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Variable factors in the quantification of a Long Term Disability Claim (Ontario)

One of the most common questions which personal injury lawyers must answers is “how much is my case really worth“?

This question is never easy to answer. These questions are largely fact specific. Even the most serious analysis of the facts and evidence cannot predict the answer with pin point accuracy. The reason for this is that the majority of personal injury cases are heard by juries. Juries by their very nature are unpredictable. Judges can be unpredictable as well. If the Judge and Jury like the Plaintiff, then the award will likely be larger. If the Judge and Jury don’t like the Plaintiff, then the award will likely be smaller. In any event, predicting the outcome of a personal injury case, along with predicting the value is not an exact science.

There are certainly guidelines and parameters which personal injury lawyers use to predict the range of damages for a case. Precedent case law is certainly the most accurate tool for that. The general public can look up old cases FOR FREE on a great website called Canlii.

Free to use. Easy to navigate. With relatively good case updates, although not a comprehensive list of cases; Canlii is certainly an excellent resource even for the non-lawyer.

Some easier predictors for case valuation are long term disability cases. The reason being is that we are fighting over benefits which can mathematically be quantified and are payable over a fixed period of time pursuant to the Long Term Disability policy in place.

1.A good starting point for quantifying a Long Term Disability case is determining what the LTD benefit amount is. Is the LTD benefit $1,000/month? $5,000/month? Perhaps somewhere in between.

Knowing what the LTD benefit is can be as simple as reviewing a standard letter from the insurer, or a simple phone call to the LTD adjuster. Either way, it’s not rocket science finding out or understanding what that monthly LTD benefit ought to be (although is can get complicated for reasons explained later).

For argument sake, let’s say that the monthly LTD benefit is $2,750/month.London-Head-Shot-Brian-Goldfinger-201x300

2.Once you know what the LTD benefit is, another simple question is determining if that monthly LTD benefit is taxable or not. This should be stated in your LTD policy. Your adjuster will also be able to tell you. It should also be on a letter from the LTD insurer. As a rule of thumb, if you pay for the LTD premiums outside of your wages of employment, the benefit should be non-taxable. If however your employer pays for your LTD premiums as a part of your wage/salary, the LTD benefit will likely be taxable. The taxability of an LTD benefit is a big deal, especially over the lifetime of an LTD claim. Non taxable benefits mean more money in your pocket to use as you wish as oppose to having to pay a large portion of that benefit over to the government

3. Once we know the sum, and taxability of your LTD benefit, it’s next important to determine the duration of which those benefits are payable. Most LTD policies our lawyers see go until the age of 65. Other policies are much more harsh that that. The duration of benefits may only be 2 years, 5 years, or 8 years depending on the wording of the LTD policy. What never ceased to amaze us is that despite the fact that the age of retirement has increased from 65 to 67, and the population as a whole in Canada is working for much longer, the duration of LTD policies has NOT changed with the times. We continue to see policies which won’t pay out beyond the age of 65, despite the fact that the insured people under said policies fully intended and NEEDED to do so in order to make ends meet. If any LTD policy writers are reading this, know that Canadians NEED to work longer in life. The concept of Freedom 55 or Freedom 65 should be extended to Freedom 80…The duration of LTD benefits, along with the quantum of those benefits are the largest determining factors in assessing the value of your LTD case. If you are 64, and LTD benefits ceased at the age of 65, then you are only litigating over 12 months of benefits. You may have the strongest case in the world, the the ceiling of your case remains at 12 months of LTD benefits (less any claims for punitive or aggravated damages, but that’s a topic for a different Toronto Injury Lawyer Blog Post).

4.Understand what the set-offs are for your LTD case. Each policy our LTD lawyers have seen contain provisions whereby the LTD insurer is entitled to a dollar for dollar set off for such things as CPP Disability Payments, Severance Payments, WSIB Benefits, QPP Benefits, Pension Payments, etc. This dollar for dollar set off presents a significant savings to the LTD insurer and will reduce the value of your LTD claim. Example. Your LTD benefit is set at $2,750/month. You recently got approved for CPP Disability Benefits at a rate of $1,250/month. With a dollar for dollar set off, the LTD insurer now only has to pay you $1,500/month in LTD benefits instead of $2,750. The more collateral benefits or money you receive from exterior sources,  the more ways the LTD insurer will look to reduce your LTD benefit on a dollar for dollar set off basis. Those set offs will quickly chop down even the largest LTD claim. The fewer set offs, the greater the ceiling of the case.

5. How much in benefits is owing to you in arrears vs. how much in LTD benefits are owing to you in the future? An LTD insurer is not in the business of paying out benefits in to the future. There are too many variables. What happens if the LTD insurer pays you out 15 years of LTD benefits in to the future and you die in year #1 after those benefits have been paid? That doesn’t seem right. What happens if you return to work in 1 year after 15 years of LTD benefits in to the future are paid? That doesn’t seem right either. Interest will attach to past benefits. Past benefits are also in the past, so we know with certainty that you could and did not work in that period of time. Future benefits are looked upon differently on account of their uncertainly. Given their uncertainty, insurers will see to attach a discount rate to those future benefits. This discount rates works the exact opposite as interest attaching to past benefits owing. The larger the discount rate, the smaller the future benefit period becomes. This is the concept of attaching a present value to future benefits, which is something which we see in economics frequently.



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