Long-Term Disability Insurance

What is long-term disability insurance?

Long-term disability insurance provides financial assistance to individuals who cannot work for an extended period due to a disabling injury or illness. This form of insurance helps policyholders maintain a certain income level if they cannot perform their job duties for an extended time.

For example, a teacher may develop a chronic illness that prevents them from working in the classroom. In this case, long-term disability insurance would help cover their financial needs while they recover.

Need help with a matter related to Long-term disability insurance? Schedule your consultation today with a top insurance attorney.

In Florida, which laws and regulations relate to long-term disability insurance?

Long-term disability insurance is regulated primarily by the Florida Department of Financial Services, which oversees the licensing and conduct of insurance companies and agents. Florida Statute Chapter 624 outlines the general provisions relating to insurance, including the types of insurance policies and the regulatory authority of the FDFS. Additionally, Florida Statute Chapter 627 deals with insurance rates and contracts.

At the federal level, the Employee Retirement Income Security Act (ERISA) governs many employer-sponsored long-term disability insurance plans. ERISA sets minimum standards for such plans, including requirements for the provision of information to plan participants and guidelines for filing claims and appealing denied claims.

In summary, long-term disability insurance for Florida residents is subject to both state and federal regulations, ensuring that policyholders are adequately protected and that insurance providers maintain ethical business practices. By understanding the laws and regulations surrounding long-term disability insurance, individuals in Florida can make informed decisions when selecting and using this type of coverage.

What are common disputes regarding long-term disability insurance that lead to litigation?

The following disputes are among the most common in actions regarding long-term disability insurance in insurance procurement and coverage matters:

• Denial of Benefits: Insurers may deny long-term disability claims for various reasons, such as insufficient medical evidence, pre-existing condition exclusions, or policyholders not meeting the definition of “disabled.” Disagreements over these denials can lead to litigation.
• Termination of Benefits: Insurance companies sometimes terminate benefits prematurely, alleging that the policyholder has recovered or can perform alternative work. Policyholders may dispute these decisions, leading to legal battles.
• Disagreements Over Policy Terms: Policyholders and insurers may disagree over the interpretation of policy provisions, such as the definition of disability, elimination periods, or the duration of benefits.
• Bad Faith Claims: Policyholders may allege that insurers acted in bad faith by delaying or denying claims without a reasonable basis or failing to investigate claims thoroughly.
• ERISA Disputes: Employer-sponsored long-term disability plans are subject to the ERISA, which sets forth procedural requirements for claims and appeals. Disputes over ERISA compliance can result in litigation.

We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to seek appropriate remedies.

To determine whether your unique situation may necessitate litigation, please contact our office to set up your initial consultation.

What measures should an insurance carrier take to minimize the risk of litigation over long-term disability insurance?

To minimize the risk of litigation over long-term disability insurance, an insurance carrier should consider the following steps:

• Clear Policy Language: Ensure policy terms are clearly defined and unambiguous to reduce misunderstandings and disagreements.
• Thorough Claim Investigations: Conduct comprehensive investigations of disability claims, including obtaining all relevant medical records and considering the opinions of treating physicians and independent medical examiners.
• Timely Claim Processing: Adhere to established timeframes for reviewing, approving, or denying claims to avoid allegations of bad faith or non-compliance with ERISA requirements.
• Consistent Claim Handling: Develop and follow standardized procedures for evaluating claims to promote consistency and fairness in claim determinations.
• Communication with Policyholders: Maintain open lines of communication with policyholders throughout the claim process, providing updates and explanations for decisions to reduce the likelihood of disputes.
• Appeal Process: Offer a fair and transparent appeal process for policyholders who disagree with claim decisions, allowing them to submit additional information and reconsider their claims.
• Training and Education: Regularly train claims adjusters and other personnel on relevant laws, regulations, and best practices to ensure accurate and fair claim handling.

What must a policyholder prove if they believe their insurer breached the insurance policy’s terms, and what are common legal defenses to those claims? 

Plaintiff policyholders must satisfy the following requirements for a breach of contract claim:

• Existence of a valid insurance policy covering the plaintiff’s conduct;
• Covered loss or damage occurred during the policy period;
• Compliance with policy conditions, such as providing timely notice and proof of loss; and
• The insurer failed to pay the claim or undervalued the claim in violation of the policy terms.

Common legal defenses against professional liability insurance claims include:

• Policy Exclusions: The insurer argues that the loss or damage is excluded from coverage under the policy terms.
• Late Notice: The insurer claims that the policyholder failed to provide timely notice of the loss, as the policy requires.
• Misrepresentation or Concealment: The insurer alleges that the policyholder misrepresented or concealed material facts when obtaining the policy or submitting the claim.
• Failure to mitigate damages: The insurer contends that the policyholder did not take reasonable steps to minimize the damage after the loss occurred.

Please get in touch with our office to set up your initial consultation to see what actions or defenses may be available for your unique situation.

Frequently Asked Questions

What constitutes a disability according to a long-term disability insurance policy?

The definition of disability may vary between insurance policies. Generally, a disability is considered a medical condition that prevents you from performing your job or any occupation for which you are reasonably suited based on your education, training, and experience. It is essential to review your specific policy to determine the applicable definition of disability.

How long do elimination periods typically last for long-term disability insurance policies?

Elimination periods, also known as waiting periods, vary among long-term disability insurance policies. They typically range from 30 to 180 days, during which the insured must be disabled before benefits begin. Shorter elimination periods often result in higher premiums, while more extended periods may have lower premiums.

Can an insurer deny a long-term disability insurance claim based on a pre-existing condition?

An insurer can deny a long-term disability claim based on a pre-existing condition. Many insurance policies contain clauses excluding coverage for disabilities resulting from pre-existing conditions, especially if the policyholder did not disclose the condition during the application process. The definition of a pre-existing condition and the specific exclusion period may vary between policies, so reviewing your policy for details is essential.

Have more questions about a long-term disability insurance-related situation?

Crucially, this overview of long-term disability insurance does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain a tireless advocate every step of the way. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to set up a consultation.

Here are some blogs written by JB attorneys that provide more information about long-term disability insurance:

• An Insurer’s Duty to Defend the Insured (jimersonfirm.com)
• Benchwarmer Effect: The Sobering Reality of Coblentz Agreements (jimersonfirm.com)