Introduction

This section reviews the defences which an insurer may offer to a claim for disability benefits by an implied term such as the duty to mitigate to typical policy terms and statutory defences.

The most important steps the insured can take to advance his or her claim are (1) prepare to show a continuum of the disability, (2) take proper steps to follow a physician’s instructions, (3) follow the policy requirements as set out below and (4) be aware of policy exclusions such as a pre-existing medical issue.

The insurer will be mindful of the need to act in good faith in dealing with a “peace of mind” contract, given the incremental damage awards of recent years. All of the above steps should be moderated by the requirement to do so in good faith.

The first issue to consider is whether the insurer has any reasonable basis to dispute the above steps by which the insured must prove the claim, such as:

1. no active employment;
2. the relevant medical test has not been made;
3. the disability was not continual from its onset through the qualifying period to the initial date for benefits;
4. the disability was not continual from the initial date for benefits through to the date of “any occupation” benefits through to the current date; and
5. limitation defences to the claim.

The insurer has other defences which come from common law principles and/or policy mandates which are also reviewed.