Insured may obtain aggravated and punitive damages in long-term disability claim
June 05, 2016, Kitchener, Ontario
Posted by: Robert Deutschmann, Personal Injury Lawyer
Punitive and Aggravated Damages in a Long-Term Disability Claim
In a long-term disability case it is important to be aware that, in certain situations, a trial Judge can order your insurance company to pay aggravated damages, mental distress damages or punitive damages. Any amounts a Judge may award for these types of damages, are paid to you in addition to any long-term disability benefit, legal cost or interest amounts ordered by the trial Judge.
Simply put, aggravated damages or mental distress damages are intended to compensate you for suffering or mental distress caused by the conduct of your insurance company. Long-term disability benefit policies are typically viewed as “peace of mind” contracts. The understanding is that you take comfort in expecting that your long-term disability insurance policy will provide you and your family with protection in the event that you are disabled. When an insurance company denies your long-term disability benefits however, it can obviously cause significant levels of anxiety or mental distress. Of course, this is the exact opposite of the “peace of mind” and protection you expected and that you paid for. It is in this type of situation that a court may order your insurance company to pay aggravated damages or mental distress damages in order to compensate you.
Punitive damages on the other hand, are intended to punish your insurance company for their wrongdoing. Punitive damages are also intended to deter, to discourage and to hopefully prevent other insurance companies from similar wrongdoing. It is important to understand however, that punitive damages are not awarded in all long-term disability cases and are in fact very difficult to get. The courts have indicated that punitive damages should only be imposed in exceptional cases. In deciding whether punitive damages should be awarded, there are a number of legal tests the court will consider. These tests include whether the insurance company’s conduct has been “high-handed”, “malicious”, “oppressive” or “highly reprehensible” and whether the conduct “offends the court’s sense of decency”.
Punitive damages are also intended to strongly remind long-term disability insurance companies of their obligation to act in good faith. Included in the duty of good faith is a requirement that your long-term disability insurance company deal with you fairly. This applies to the way your insurance company investigates and assesses your claim. It also applies to their decision to either pay or deny your long-term disability claim. In making a decision whether or not to pay your long-term disability benefits, an insurance company must assess the merits of your long-term disability claim in a balanced, objective and reasonable manner.
Your insurance company must not deny coverage or delay payment of your long-term disability benefits in order to take advantage of your financial situation or to gain bargaining or negotiation leverage. Your insurance company’s decision should be based on a reasonable interpretation of their obligations under your long-term disability policy. Without reasonable grounds to deny your long-term disability coverage or payment, the duty of good faith requires that your insurance company pay your disability benefits on a timely basis.
The simple fact that your insurance company has denied your long-term disability benefits does not mean that they have acted in bad faith. It also does not mean that a court will order your insurance company to pay any amounts for aggravated, mental distress or punitive damages. In order to successfully claim aggravated, mental distress or punitive damages, you will be required to present facts to the court that satisfy the necessary legal tests.
Accordingly, it is always important to speak to an experienced long-term disability lawyer about the possibility of claiming aggravated, mental distress and punitive damages. Speaking to an experienced long-term disability lawyer will also help to ensure that you receive any additional damages that you may be entitled to as part of your long-term disability claim.
|Posted under Disability Insurance, Fractures, Pain and Suffering, Personal Injury
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About Deutschmann Law
Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit www.deutschmannlaw.com or call us toll-free at 1-866-414-4878.
The opinions expressed here, while intended to provide useful information, should not be interpreted as legal recommendations or advice.