Accidental Death and Dismemberment Benefits: Common Disputed Claims

Accidental Death Insurance and Loss of Use Claims 

Accidental death policies pay your beneficiary if your death occurs as a result of an accident. They can be part of your group insurance benefits or be found as a benefit under a private policy. These policies will also usually dismemberment insurance which is paid when an accident causes loss of a body part or bodily function. These benefits are usually referred to as AD&D insurance.

How does AD&D insurance differ from traditional life insurance?

Life insurance is payable when the insured person dies as long as the coverage is in place. The insurance policy pays a death benefit regardless of the cause of death other than exceptional circumstances such as death by suicide in the first two years after the life insurance policy was purchased. After the first two years of insurance coverage, suicide will not result in a claim denial. Insurers can also deny a traditional life insurance claim where there has been misrepresentation in the application for insurance regarding a pre-existing condition or if the insured has failed to pay premiums.

AD&D insurance will pay the death benefit or the benefit amount associated with the loss where an accident occurs. An insurance company may deny claims where the accident occurs as a result of the use of illegal drugs or if the dismemberment claim did not result from an accident. The main difference between these types of insurance coverage is that AD&D insurance policies provide coverage only in the event of an accident.

Sample Policy Language: 

The language referred to below is the AD&D insurance policy published on the Canada Life website. It’s important to recognize that as these disputes are contract claims, you need to review your own contract. However, this language is used to illustrate some typical provisions and the disputes over their application to a claim for benefits.

Covered Accidental Death, Dismemberment and Specific Loss Benefits:

Covered Loss means a specific loss set out in Section 3 that:

• Occurs as a direct result of the injury, independent of all other causes;

• Occurs within 365 days after the date on which the injury is sustained; and

• In the case of loss of use, is continuous for 365 days after the date on which the injury is sustained.

Loss by Dismemberment means:

• For hands and feet, complete severance through or above the wrist or ankle joints;

• For arms and legs, complete severance through or above the elbow or knee joints;

• For thumb and big toe, complete severance of one entire phalange; and

• For fingers and other toes, complete severance of two entire phalanges.

Loss of Sight, Speech, or Hearing:

• means total and irrecoverable loss beyond correction by surgical or other means.

Loss of Use:

• means total and irrecoverable loss of the ability to perform each and every action the arm, leg, or hand was able to perform before the date the Injury was sustained beyond correction by surgical or other means.

The policy will provide that a benefit is paid based on the loss suffered with a specific amount attributed to each loss.

Reasons that an insurance company will deny claims:

Three key areas of dispute in AD&D claims are:

1. Was the insured person’s death accidental? Did the loss or dismemberment occur as a result of injuries caused by an accident? For example, death which occurs during treatment for a medical condition such as surgery is not an accident even if the death is unexpected.

2. Are there any exclusions which will result in a claim denial? Common exclusions include death caused by natural causes, injuries caused due to an illness such as heart attack or death by suicide.

3. Has there been a loss of use that is total and irrecoverable?

The third area will be covered by this article – total and irrecoverable loss of use.

What Does Total and Irrecoverable Loss of Use Mean?

The reason for the disputes in these types of claims is explained best with some examples. If the insured retains some residual function, the insurer may argue that there has not been a total loss of use. Further, if the insured has seen some increase in function in the year following an accident, the insurer may take the position that the insured person may recover some of the function of the body part or organ.

To the insured, the fact that they retain some residual function may seem like the insurer is “splitting hairs” when the loss of function has been life changing and catastrophic. There is little case law in the area although the Leonard v. Mutual Life of Canada, [2002] O.J. No. 669, decision shows what courts may do at trial where the case involves loss of use. Mr. Leonard had sued Mutual Life under his group insurance policy for accidental death and dismemberment benefits. The policy covered “paraplegia” which was defined in the policy as “the loss of use of both lower limbs”. Loss of use was defined as “the entire and irrecoverable loss of use beyond remedy by surgical or other means”.

Mr. Leonard was diagnosed with paraplegia after he fell 22 feet from a steel beam landing on a concrete floor and sustaining a crushing fracture to his spine. The court noted that Mr. Leonard could:

“drive an automobile, shovel snow, cut the grass, do vacuuming and home maintenance, unload a wheelchair and carry it, take photographs while walking and so on.”

The court then went on to find that because Mr. Leonard had “no feeling at all from the knees down; and no bladder, bowel or sexual sensation” and:

“Through his own extraordinary initiative, discipline and rehabilitative efforts, he has progressed to the point where he can move his legs using certain muscles in his lower abdomen and hips. In doing so, he uses his legs almost as stilts; that is, as though they were prostheses.”

The court found in favour of Mr. Leonard, noting that he had “lost the use of both of his lower limbs within the meaning of the policy”.

Loss of Use Examples

A dispute can arise where an insured is capable of walking with a walker but cannot walk unassisted. The insurer will say that being able to stand and walk with the assistance of a walker means that the loss of use has not been total and irrecoverable. The insured may see the fact that they will never walk without the use of the walker as the total and irrecoverable loss of the use of their legs.

A dispute over loss of use of speech can arise where the insured is able to whisper with difficulty. The person cannot project their voice well enough to be heard in a social or work setting. The insurer will argue that because the injured person can make themselves heard with great effort in a quiet room and in a one-on-one conversation, they have not suffered a total and irrecoverable loss of use of their voice, denying coverage for the claim.

Loss of use claim disputes may also arise in the context of presumptive disability where disability is presumed as a result of the loss of use of a body part or function.

Conclusion:

Accidental death and dismemberment and loss of use are complex claims. It is important to seek legal advice from a lawyer who has experience dealing with these claims. Most of these cases are resolved before a court makes a determination at a trial of whether the claim for benefits is payable.  We know how to assess whether the insurer’s decision can be challenged and how to approach proving your claim.

For advice, please text 613-777-0992 or contact us to schedule a meeting with one of our lawyers.  We will provide a free consultation, in French or English, to ensure that your rights are protected.   In most cases, we can offer to represent you on a contingency fee basis.  This means that you do not pay legal fees unless you win or achieve a settlement on your case.