Long-term disability insurance part 2: the dispute

With almost two decades of experience advising clients with long-term disability (LTD) claims, Ottawa personal injury lawyer Najma Rashid has answered just about every question you can think of when it comes to LTD insurance.

Here, Rashid, a partner with Howard Yegendorf & Associates, what happens when insurers and insureds don’t see eye to eye.

Q. When do I have to sue my LTD insurer?

A. Broadly speaking, there are two times when you may have to sue your LTD insurer. First, if your claim is denied and no benefits are paid at all. The second situation arises when the insurer has been paying benefits and then stops, which we call a termination. Most insurance policies require that the insured individual continues to provide medical information in support of their claim, so the insurer will regularly assess their continued entitlement to benefits and can terminate them if it believes the circumstances have changed sufficiently.

Q. How long do I have to sue?

A: The Ontario Limitations Act provides for a two-year limitation period to commence a civil claim, which courts have determined begins from the date LTD benefits are denied or terminated. However, some LTD policies contain a one-year limitation period.

Q. When should I contact a lawyer?

A. You should seek legal advice as soon as your LTD benefits are denied or terminated in order to find out what your rights are. Insurers will have their own internal appeal processes and they may change their decision after reconsidering, but you should not wait that long to contact a lawyer.

Q. What are some common reasons for disputes?

A. If an insurer believes that you are not totally disabled, they may deny a claim. Sometimes they will issue a denial over a lack of medical disclosure, but usually, it’s because they feel the medical information doesn’t support a finding of total disability.

Disputes are also common at the point when the own-occupation period transitions into the any-occupation period, usually at the 24-month mark. Insurance companies may take the position that while you are unable to return to your old job, there are jobs that you are qualified or could be trained to do instead.

Q. How much will it cost me?

A. You will have to have a discussion with your lawyer over the payment of legal fees, but if you succeed in a lawsuit, you will be able to recover a portion of your legal costs from your insurance company.

Q. Should I expect my insurer to conduct surveillance?

A. It’s not unusual for insurance companies to hire investigators to conduct surveillance on an insured person, so this is something you should be prepared for.

Q. What will I have to do as part of the lawsuit?

A. There are a number of stages in the process. After the pleadings are exchanged, laying out the details of the claim and defence, documentary production will occur. The next stage is examination for discovery, where a representative of the insurance company will be examined by your lawyer and you as the claimant will be questioned by the insurance company. In Ottawa, mediation is mandatory, but if that does not result in a settlement, then the case could go to a pre-trial conference and trial and you may have to testify in court. At any stage, the insurer may ask you to attend at a defence medical examination.

For part 1 in this mini-series, in which Rashid discussed some of the basics about LTD insurance, click here.