Disability Insurance Issues

Arlington insurance attorneys need to know the issues presented in policies of disability insurance.
Disability income policies typically specify an amount that will be paid in the event of a disability, as that disability is defined in the policy, and a maximum length of time for which such benefits will be paid. An example would be $1,000 a month for 180 months.
Something to be aware of is that the policy holder does not always have to prove that they actually lost the amount of earnings protected. Most the time, the benefits are payable even if the policy holder is unemployed at the time of the disability.
These policies get confusing when they use the term “total disability” when describing the situation that must be satisfied to qualify for the benefits. The San Antonio Court of Appeals issued an opinion in 1966, that is still good law. The case is Occidental Life Ins. Co. v. Duncan. In this case, the court set the test for “total disability” as whether a reasonably prudent person in the insured’s condition would, in the exercise of ordinary care, engage in the insured’s business. This does not require that the insured be bedridden, immobile, or totally unable to work before he or she can recover.
Disability insurance may define “total disability” in terms of:
(1) the insured’s usual occupation (e.g., “unable to perform any and every duty pertaining to his or her own occupation”);
(2) an occupation for which the insured is qualified by virtue of education, training, and experience (e.g., “unable to engage in any gainful occupation, training, or experience”);
(3) for purposes of a particular disability insurance policy, an insured was totally disabled if he was “unable to perform all of the important daily duties of his occupation” in the Texas Supreme Court case, Provident Life and Accident Insurance Co. v. Knott.;
(4) inability to perform “each of the material duties” of the insured’s regular occupation.;
(5) any occupation whatsoever (e.g., “wholly incapacitated from performing any work whatsoever for remuneration or profit”);
(6) some combination of the above.
In the Provident v. Knott case, the Texas Supreme Court read the policies in question defining the term “total disability” to mean that the insured must, in order to be considered totally disabled under the policies, be unable to “perform all of the important daily duties of his occupation.” The court then held that the trial court’s granting of summary judgment in favor of Provident was appropriate given that the insured, a gynecologist seeking benefits for total disability under those policies was able to see patients, perform surgery, consult with other physicians and perform administrative duties.
Here is what is important when dealing with disability polices. – These types of cases all involve the court’s interpreting the pertinent clause or clauses which define what “total disability” means under the particular policy in question. The Texas Supreme Court has driven home this point when it indicated that, while in the past, certain decisions might be read as indicating that common law definitions of disability were allowed to supersede definitions included in a policy, such arguments will not be allowed today.
Further, the 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 insurance company 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 can be found in the Texas Administrative Code, Section 3.3012(b).
Partial disability is usually 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.

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