Presuming that the first test of “active employment” has been met, the insured party must then show they have met the medical test of disability as required by the policy. This will vary by policy definition, although usually the first 24 months of the policy will show the test as being “own occupation”.

An issue often in debate in an “own occupation” clause centers on the degree of disability proven on the evidence and the test to be applied in the analysis. This question is fundamental to the debate as to entitlement and is made more complex by the fact that physicians, particularly, those treating the plaintiff, typically have no idea of the legal test to be applied when completing their medical-legal report. This is true for both “own occupation” and “any occupation” claims.

The leading case on this subject remains the 1983 Supreme Court of Canada decision ¹ in which the policy allowed for benefits for a five year “regular occupation”²clause.

The plaintiff was the owner-manager of a general insurance brokerage business. The trial judge found that the policy definition referred to the plaintiff’s occupation as running the insurance brokerage and not to certain lesser components of the business, such as sales or bookkeeping. The plaintiff needed to prove only that he was medically unable to run his business, which was accepted on the facts.

In the Supreme Court, the insurer argued that the test to be considered was whether the plaintiff could perform the material duties of his occupation. It then broke down the components of the overall job responsibilities into individual segments and assessed these sub-species of the overall functions.

The Court determined that the insurer submission was denied by the evidence which “clearly shows that his attempts to carry on as owner-manager have brought on attacks of stress and nervousness bordering on hysteria (to use the words of Hall J.A.).”³ It was from this rational fear that the Supreme Court agreed with the application of the principle of reasonable prudence to cease active work. From this decision, two tests for disability emerged, namely

(1) “reasonably prudent to desist” and (2) “unable to perform substantially all the duties”.

This decision remains the touchstone in the case law today. ⁴

The Inglis case is a good example of the successful invocation of the first test, as the court accepted that the plaintiff’s  medical condition prevented him from carrying on the duties of a plumber, in that it caused an inherent danger to himself and hence exposed himself to risk of injury due to possible confusion or loss of consciousness.

Counsel would be prudent to instruct the medical clinician as the test to be applied in completing the medical-legal report to avoid any needless complications.