Disability Insurance Coverage Issues

In a definition of “total disability in an individual accident and sickness policy or hospital, medical, and dental service corporation subscriber contract, the inability to perform duties may not be based solely on an individual’s inability to perform “any occupational duty,” but the insurer may specify the requirement of the inability of the insured to perform all of the substantial and material duties pertaining to his or her regular occupation, or words of similar import.  This is found in the 28 Texas Administrative Code, Section 3.3012(b).

The policy may further provide coverage for “partial disability,” which is typically defined as the insured’s inability to perform one or more but not all of the essential duties of his or her employment or occupation.

Disability policies normally require that any claimed disability occur while the policy is in effect or within a specified time after any claimed accident or injury.

As an example, the policy may provide coverage for an illness or injury that “totally and continuously disables the insured within 30 days of the date of the accident so as to prevent him from performing each and every duty pertaining to his occupation.”

Disability insurance policies usually distinguish between disabilities caused by illness and those resulting from accidental injury.

An example is found in the 1978, Beaumont Court of Appeals opinion, Lone Star Life Insurance Co. v. Griffin.  The policy provided that the insurer would pay the insured $1,000 pr month for 60 months for an accidental injury resulting in total disability and that it would pay $1,000 per month for 24 months for total disability resulting from sickness.

As in the above example, a shorter period of benefits is usually provided for disability based on sickness, while longer benefits are payable for disabilities resulting from illness, so greater benefits can be provided.

The reason for this distinction is that far fewer diabilities result from accidents than from illness, so greater benefits can be provided.

The Texas Administrative Code includes provisions relating to disability insurance as promulgated by the Texas Department on Insurance.

28 Texas Administrative Code, Section 3.3040(e) states the policy may not provide for reduction of disability benefits if the insured is not employed at the time diasability commences or is not employed away from his or her place of residence.

28 Texas Administrative Code, Section 3.3059 states the policy may contain provisions relating to recurrent disability, but such a provision may not specify that the disabilities be separated by a period greater than six months.