US District Court for the Central District of California, accuses AIG Specialty Insurance Company of walking away from its defense obligations after a wave of environmental claims hit the waste management company. No determination has been made on any of the claims, and AIG has not yet filed a response.
At the center of the dispute is a pollution legal liability policy AIG issued to Athens covering March 2020 through March 2021. That policy, according to the filing, broadly covers loss from "pollution conditions" - including bodily injury, property damage, and clean-up costs - and carries a duty to defend.
The trouble started in November 2020, when a property owner in California's Antelope Valley sued Athens over alleged contamination from green waste land applications. AIG agreed to step in and defend that case, under a reservation of rights. But as more lawsuits followed from additional property owners alleging similar pollution damage across the same region, AIG denied coverage for each new claim.
Athens says all of those lawsuits are related. And under the 2020 policy's related-claims provision, all "claims for loss arising from the same, related or continuous pollution conditions" are treated as if they were all first made during that same policy period. If that reading holds, the later lawsuits would fall under the 2020 policy - the one AIG already agreed triggered a defense.
Instead, Athens alleges, AIG assigned the newer claims to a 2024 policy and invoked a Perfluorinated Compounds exclusion to deny coverage. According to Athens, the 2020 policy contains no PFAS exclusion - and the underlying lawsuits do not even involve PFAS contamination.
The filing also alleges that AIG walked back its original position on the very first lawsuit. In February 2025, AIG issued a supplemental reservation of rights letter that narrowed its defense to a single allegation - emotional distress from an unauthorized truck entering the plaintiff's property - while stepping back from the broader pollution claims that make up the bulk of the case.
Athens is asking the court for a declaration that AIG owes a defense on all the underlying actions, reimbursement of the defense costs it has shouldered alone, and damages for what it describes as bad faith conduct, including a request for punitive damages.
For insurers and claims professionals, the case puts a spotlight on how related-claims provisions interact with successive policy years - particularly when later policies introduce exclusions that earlier ones did not. The use of PFAS exclusions, still a relatively new and contested feature in pollution liability programs, adds another layer of industry significance.
It also raises a practical question about duty-to-defend standards under California law: once an insurer accepts a defense on one claim, what happens when the related claims start piling up?
A jury trial has been demanded.
