Case — continued from Previous Page
degree or license, many of these policies state that the insurance company will deem that specialty to be the insured’s “own occ.” But there are different types of “own occ” coverages that have been sold over the years. • True “own occ” coverage will replace lost income if the insured is unable to perform the material and substantial duties of his pre-disability occupation, even if he is able to earn income from some other type of work. For example, a fellowship-trained surgeon, who spent decades preparing for a career that is cut short by a disabling accident, may no longer be able to operate. But if he can perform some other, less physically – or cognitively – demanding occupation, he will still be entitled to benefits under this type of coverage.
• Modified “own occ” coverage will entitle the insured to benefits only if he is ren- dered unable to perform the material and substantial duties of his pre-disability occupation and he is not earning income from any other occupation. This type of coverage seems to penalize the motivated and resourceful claimant who tries to transition into a new or related field. It discourages attempts to overcome a dis- ability and return to work in some other capacity, even if not at the profession for which the insured spent half a lifetime in training. • Shifting “own occ” disability policies start out with own-occupation coverage for a limited period of time (usually two years or five years). Thereafter, the defini- tion of disability in the policy shifts to “any occ” which is usually defined as the
inability to perform any gainful occupa- tion for which the insured is reasonably qualified by education, training and experience. To supplement the above types of
total disability coverage, an individual can purchase a “residual” or partial-disability rider. Residual coverage provides benefits if the insured is able to work, either part- time or full-time, but due to illness or injury is unable to earn at least 80 percent of his pre-disability income. This benefit replaces the amount of income lost due to the illness or injury. But beware that the insurance company will often argue that the loss of income was caused by econom- ic factors and not the disability. This is especially true in difficult economic times. Further, claimants should be aware
that, even if the insured purchased a “life- time benefit” rider extending total disabil- ity benefits beyond the policy’s maximum benefit period, if the insured files a resid- ual or partial disability claim instead of a total disability claim, benefits will cease at age 65. Most claimants are surprised to find this “fine print” in the policy. The problem arises frequently because most hardworking professionals refuse to give up their occupation completely, regard- less of the severity of their impairment. Insurance companies have used resid-
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Wendy W. Kramer, ESQ. MEDIATOR | ARBITRATOR | ATTORNEY AT LAW
2001 Wilshire Blvd., Ste. 210 • Santa Monica, CA 90403 •
wkramer@k2law.com 310-829-6063 ext. 12 |
www.kramermediate.com
70— The Advocate Magazine JUNE 2011
ual or partial-disability riders as a sword against claimants in many cases, alleging that when a policy includes residual cover- age, an insured can only be totally dis- abled if he is unable to perform all of the significant duties of his occupation. Insurers have asserted this severely- restricted definition of total disability applies, regardless of the definition stated in the policy. The insurance carrier’s typi- cal argument is, if the total disability pro- vision did not refer to an inability to per- form all duties, it would be duplicative of the residual disability provision which provides benefits if the insured is unable to perform one or more significant duties. (See, e.g., Dym v. Provident Life &Accident Ins. Co. (S.D. Cal. 1998) 19
F.Supp.2d 1147; Gross v. UnumProvident Life Ins. Co. (C.D. Cal. 2004) 319
F.Supp.2d 1129.) Such arguments fly in the face of the standard of total disability set forth by the
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