Calling for Coverage! Cell Phones and the CGL Policy

In the last issue, Education Forum looked at key scientific and legal findings on the potential health risks posed by cell phone use. In this article, we look at some of the insurance issues triggered by claims related to the electromagnetic fields (EMF) emitted by cell phones.

Much of the case law in this area comes from south of the border. Courts in the US have considered the issue of an insurer’s duty to defend in cases based on claims of injury related to cell phone use; and have also considered claims to recover the costs of medical monitoring to detect and prevent future illness.

Insurer’s duty to defend 

Some US courts have concluded that an insurer has no duty to defend in cases involving claims of injury at the cellular level allegedly related to cell phone EMF emissions. But others have concluded that allegations of harm at a biological or cellular level do constitute “bodily injury” and trigger CGL policy defence obligations. The dissenting and majority judgments from the Supreme Court of Texas in Nokia, Inc. v. Zurich American Insurance Co. (2008) illustrate the differing views on the question.

In the Nokia v. Zurich, class actions were brought against Nokia seeking damages for alleged biological injury from exposure to radiation emitted by cell phones that Nokia manufactured. Nokia tendered defence in one of the cases to Zurich American Insurance under its CGL policies. Zurich agreed to defend, but reserved the right to contest its obligations later and ultimately sought a declaration that it had no duty to defend or indemnify Nokia.

At the Texas Supreme Court, Zurich argued it had no duty to defend because the complaints in the underlying cases did not state claims for bodily injury or seek damages because of bodily injury – the plaintiffs’ complaints used the phrase “biological injury” rather than the term “bodily injury”.

The majority decision of the court concluded that the injuries alleged by the plaintiffs did potentially qualify as bodily injuries under the policies, and drew a parallel to claims for subclinical injuries resulting from exposure to asbestos. The majority also found that, although the class-action plaintiffs were seeking compensation for the cost of headsets, they were also asserting injury and claiming damages for physical exposure to radiation.

By contrast, the two justices who dissented agreed with the insurance company’s argument that none of the damages sought were “because of” bodily injury. According to the dissent, the plaintiffs claimed for headsets or their value (on the grounds that using cell phones without headsets could potentially cause bodily injury because of EMF), but they did not explicitly claim for personal injury damages.

Medical monitoring claims

Some US class action suits alleging radiofrequency radiation exposure have included claims for medical monitoring, to recover the cost of testing to detect and prevent possible illness. This kind of claim is often made when someone has been exposed to high levels of a substance that is known to increase the likelihood of illness.

Such claims raise questions about whether, and to what extent, they might fall within a CGL policy’s defence or indemnity obligations. The answer hinges on three issues:

• whether the claim alleges “bodily injury” within the scope of the coverage

• whether the injury occurred during the policy period

• whether the claim is for damages that the policyholder is obligated to pay

Most US courts seem to have concluded that claims of harm at a biological or cellular level resulting from cell phone use do satisfy the bodily injury requirement, and that insurers therefore have a defence obligation. However, it is not yet clear whether the bodily injury involved in medical monitoring claims is sufficient to trigger coverage.

The issue of whether or not the injury occurred during the policy period is especially tricky because medical monitoring claims are made before the illness has materialized. Whether claims for medical monitoring constitute damages typically centres on whether “damages” refers to legal damages only or whether it also covers other relief. Courts have come to different conclusions on this.

In Canada, although most health care is government-funded, claims for medical monitoring have been made on various grounds, including the fact that provincial health care plans may be subrogees, that certain services and treatments are not covered by provincial health care plans, and that there is a risk that some services may not be government-funded in the future. 

Analogies to asbestos

As discussed in the last Education Forum article, definitive scientific evidence of a connection between cell phone use and cancer is not yet available. If a definitive link is eventually confirmed, the injuries may not emerge until years after the exposure, and insurers could face significant growth in claims for a previously underestimated risk. In this sense, cell phone claims could prove similar to asbestos claims.

Yet brain cancer can also be attributed to other causes and exposures. Establishing a direct link to cell phone use in a given claim would be more difficult than is the case with asbestos and mesothelioma, where most cases of the disease can be traced back to asbestos exposure.

Apportioning liability could also be difficult, since a claimant might have used different cell phones at different times. Apportioning liability has come up in asbestos cases where claimants might have been exposed to asbestos in more than one workplace. Some employers were found jointly and severally liable; others were found severally liable but not jointly liable.

Another issue in asbestos cases that is also likely to arise in EMF cases is the question of when the insurance contract is triggered. To decide this, courts may have to determine when a claimant is considered to have sustained the illness, which the asbestos cases show can be difficult.

The Canadian context

If a product liability action were brought in Canada against a business in the cell phone supply chain – a manufacturer, cell phone service provider, cell phone retailer, etc. – it’s likely the business would look to its CGL policy, as most such policies cover product liability.

There is anecdotal evidence that some Canadian underwriters take EMF risks into account when providing CGL quotes, and some even include specific exclusions for EMF-related risks. Although the scientific evidence is currently confusing and contradictory, such underwriters are adopting a cautious approach, seeking to limit their exposure to a potentially uncontrollable and unpredictable risk. Other Canadian underwriters take the line that, given the current scientific evidence related to EMF, at this point there is no quantifiable exposure to take into account.

Finally, even if there is no consensus regarding product liability exposure for EMF emitted by cell phones, some companies in the cell phone business are already looking to insure against the possible risk, and some insurance products – whether specialty products or CGL policies without exclusions – are potentially available to protect them.

This article is based on excerpts from ADVANTAGE Monthly, a series of topical papers on emerging trends and issues provided to members of the CIP Society. The Chartered Insurance Professionals’ (CIP) Society is the professional organization representing more than 15,000 graduates of the Insurance Institute’s Fellow Chartered Insurance Professional (FCIP) and Chartered Insurance Professional (CIP) programs.