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Insurers Must Defend Cell Phone Maker: Court
Business Insurance
Journalist: Roberto Ceniceros
August 29, 2008

Insurers have a duty to defend Nokia Inc. against several class action lawsuits filed nationwide alleging that radio frequency radiation from wireless phones caused biological injury, the Texas Supreme Court ruled Friday.

The decision in Zurich American Insurance Co., Federal Insurance Co., and National Union Fire Insurance Co. vs. Nokia Inc. is troublesome for insurers in cases beyond those involving cell phones, said Randy Maniloff, a partner at White and Williams L.L.P. in Philadelphia. The ruling is a setback for insurers because the court said headsets demanded by plaintiffs suing the cell phone maker constitute damages. The insurers are therefore responsible for providing a defense against the plaintiffs' demand for headsets.

Courts have not usually enforced "generic and amorphous" allegations of damages in duty to defend cases, said Mr. Maniloff, who represents insurers but was not involved in the Nokia case.

The class action lawsuits against Nokia demanded headsets or money to purchase the equipment. Plaintiffs say headsets would reduce alleged radiation-related health risks.

The insurers argued before the Supreme Court that they did not have a duty to defend Nokia because the complaints which is what the policies were designed to cover.

But Nokia argued that the plaintiffs seek damages including, but not limited to, headsets, and those damages are squarely covered by the policies. The high court agreed and upheld an appeals court finding that "because the complaints alleged claims for bodily injury" and sought "damages because of bodily injury…the insurers had a duty to defend Nokia."

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