The Infrastructure Investment and Jobs Act of 2021 represents a significant step toward modernizing the United States’s infrastructure, with a strong focus on improving water systems. Among its key provisions is the allocation of funds aimed at eliminating the use of lead pipes and ensuring access to clean, safe drinking water for all communities.
These initiatives are not only vital for public health, but they also carry long-term implications for the insurance industry. As municipalities invest in upgrading water infrastructure, insurers may see shifts in risk profiles—particularly related to water contamination claims and the protection of public assets, which could drive changes in underwriting practices and policy premiums.
Efforts to make the nation’s water cleaner
One of the most recent updates to IIJA initiatives involving clean water and the removal of lead pipes happened in October 2024. The Biden administration issued a final rule, the Lead and Copper Rule Improvements, requiring drinking water systems across the country to identify and replace lead pipes within 10 years.[1]
Additionally, the LCRI require more rigorous testing of drinking water and a lower threshold requirement for action to protect the community from lead exposure and improve communication to better inform communities of lead exposure risks, location of lead pipes, and plans for their replacement.
The LCRI are intended to protect the public from significant and irreversible health effects associated with drinking water contaminated with lead. Lead is a potent neurotoxin for which there is no safe level of exposure, and for which there is no known antidote according to the Centers for Disease Control and Prevention.[2] Lead can severely harm mental and physical development, slow down learning, and irreversibly damage children’s brains.[3] Adults exposed to lead can develop increased blood pressure, heart disease, decreased kidney function, and cancer.[4] Therefore, this initiative is a critical step in addressing long-standing public health concerns and safeguarding communities from the dangers of lead contamination.
At the same time as the issuance of the LCRI, the Environmental Protection Agency announced $2.6 billion in newly available drinking water infrastructure funding through the IIJA.[5] The funding is slated to flow through the drinking water state revolving funds and is available to support lead pipe replacement and inventory projects.[6] Forty-nine percent of the funding must be provided to disadvantaged communities as grant funding or principal forgiveness that does not have to be repaid.[7]
The EPA also announced the availability of $35 million in competitive grant funding to reduce lead in drinking water. Additional federal funding is available to support lead pipe replacement projects as well.[8]
However, Executive Order 14154—Unleashing American Energy, which was signed by President Trump in January 2025—immediately paused disbursements of funds appropriated through the IIJA, among other laws, to review their processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of such appropriated funds for consistency with the law.[9]
It remains to be seen how this will impact projects already authorized to receive funding, and the disbursement of additional discretionary spending still remaining from the IIJA.
Impact on the insurance industry
Despite the future of these funding projects being unclear, efforts are underway to make America’s water cleaner and to replace lead pipes embedded in the United States’ infrastructure. This will have a significant impact on the insurance industry, and it will require it to adapt its risk models, pricing strategies, and product offerings in response to the changing landscape of water infrastructure and liability risks. Some of the key effects of these changes include, but are not limited to:
Reduced liability risks for water contamination. One of the primary goals of the IIJA is to eliminate lead pipes and improve drinking water quality across the country. For property owners—especially those in older buildings—the risk of lead contamination claims could decrease over time as infrastructure is updated, leading to fewer lawsuits related to water contamination and health issues caused by lead exposure. Therefore, this will reduce liability for property owners and lower associated claims.
Changes in underwriting and risk assessment. Insurers will likely reassess the risks tied to properties in areas where lead pipe replacements are underway or already completed. Despite the expectation that infrastructure improvements will reduce the long-term risk of contamination, insurers may need to account for areas where lead pipes are still in place or where infrastructure updates are delayed—especially now that the new presidential administration is pausing further funding, thus delaying processes. Insurers could adjust premiums based on the level of risk associated with the age and condition of local water systems.
Potential for new coverage products. With the IIJA’s focus on modernizing water infrastructure, the property/casualty insurance industry may see opportunities to introduce new coverage products. For example, insurers might see fit to offer policies designed specifically to protect against risks tied to water quality and infrastructure failure, such as contamination from aging water systems that have yet to be replaced.
Increased focus on environmental risks. The IIJA’s clean water initiatives align with broader efforts to address environmental concerns. As insurers continue to refine their risk models, environmental factors—including water quality—may become more prominent in underwriting decisions. Insurers may begin to incorporate factors like proximity to outdated infrastructure or regions with lead pipes into their risk analysis, which may potentially influence premiums.
Revised property values. As municipalities replace lead pipes and improve water infrastructure, property values in affected areas may increase due to the improved public health environment and access to clean water. Insurers will need to adjust their property valuations and pricing models to reflect these potential shifts in market dynamics.
Greater regulatory scrutiny. With increased federal investment in clean water initiatives, there could be more stringent regulatory standards for water quality and infrastructure as a result, particularly in states and localities receiving federal funding. Property owners—particularly those with older buildings—may face higher compliance costs, which could influence claims and insurance rates. Insurers may need to stay ahead of evolving regulatory requirements to adjust policies accordingly.
Practical tips for agents and brokers
By staying informed and proactive, agents can not only navigate the evolving landscape but also position themselves as trusted experts helping clients manage new risks and opportunities stemming from the IIJA’s water and lead pipe initiatives. Here’s how agents and brokers can prepare to help their clients:
Stay educated on local infrastructure updates. Keep track of the progress in your region or areas of focus where lead pipe replacements are taking place. Many municipalities will receive funding from the IIJA for water system upgrades. Understanding which areas are prioritized for improvements will allow you to better inform clients about potential changes to their risk profiles.
Reevaluate property risk assessments. With ongoing changes in water infrastructure, it’s crucial to reassess the risk exposure of properties in areas with aging infrastructure. If a property is in a high-risk area for lead contamination (or still has lead pipes), your underwriting approach may need to be adjusted accordingly.
Educate clients on potential policy adjustments. Explain how improvements to local water systems could influence insurance premiums and policy terms. While these changes could lower risks associated with lead contamination, they also may introduce new coverage options or requirements for environmental hazards.
Stay ahead of regulatory changes. Federal and state regulations regarding water quality and infrastructure will likely continue to evolve as the projects funded by the IIJA continue. Stay informed about regulatory requirements related to water systems and insurance standards.
Keep an eye on emerging coverage options. As the clean water initiatives progress, insurers may introduce new coverage options for water-related risks, such as system failure or contamination claims. Be prepared to discuss these new products with clients—particularly in areas where upgrades are completed.
Final thoughts
These new infrastructure initiatives lead the insurance industry to face both challenges and opportunities. Agents must stay informed about local infrastructure updates, reassess property risks, and educate clients on how these changes may impact their policies. By offering advice on risk mitigation, monitoring regulatory shifts, and adapting to emerging coverage options, agents can help clients navigate the evolving landscape.
As municipalities and businesses invest in upgrading water systems, agents who are proactive in understanding and adapting to these changes will not only protect their clients but also position themselves as valuable advisers in an increasingly complex insurance environment.
The series
PIA infrastructure series: Introduction
Infrastructure series: Bridge the gap: We need solid structures in a world without flying cars
Infrastructure series: Why broadband internet matters more than ever
Infrastructure series: Aviation initiatives are taking flight
Infrastructure series: Transportation spending and its impact on insurance
Infrastructure series: Clean water initiatives and property insurance— the IIJA’s impact
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] Ibid.
[7] Ibid.
[8] Ibid.
[9] Executive Order 14154, 2025
Danielle Caswell, Esq.
Danielle Caswell joined PIA Northeast as associate counsel in the Government & Industry Affairs Department in 2023. She earned her bachelor’s degree from New York University and her law degree from Brooklyn Law School with a particular focus on intellectual property, information, and media law. Prior to joining PIA, Danielle was an associate at a law firm in New York City where she focused primarily on intellectual property and entertainment-related transactional and litigation matters.
