TPD claims - beware the Date of Assessment

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By David Slatyer, Partner

Introduction

In Standley v Onepath Life Ltd (2020) NSWSC 848, an issue of great interest and which determined the case was whether the ‘qualifying or waiting period’ for total and permanent disablement under the insurance policy was fixed to a particular time.

The court decided that the words of the policy did not specifically require the waiting period to commence or occur at a particular time.

The effect was that Mr Standley was able to satisfy the waiting period at a time later than what the insurer’s orthodox approach contended for, that is well after he ceased work because of injury.

Further, by that later date Mr Standley could prove he was suffering a secondary psychiatric injury, which, in combination with his physical injuries (that alone were insufficient to render him TPD), caused the court to find that he was TPD.

Background

Mr Standley was a call centre manager supervising about 40 people when he was involved in a motor vehicle accident that caused him to sustain a fractured wrist and two fractures to his leg. Two-three months later he attempted to return to work but after a further two-three months he resigned due to ‘not coping’ with the demands.

For his injuries he received worker’s compensation, and damages of $900,000 from a CTP action.

Some time later a TPD claim was lodged, relying on the physical injuries alone.

There was competing medical evidence regarding the effects of his physical injuries. However the claimant had made out to his doctors that his work involved physical exertion including walking around supervising staff and lifting packages, but the court did not accept that, and therefore found it difficult to accept his medical evidence on this subject.

The insurer reached a decision to reject the claim. In doing so it fixed the date of assessment for TPD as 2 May 2016, being the conclusion of three consecutive months inability to work because of the injuries, with such waiting period starting when Mr Standley ceased work in February 2016.

Accordingly, at 2 May 2016 there was no evidence of any psychiatric injury, and there was evidence that the physical injuries were not to the extent that Mr Standley was unlikely ever to ever again be able to engage in his own occupation.

The definition of TPD in the policy was:

“…as a result of illness or injury, the life insured:

  1. has been absent from and unable to engage in their own occupation for three consecutive months; and
  2. is disabled at the end of the period of three months to such an extent that they are unlikely ever to ever again be able to engage in their own occupation”

Findings

The court accepted that the date for assessing TPD (i.e. whether Mr Standley’s injuries were to the extent that he was unlikely to ever again be able to engage in his own occupation) was the end of a period of three consecutive months inability to work because of the injuries.

However it agreed with Mr Standley’s counsel that the TPD definition should not be read narrowly so as to restrict the period of three consecutive months to occur at a fixed time.

The court said that “the clause does not in its terms limit the three months of inability to work to any particular period, and I am not persuaded that there is any reason to read into the clause any limitation on its scope”.

This meant that Mr Standley could prove that at some later stage he met the TPD criteria.  By September 2017 there was evidence including medical evidence of a secondary psychiatric condition, which in combination with this physical injures, supported his claim.

As the insurer had not challenged Mr Standley’s psychiatric condition as at September 2017 and beyond, the court decided that the claim was made out.

Conclusion

This is another reminder to pay heed to the particular words of the policy, to be construed according to the ordinary meaning of those words in the context of a commercial contract.

Here there were no words in the definition to fix the commencement of the waiting period to the cessation of work, when such words could have been used.

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