*Basic terms used in accidental death insurance claims.
Insurance Policy – the insurance policy may be referred to as an Accidental Death Policy, an Accidental Death & Disability Policy aka AD&D insurance or even a Travel Insurance Policy. Typically, they all provide coverage for accidental death as long as the decedent was covered under the policy, died as a result of an accident and did not fall within any of the exclusions for coverage listed in the policy.
Insured and Beneficiary – in a Group Policy the insured is often the Employer. These group policies then provide coverage for participating employees that are typically referred to as participants. In an individual policy (typically purchased by the insured) the individual whose life is being covered under the policy is the insured. The beneficiary is the individual designated by the insured or the participant to receive the benefits provided for in the insurance policy.
Accident – when the insurance policy does not define the term “accident” or “accidental” the courts have interpreted it to mean “unintended and unexpected”. A loss, according to the courts, would not be unintended and thus not accidental if it was “substantially certain” to result from the insured’s conduct.
Exclusions – every policy contains exclusions from coverage meaning that even if the insured were to die in an accident, the death still may not be covered if the accident was caused by one of the listed exclusions. These exclusions typically include death as a result of suicide, war, acts of terror or illness or the treatment thereof. The difficulty arises when there may be more than one cause of a loss where one of the causes is covered and another cause is excluded. In these cases the language of the policy and the law of the specific State or Federal Circuit that applies becomes very important.
*What are the steps for filing a claim?
The beneficiary of the policy must submit a claim to the insurer (or where the employer sponsors the plan sometimes with the employer) as soon as practicable after the accidental death. There are time limitations in each policy for submitting a claim. However, those are not strictly enforced. Nevertheless, the best policy is to submit your claim as early as possible.
*Appealing a denial
In claims governed by the federal law known as ERISA (Employee Retirement Income Security Act) a claimant is required to submit an appeal to the insurer before they can file litigation. The appeal must be submitted within 180 days of receipt of the denial. The appeal must be submitted prior to filing suit in court against the insurance company for the disability benefits. These rights and obligations should be explained in the letter of denial. The denial letter should also set forth the reasons for the denial. These reasons for denial then become the focus of the appeal.
In claims not governed by federal law, but rather State law, there is no obligation to submit an appeal prior to filing a lawsuit. However, oftentimes it is a good idea to submit an appeal to resolve the claim.
*What damages are recoverable?
Under ERISA the only recoverable damages are the benefits promised in the insurance policy plus interest and attorney’s fees required to litigate the issues. There is no entitlement to “bad faith” damages or punitive damages.
In non-ERISA cases governed by state law there are 3 levels of conduct that give rise to 3 levels of damages.
- If you can show a breach of contract – a breach of the promises made in the insurance policy – then you are entitled to the contractual damages, to wit, the benefits promised in the insurance policy.
- If you can show that the insurer breached the implied covenant of good faith and fair dealing then you can collect “bad faith” damages consisting of both economic and emotional damages resulting from the wrongful failure to pay benefits under the policy.
- If you can show malice, fraud or unconscionable conduct on behalf of the insurer with clear and convincing evidence then you may be able to recover punitive damages against the insurer.
*Basic terms used in disability insurance claims.
Disability – to receive benefits under a disability policy one must fit into the definition of “total disability” or “partial disability” contained in the policy. Most policies’ definition of total disability requires that one be unable to perform the material duties of their “own occupation”. This definition often changes after 24 months of benefits to an inability to perform “any occupation” for which the insured is capable of performing based on their training, education and experience.
Own occupation – to be unable to perform one’s own occupation is not the same as being unable perform your job. Own occupation refers to how your job is generally performed in the economy, not necessarily how your employer required you to perform your job.
Any occupation – when an insurer acknowledges that the employee cannot perform their own occupation, but asserts that they can perform another occupation, that occupation must be “gainful.” What constitutes a gainful occupation differs from policy to policy. At a minimum it should pay as much as you are receiving in disability benefits. However, many policies actually indicate that an alternative occupation must pay a minimum of 80% of your prior earnings.
Other income (offsets) – many policies provide that the insurer is entitled to an offset for other benefits you may receive because of your disability. This would include typically State Disability benefits, Social Security benefits, retirement benefits, etc., thus if you are entitled to $5,000.00 per month in disability benefits and you are receiving $1,000.00 per month in Social Security benefits the insurer would only be required to pay you $4,000.00 per month.
Limitations – many disability policies contain provisions that limit benefits to 24 months if the disability is caused or contributed to by mental illness. More and more policies are inserting additional limitations for disabilities caused by or related to fibromyalgia or disabilities bases on self-reported symptoms. You should be aware of these limitations prior to submitting your claim for benefits.
*What are the steps for filing a claim?
The employee must submit a claim to the insurer (or sometimes with the employer) as soon as practicable after leaving work. There are time limitations in each policy for submitting a claim. However, those are not strictly enforced. Nevertheless, the best policy is to submit your claim as early as possible.
The application will require your physician to certify your disability. Thus, you must have the support of your doctor to submit your claim for disability.
*Appealing a denial
In claims governed by Federal law known as ERISA (Employee Retirement Income Security Act) a claimant is usually required to submit an appeal to the insurer before they can file suit. The appeal must be submitted within 180 days of receipt of the denial. These rights and obligations should be explained in the letter of denial. The denial letter should also set forth the reasons for the denial. These reasons for denial then become the focus of the appeal.
In claims not governed by federal law, but rather State law, there is no obligation to submit an appeal prior to filing a lawsuit. However oftentimes it is a good idea to submit an appeal to resolve the claim.
*What damages are recoverable?
Under ERISA the only recoverable damages are the benefits promised in the insurance policy plus interest and attorney’s fees required to litigate the issues. There is no entitlement to “bad faith” damages or punitive damages.
In non-ERISA cases governed by state law there are 3 levels of conduct that give rise to 3 levels of damages.
- If you can show a breach of contract – a breach of the promises made in the insurance policy – then you’re entitled to the contractual damages, to wit, the benefits promised in the insurance policy.
- If you can show that the insurer breached the implied covenant of good faith and fair dealing then you can collect “bad faith” damages consisting of both economic and emotional damages resulting from the wrongful failure to pay benefits under the policy.
- If you can show malice, fraud or unconscionable conduct on behalf of the insurer with clear and convincing evidence then you may be able to recover punitive damages against the insurer.