Long Term Disability Insurance and the Offset Provision

Long term disability insurance coverage is something of a moving target, it has to be said. Many people believe that once they’ve been awarded LTD benefits, their troubles – at least with their insurance company – are over and they can reasonably count on receiving the amounts they are entitled to as long as they remain disabled

Unfortunately, that’s not really the case.

Offset = Pay Back

Once an LTD claim has been established, there may be several other clauses and procedures that come into effect at various points along the way as the claim progresses. One of them involves the insurance company’s ability to mitigate their own exposure – i.e. pay less to you – by calling on you, the injured party, to make as many other claims for benefits as you can. The idea is that they come up with the global figure you are entitled to and then if you are also entitled to other benefits, they are deducted from what they pay to you. For example, if they decide you are entitled to $2,000 per month and you can get another pension or benefit for $500 per month, the idea is that they then owe you only $1,500 per month – and it’s up to you to do all the legwork. It is typically called an “offset provision” in the insurance contract.

Take the case of an Ontario man that is currently going through the courts. He was injured in 2009 and was approved for disability benefits from an insurance company – coverage he had through his employer.  Here is the short version of his long and tangled case.

  • After being awarded $3000 per month in benefits, the insurance company evoked the offset provision and asked him to initiate a claim for CPP benefits. (Note – if he did not comply they had the right to deduct what they estimated CPP might have paid him from his monthly cheque.)
  • He filed a claim and was denied by CPP – twice.
  • The insurance company continued to insist that he should pursue an appeal to the CPP Review Tribunal.
  • He appealed – with the help of a lawyer – and won a judgement of $34,000.
  • He paid his lawyer’s fees of about $17,000 and then gave the insurance company the balance.
  • They continued to insist on receiving the full amount of $34,000 and that lawyer’s fees were his responsibility – and since they were continuing to pay him, they simply deducted it from his benefits.

He has sued to recover the monies and won a major victory this past summer. The insurance company sought a summary judgement which means that they wanted to get the case dismissed before it started based on its having zero chance of success. The judge did not agree and the case continues through the system.

You Need Someone in Your Corner

It’s clear from cases like this that insurance companies just aren’t on your side or looking out for your interests – they look out for their own. That’s where we come in.

Contact Petrillo Law today by calling (905) 949-9433 for a free consultation with an experienced disability insurance lawyer. We look forward to hearing from you.

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