Important Things to Know About Long Term Disability Insurance
One of the most common types of insurance policies that people have access to is long-term disability insurance, alternatively referred to as accident and sickness insurance.
Dana G. Quantz from Hutchison Oss-Cech Marlatt regularly advises people regarding their rights. He has provided some important things to know about long-term disability insurance policies and claims.
Get a copy of the policy wording
The most important thing to do when you have a claim for sickness or long-term disability is to get a copy of the policy wording setting out the obligations of the insurer to the person covered under the policy of insurance. As long-term disability policies are often paid for by employers, the insurance company has not necessarily provided you with a copy of the wording. Most employees only have a booklet explaining the amounts and basic features of the coverage.
A group policy must set out the following features:
(a) the name or a sufficient description of the insured;
(b) the method of determining the persons whose lives or well-being or both are insured;
(c) the amount, or the method of determining the amount, of the insurance money payable and the conditions under which it becomes payable;
(d) the period of grace, if any, within which the premium may be paid;
(e) the term of the insurance or the method of determining the dates on which the insurance starts and terminates;
(f) in the case of a contract of group insurance, any provision removing or restricting the right of a group person insured to designate persons to whom or for whose benefit insurance money is to be payable;
(g) in the case of a contract of group insurance that replaces another contract of group insurance on some or all of the group person insureds under the replaced contract, whether a designation of a group person insured, a group person insured’s personal representative or a beneficiary as a person to whom or for whose benefit insurance money is to be payable under the replaced contract applies to the replacing contract;
(h) the statement that: “Every action or proceeding against an insurer for the recovery of insurance money payable under the contract is absolutely barred unless commenced within the time set out in the Insurance Act.”
As a person who is covered under the policy, you are entitled to a copy of the full wording under the policy. Section 96(5) of the Insurance Act, RSBC 2012, c 1, requires that all long-term disability insurance providers give copies of the policy to those covered under the policy upon request.
What does total disability mean?
In Tanious v The Empire Life Insurance Company, 2016 BCSC 110, the Honourable Mr. Justice N. Brown summarized the law on what total disability means in a long-term disability policy as follows:
 The most oft-cited test to determine whether an individual is totally disabled was stated by Laskin C.J. in Paul Revere at 546:
The test of total disability is satisfied when the circumstances are such that a reasonable man would recognize that he should not engage in certain activities even though he literally is not physically unable to do so. In other words, total disability does not mean absolute physical inability to transact any kind of business pertaining to one’s occupation, but rather that there is a total disability if the insured’s injuries are such that common care and prudence require him to desist from his business or occupation in order to effectuate a cure; hence, if the condition of the insured is such that in order to effect a cure or prolongation of life, common care and prudence will require that he cease all work, he is totally disabled within the meaning of health or accident insurance policies.
 This test has been consistently followed in B.C.: Asselstine v. Manufacturers Life Insurance Co., 2005 BCCA 292; Halbauer v. Insurance Corp. of British Columbia, 2002 BCCA 5; Eddie v. Unum Life Insurance Co., 1999 BCCA 507; Mathers v. Sun Life Assurance of Canada, 1999 BCCA 292, leave to appeal to S.C.C. ref’d  S.C.C.A. No. 334.
 Being able to perform one or more important aspects of the occupation separately will not necessarily disqualify the insured from coverage; they do not need to be totally helpless. What matters is that the insured is unable to perform substantially all of the duties of that position: Paul Revere, at 545 – 546.
In other words, total disability does not mean that a person is totally incapable of any work. Instead, it refers to the state where your medical conditions are such that common care and prudence require you to stop with your business or occupation. If a person receives reasonable advice to go off work due to a medical condition, then the definition of total disability is established.
Beware of any change in definition
Long-term disability insurance policies can change the definition of total disability within the policy. The two most common definitions focus on the scope of the disability. All policies initially focus on total disability from your occupation. This means that if you fulfill the definition of total disability from your particular job then you should be entitled to benefits.
However, after a period of time, the policy may provide a change in definition. This means that after 2 years of benefits, for example, the policy can redefine your entitlement to benefits to total disability from any occupation. If this change is possible under the policy, then continued benefits are only available if you are totally disabled from working in any occupation, not simply your job. At this stage, the focus changes to returning you to any work as opposed to determining if you can return to your particular job.
The change in definition can result in confusion for many people on long-term disability because they must find new employment even though they remain totally disabled from the job they were working before.
Can the insurer send me to a doctor?
Yes. An insurer does not need to believe your doctor. The insurer is entitled to see your medical records as part of the claim but it does not need to believe everything written in the documents. Instead, it can send you to a physician of their choice to evaluate your medical condition. Statutory condition number 7 under section 101 of the Insurance Act, RSBC 2012, c 1, gives the insurance company the right to examine the person insured when and as often as it reasonably requires while the claim is pending.
While an insurance company does not need to believe your doctor, it does have an obligation to make reasonable decisions on claims and must follow the medical evidence. An insurance company cannot make arbitrary or unreasonable decisions when faced with medical evidence because it owes an obligation to act with utmost good faith to those covered under the insurance policy.
An insurance company’s failure to act in good faith in denying a claim of long-term disability insurance has attracted disapproval by the courts and resulted in increased claims for damages, including claims of aggravated and punitive damages.
What are the deadlines to know in a long-term disability claim?
As a person insured under a long-term disability policy, there are three deadlines to be aware of. First, you must give written notice to the insurer of accident, sickness or disability no later than 30 days after the potential claim arises. This deadline is met by a phone call to your insurance company within the first month of the disability arising.
Second, the insurer is entitled to such proof as is reasonably possible in the circumstances regarding the happening of the accident or start of disability, the loss caused by the disability, the right to receive payment under the policy, your age, and if relevant your beneficiary’s age. These details of the claim should be provided within 90 days after the potential claim arises. Most insurance companies require detailed forms to be filled out and filling out these forms and submitting them to your insurance company fulfills this deadline.
The last deadline to be aware of is the deadline to file a claim in the courts when an insurer has denied or stopped long-term disability benefits. Section 104 of the Insurance Act, RSBC 2012, c 1, sets out the deadlines for when a claim should be filed in these cases:
104 (1) Subject to subsections (2) and (5), an action or proceeding against an insurer for the recovery of insurance money payable in the event of a person’s death must be commenced not later than the earlier of
(a) 2 years after the proof of claim is furnished, and
(b) 6 years after the date of the death.
(2) Subject to subsection (5), if a declaration has been made under the Presumption of Death Act, an action or proceeding referred to in subsection (1) must be commenced not later than 2 years after the date of the declaration.
(3) Subject to subsection (5), an action or proceeding against an insurer for the recovery of insurance money not referred to in subsection (1) must be commenced not later than 2 years after the date the claimant knew or ought to have known of the first instance of the loss or occurrence giving rise to the claim for insurance money.
(4) If insurance money is not payable unless a loss or occurrence continues for a period of time specified in the contract, the date of the first instance of the loss or occurrence for the purposes of subsection (3) is deemed to be the first day after the end of that period.
(5) An action or proceeding against an insurer for the recovery of insurance money payable on a periodic basis must be commenced not later than the later of
(a) the last day of the applicable period under subsection (1), (2), (3) or (4) for commencing an action or proceeding, and
(b) if insurance money was paid, 2 years after the date the next payment would have been payable had the insurer continued to make periodic payments.
As you can see the rules change depending on specific circumstances. A rule of thumb is that a lawsuit under a long-term disability policy must be started within 2 years after the insurance company denies the claim or refuses to continue paying. However, it is important for you to get legal advice if you are thinking of making a claim against an insurance company for a denial of long-term disability benefits.
Seek Legal Advice
If you are insured under a long-term disability policy and the insurer has denied your claim, then we encourage you to speak to one of our lawyers regarding insurance claims.
Contact us and we can help you evaluate your options. We know insurance law!