A Disability Insurance policy is a contractual relationship between you and your insurance company. Like all contracts, it is governed by certain laws and regulations.
It’s probably safe to assume that your insurance company has a lot more money (and more lawyers) at its disposal than you do. This means the “relationship” mentioned above is not an equal one. Because the insurance company has more resources than the people it insures, it is required to act in “good faith”. That basically means that it needs to act fairly towards you rather than act exclusively in its own best interest. Although the insurance company is more “powerful” than you, it must treat you as an equal partner in the contract (your insurance policy).
If the insurance company doesn’t do that, it has acted in bad faith. Here are a few examples:
- You have reports from several medical professionals that say you aren’t able to work, but the insurance company’s in-house doctor says you can and the insurance company ignores your reports in favour of its own.
- Cutting off your benefits without telling you why.
- Consistently making late payments or missing payments altogether.
The courts recognize bad faith when it happens so if it has happened to you, you have legal options at your disposal. If the insurance company is found to have acted in bad faith, a judge can order them to pay compensation to you on top of whatever it owes you for your disability benefits. If you believe your disability insurance company has acted in bad faith, you may want to seek a consultation with an experienced disability lawyer.