This 36 year old injury claimant sought  an order requiring Empire Life Insurance Company  to pay her long-term disability benefits as the insurance company refused to pay the disability benefits (Tanious v. The Empire Life Insurance Company,2016 BCSC 110). The retroactive value of the claim was no more than $60,000, after making appropriate deductions for taxes and CPP disability benefits. If successful, however, she would be entitled to prospective benefits to age 65. The claimant also sought damages in the range of $20,000 to $25,000, for mental distress.

After several years of fighting the court agreed with the claimant and declared that she was entitled to the disability benefits that had been unjustly denied by the insurance company. This was however not a case of bad faith, and it was not claimed. There was a genuine issue over causation and the court found it necessary to re-state the real definition of “total disability” as follows:

[228] Being able to perform one or more important aspects of the occupation separately will not necessarily disqualify the insured from coverage; they do not need to be totally helpless. What matters is that the insured is unable to perform substantially all of the duties of that position: Paul Revere, at 545 – 546.

As to the award for mental distress, damages for mental distress for breach of peace of mind contracts are clearly recoverable in Canada. Contracts for disability benefits are meant to provide peace of mind and a sense of financial security in hard times; that the insured will have a roof over their head and food on the table, whatever befalls them. The claimant pointed out this is particularly important when insured individuals suffer from overwhelming and inherently destabilizing illnesses like MS.

The claimant was therefore also awarded the modest amount of $15,000 because she has suffered much more than she would have had her application been accepted. If not having been denied, she would have had enough money to” purchase wholesome food; live in decent quarters; and overall, allow her to live in a reasonably dignified fashion not being fearful of having no money. Considering the evidence on the nature of MS, financial stress could only worsen her condition.”

This really does beg the question of whether $15,000 for mental distress, loss of peace of mind and of dignity as a person caused by refusal to pay benefits is an adequate award against a profit based insurance company.

Posted by Personal Injury Lawyer Mr. Renn A. Holness, B.A. LL.B.

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