Insurance lawyers who handle disability income policies will see two types of policies.
One is the policy purchased through employment of provided by the employer. The other type is the type purchased independent of employment, usually through an independent agent or in response to advertisements.
Those purchased through employment by the employee will often times be ERISA policies. ERISA stands for Employee Retirement Income Security Act. ERISA policies are governed by Federal law. All other types of disability income policies are governed by State law. ERISA policies are in a classification all their own. This blog is not discussing ERISA policies and a person needs to know which type is at issue.
Disability income policies typically specify an amount that will be paid in the event of a disability (as defined in the policy) and will pay a maximum length of time for which such benefits will be paid, such as $400 per month for up to 120 months.
An experienced insurance lawyer knows that the insured does not need to prove that he or she actually lost the amount of income protected. In other words, the benefits are payable even if the insured is unemployed at the time of the disability.
The test for “total disability” is whether a reasonably prudent person in the insured’s condition would, in the exercise of ordinary care, engage in the insured’s business. It is not necessary that the insured be immobile, bedridden, or totally unable to work before he or she can recover. This is what was stated in the 1966 opinion from the San Antonio Court of Appeals in the opinion styled, Occidental Life Ins. Co. v. Duncan.