When a person is injured by another’s wrongdoing — whether those injuries are physical or emotional, as in a personal injury claim, or only legal, as in a breach-of-contract claim — Ontario law permits the injured person to sue for compensation for his or her injuries.
That compensation comes in the form of damages, which are an award of money intended to make an injured person whole for his or her injuries — to put him or her back in the position he or she would have been in had the injuries not occurred.
Damages can be recovered for many distinct types of injury, but generally fall into one of two broad categories: pecuniary and non-pecuniary damages. A personal injury case may involve both types, but a breach-of-contract case usually only involves pecuniary damages.
Where do disability claims fit in? It depends. If the disability was caused by another person’s wrongful act, then it can be compensated in a personal injury claim. Otherwise, the disabled person will have to rely on any applicable long-term disability insurance policy — a contract — to recover.
But disability is also special in this regard. In some cases — specifically, when an insurance company wrongly denies a long-term disability insurance claim — the law sometimes provides for both pecuniary and non-pecuniary damages, even though the claim against the insurance company is for breach of contract.
This post explores some of these concepts, and why they matter for Ontarians, in more detail.
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Pecuniary vs. Non-Pecuniary Damages
Pecuniary damages, also known as economic or special damages, are those that compensate a person for calculable losses — losses that are relatively easy to quantify. For instance, medical expenses and repair costs are two types of pecuniary damages. There is a bill that can be consulted to determine exactly how much money an injury cost the injured person.
Lost earnings are another type of pecuniary damages. Although there is no “bill” to look to in establishing the amount of lost earnings, that amount can be determined by comparing pre-injury earnings to post-injury earnings.
In contrast, non-pecuniary damages, also called non-economic or general damages, don’t have a “price tag” of any sort attached to them, meaning it is more difficult to assign an exact figure. These sorts of damages include pain and suffering or disfigurement.
Damages for Disabilities in Personal Injury Claims
Disabilities that are caused by another person’s wrongful act can give rise to numerous kinds of damages, both pecuniary and non-pecuniary. For example, because the injured person is unable to work (e.g., disabled), he or she will be able to recover lost wages. Because he or she may have to undergo physical or other types of therapy, he or she can also be compensated for that.
In addition, he or she can recover for physical and emotional pain and suffering — a type of non-pecuniary damages. Normally, the same cannot be said in the context of a claim on a long-term disability insurance policy.
Benefits vs. Damages in Long-Term Disability Claims
There isn’t always someone at fault in causing a disability. As a result, in the typical Ontario long-term disability claim, we don’t think of damages, but benefits. Under a disability insurance policy or the Canada Pension Program (CPP), a person can receive regular income-replacement benefits calculated as a percentage of the person’s pre-disability income.
Similarly, the Ontario Disability Support Program (ODSP) provides income-support and employment-support benefits. These benefits are based on a person’s need, and can help pay for such things as housing, medical supplies, and disability-related costs (e.g., hearing aids).
All of these benefits are analogous to pecuniary damages in the personal injury context: for instance, income replacement is like lost wages. There isn’t really a good analogue to non-pecuniary damages among long-term disability benefits, even though it will usually be the case that the disabled person has pain and suffering of some kind, for example.
But when an insurance company wrongfully denies a claim, then we come back to the concept of damages.
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What happens if you have to sue your insurer?
As we’ve discussed many times before, insurance companies — including disability insurers — do not always have their insureds’ best interests at heart. Relying on unclear policy language, or by questioning a claimant’s disability, insurance companies often fight aggressively to avoid paying out benefits that a covered person is entitled to.
In such circumstances, Ontario law permits the insured to sue the insurance company to recover the benefits he or she should have received. A prevailing plaintiff will be entitled to contractual damages — e.g., the amount he or she would have received under the policy but for the insurer’s denial.
In addition to those contractual damages, Ontario law sometimes entitles a person to additional damages. In exceptional cases, these can include punitive damages — non-compensatory damages meant to punish the insurance company, rather than compensate the injured person.
But they can also include a type of non-pecuniary damages — damages for mental anguish (sometimes called aggravated damages). Long-term disability insurance is supposed to provide the insured individual with peace of mind. An insurance company’s refusal to pay such benefits when they are deserved may rob the insured of the peace of mind for which he or she has contracted with the company. Ontario law allows the insured to recover for that loss in the form of mental anguish damages.
The distinction between pecuniary and non-pecuniary damages usually only comes up in the personal injury context. But as the above discussion shows, it can be important to know the difference even outside of that context, as when dealing with an insurance company’s handling of a long-term disability claim.
To understand what rights you or a loved one may have in making an Ontario long-term disability insurance claim, including what damages you may be entitled to if they are denying your claim without reason, contact the experienced disability lawyers of Preszler Law Firm for a free consultation today.