As evacuation orders displaced 50,000 Californians following a chemical leak at a plastics manufacturing facility, insurance coverage experts say standard policies are unlikely to cover residents’ losses.

The Law360 article, “Calif. Chemical Leak Poses Coverage Challenge for Evacuees,” describes a May 2026 incident at a facility operated by GKN Aerospace Transparency Systems Inc. in Garden Grove, California. Authorities issued evacuation orders after a tank containing a volatile chemical experienced a dangerous temperature increase and equipment damage, raising fears of an explosion. The emergency disrupted businesses, canceled community events, and forced residents to temporarily relocate, with many incurring significant lodging and food expenses.

Goldberg Segalla partner Larry D. Mason, who focuses much of his practice on environmental and toxic torts and complex insurance regulatory matters, offered insights on the coverage implications. Larry notes that he is not surprised homeowners, renters, and small business policies are providing limited relief.

“Depending on the terms of the insurance contracts purchased, there may not be coverage for ‘loss of use’ of the premises where there has been no direct physical damage to the premises,” he says. “These policies do not typically include civil authority clauses that would provide coverage where, for example, government authorities issue evacuation orders to temporarily vacate insured locations.”

Larry also explains that commercial general liability policies at issue are likely to include absolute pollution exclusions, which insurers may assert as a bar to coverage, though specialized pollution liability insurance may apply.

“As it pertains to the Garden Grove chemical leak incident, from the third-party coverage perspective, the application of the pollution exclusion is the most likely applicable exclusion to be asserted by an insurer as a bar to coverage,” he says.

He adds that insurers covering affected third parties may pursue subrogation to recover payments from potentially responsible entities, and notes that California courts have at times construed pollution exclusions narrowly in favor of policyholders.

READ THE FULL ARTICLE HERE: “Calif. Chemical Leak Poses Coverage Challenge for Evacuees,” Law360, June 25, 2026 (Subscription required)

MORE ABOUT GOLDBERG SEGALLA’S Larry D. Mason:

Larry is a renowned trial and appellate litigator and counselor to many national and international businesses across diverse industries. Based in Chicago but with experience litigating and counseling clients through complicated and high-profile matters across the country and internationally, he dedicates most of his practice to insurance coverage, reinsurance, commercial litigation, environmental and toxic torts, and complex insurance regulatory matters. He also focuses on professional liability for clients in insurance, environmental, construction, and related industries; products liability; and identifying emerging risks. He brings his extensive experience to leadership positions in the firm, where he is chair of the Environmental and Mass Torts Coverage, First-Party Property, and Construction Coverage subgroups.