Damages for Mental Anguish in a Long-Term Disability Claim

When—due to a disability—an employee can no longer work, they could qualify for long-term disability insurance. Long-term disability insurance can provide them with financial assistance to compensate for their lost income. Insurance coverage usually provides about 65% of a disabled employee’s regular income.

Long-term disability insurance is covered under a contractual agreement between the insurance provider and the insured employee. Therefore, if an insured disabled employee is unable to work and submits a valid claim and the insurance provider denies the claim, the employee can take legal action against the insurance provider. An insurance provider’s denial of a valid long-term
disability insurance claim constitutes a contractual breach. Therefore, the insured employee can respond by seeking civil compensation (“damages for unpaid benefits”) from the court from the insurance provider for wrongdoing.

Of course, the employee can also seek damages from the insurance provider for their mental anguish if that insurance provider denies a valid claim. In addition to constituting a contractual breach, an insurance provider’s denial of a valid claim constitutes a violation of their implicit duty of good faith, and the employee can respond to this claim denial by seeking damages for their mental anguish.

In Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30, the Supreme Court of Canada ruled that the contractual parties’ expectations at the time they entered into the contract determine the awarding of damages. Accordingly, the courts would award damages in cases where the contractual parties envisioned that a contractual breach would cause psychological anguish and the mental anguish that the breach precipitated was adequate to justify the awarding of damages. The conduct of the insurance company will be closely scrutinized by the court and you need an experienced disability lawyer to help you prove the bad faith and mental anguish that you suffered.

If you have a disability that prevents you from working and your insurance provider has denied your claim for long-term disability benefits, call McNally Gervan today at 613-238-1424. They will focus on obtaining the compensation you deserve so that you can reclaim your peace of mind.