Understanding Your STD and LTD Policies
Disability insurance policies exist to provide replacement income should you become disabled and are unable to work. Policies of this nature are intended to provide “peace of mind.”
By handling your claim, your insurer is expected to act in the utmost good faith. There are many different types of policies available for anyone seeking insurance. They can be either statutory benefits (i.e. Canada Pension Plan (CPP)), privately purchased individually, or group benefits received through an employer. These policies can be obtained in short (STD) and long (LTD) term disability formats.
As a result of the various types of disability policies, knowing your entitlements and how you qualify depends on your policy, its wordings, and its definitions. There is benefit in reading your STD and/or LTD policy and identifying its coverages.
The first step is to determine what type of policy you have. A major category is the Canada Pension Plan Disability Benefits (CPPD), which is a fund available to all T4A employees. The CPPD provides contributors with partial income replacement in the case of disability. The qualification requirements are statutorily defined, as you must be (1) under the age of 65; (2) have a severe and prolonged disability; and (3) be of regular employment. Your benefit is based upon your contributions. Once eligibility is met, CPPD entitlements, which are defined by the statute, can be granted. Since the CPPD is a creature of statute, interpreting its provisions is a more general task, largely dependent upon the legislation and its subsequent judicial treatment. Once CPPD benefits are approved, you should investigate whether you have access to the Trillium Plan, which may provide coverage for your prescription medication.
You may also have access to a private policy. These can be received at the same time but are commonly reduced to account for approved CPPD benefits. Sometimes an employer will have a group insurance policy, which is available to employees. It is important to note that these policies are purely contractual in nature, as the benefits, restrictions, and eligibility requirements are defined by the individual policy. Private policy wordings are largely dependent upon individual contractual interpretation.
The general rule of contractual interpretation requires a practical, common-sense approach not dominated by technical rules of construction, where the court:
“… read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning…”
Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53 at para 47 (emphasis added).
In other words, this general principle considers the words and intentions of the parties within their context. In addition, the Supreme Court of Canada has classified insurance policies as a “special category of contracts” that incorporate several insurance-specific principles.
When interpreting an insurance contract, the court is first obliged to investigate any ambiguities. If there are none, then the STD or LTD policy is understood in the same way by both parties. Where ambiguity exists, then multiple rules of interpretation come into play; some of these rules are set out below:
1.The Contra Proferentem Rule: Contra proferentem states that the court should construe ambiguities found in an STD or LTD policy in favour of the insured so long as it is within reason.
“Policies … are prepared by the insurers and in doing so they not unnaturally are minded to protect their own interests. To avoid the consequent injustices that may ensue to an insured, courts have long insisted that any ambiguity be resolved in favour of the insured.”
Scott v Wawanesa Mutual Insurance Co, 1 SCR 1445.
According to the Supreme Court of Canada in Consolidated-Bathurst v Mutual Boiler, 1 SCR 888, this principle is limited:
“But this principle ought only to be applied for the purpose of removing a doubt, not for the purpose of creating a doubt, or magnifying an ambiguity, when the circumstances of the case raise no real difficulty.”
Consolidated-Bathurst v Mutual Boiler, 1 SCR 888.
2. Coverage and Exclusion Clauses: Coverage provisions in STD or LTD policies (i.e. the definition of `disability`) must be construed broadly and restrictive provisions (i.e. exclusion clauses) must be construed narrowly. In Amos v Insurance Corp. of British Columbia, 3 SCR 405, a driver applied for auto-insurance benefits after being shot in his car. Although he was originally denied because the policy required a causal link between the ownership, use or operation of the vehicle and the injury, the court construed this causal link with an “arising out of” standard rather than "caused by." Due to this lower threshold, the insured satisfied the test. This interpretation followed the principle of construing coverage clauses broadly.
3. Common Sense Interpretation: Since insurance contracts are standard-form, inequalities in bargaining power can arise. In this manner, the words must be interpreted in accordance with their plain and ordinary meaning. These provisions must be interpreted:
“… as they would be understood by the average person applying for insurance, and not as they might be perceived by persons versed in the niceties of insurance law.”
Sabean v Portage La Prairie Mutual Insurance Co, 2017 SCC 7.
It is through these general and specific rules of contractual interpretation that an STD or LTD policy is assessed. Once done, it allows you to better understand what your entitlements are. If you have been denied coverage through one of these policies, then you may want to seek legal assistance to ensure that any appeals can be properly exercised. It is always a good idea to seek legal advice as soon as possible because there may be very short deadlines to request an appeal or reconsiderations. If you fail to meet these deadlines, your claim may be severely hindered, if not barred. Contacting a lawyer as soon as possible should help ensure that you are not unjustly denied your CPPD, STD and/or LTD entitlements.