When your long-term disability (LTD) benefits are denied, the financial impact is only part of the harm. Many claimants also experience stress, anxiety, and significant disruption to their lives. In some cases, the law recognizes this added harm and allows you to seek compensation beyond your benefits.
If you’ve decided to challenge the wrongful denial of your long-term disability benefits, chances are your lawsuit includes a claim for aggravated and punitive damages. These forms of compensation go beyond the core of the LTD claim and are claims for additional monetary compensation resulting from the denial of your legitimate LTD benefits. They are meant to address the misconduct of the insurance company and penalize them for acting in bad faith.
This article explains what punitive and aggravated damages are, how they apply to LTD claims in Ontario, and when you may be able to pursue them. This may sound complicated, so let’s break this down.
TL;DR: What are punitive and aggravated damages in LTD claims?
Punitive and aggravated damages are additional compensation you may claim if your disability insurer acted in bad faith. Aggravated damages cover emotional harm, while punitive damages punish the insurer for egregious conduct. These damages are separate from your entitlement to LTD benefits and must be proven independently.
What Are Aggravated Damages in LTD Claims?
Aggravated damages are a claim within civil lawsuits where additional damages are being sought for emotional distress, humiliation, anxiety or mental suffering caused by the insurer’s high-handed, malicious or outrageous conduct.
What Are Punitive Damages in LTD Claims?
Punitive damages is a claim within civil lawsuits representing financial penalties. They are specifically designed to “punish” a defendant for egregious conduct, such as acting in bad faith or ignoring clear medical evidence.
Punitive damages are awarded with the aim of deterring such conduct by others from similar actions in the future. Unlike other damages, they are not tied directly to your losses but instead focus on the insurer’s actions.
When Can you Claim Punitive and Aggravated Damages in LTD Cases?
Punitive and aggravated damages, collectively referred to as extracontractual damages They represent a claim for monetary compensation outside the core of the LTD lawsuit which revolves around your disability and inability to work
Punitive and aggravated damages in a LTD lawsuit may be available when:
- You were wrongfully denied your LTD benefit
- Your insurance company was aware that you are medically incapable of returning to work
- The denial process caused additional emotional or psychological harm
- The insurer acted in bad faith, unfairly, or abusively
Punitive and aggravated damages must be proved independently from the LTD denial.
An experienced disability lawyer will be able to outline the strength of a punitive and aggravated damages claim.
Key Case Example: Baker v. Blue Cross Life Insurance Company of Canada
A leading example is Baker v. Blue Cross Life Insurance Company of Canada, where a jury awarded $1.5 million to the plaintiff (Baker). This is the largest known punitive damages award in Canada. The award was upheld on appeal.
The court found systemic issues in how claims were handled and determined that only a significant financial penalty would prompt meaningful change. The decision highlights how seriously courts can respond to insurer misconduct in LTD claims.
Why Legal Representation Matters in LTD Damage Claims?
Claims for punitive and aggravated damages are complex and require strong legal evidence. It is not enough to show your benefits were denied. You must demonstrate how the insurer’s conduct crossed the line.
An experienced disability lawyer can:
- Assess whether your case supports additional damages
- Gather the evidence needed to prove insurer misconduct
- Build a strategy that strengthens your overall claim
Frequently Asked Questions
What are punitive damages in an LTD claim?
Punitive damages are financial penalties awarded against an insurance company for egregious or bad faith conduct. They are meant to punish the insurer and deter similar behaviour in the future.
What are aggravated damages in disability claims?
Aggravated damages compensate for emotional distress, mental suffering, or humiliation caused by the insurer’s conduct during the claims process.
Can you sue for more than denied LTD benefits in Ontario?
Yes. In addition to unpaid benefits, you may be able to claim punitive and aggravated damages if the insurer acted in bad faith or caused additional harm.
How do you prove bad faith in an LTD claim?
Bad faith may be proven by showing the insurer ignored medical evidence, conducted an unfair investigation, delayed the claim unnecessarily, or acted in a misleading or abusive manner.
Are punitive damages common in LTD cases?
No. Punitive damages are relatively rare and are only awarded in cases involving particularly serious misconduct by the insurer.
How much are punitive damages worth in Canada?
Amounts vary widely depending on the severity of the insurer’s conduct. In rare cases, such as Baker v. Blue Cross, awards can reach into the millions.
Speak to an LTD Lawyer at Whitten & Lublin About Your Claim
Having an experienced disability lawyer matters when it comes to advancing and substantiating claims for aggravated and punitive damages.
A critical legal eye can tip the scales in the favour of your LTD lawsuit. The disability legal team at Whitten & Lublin offers free consultations for short and long term disability claims.
If your LTD benefits have been denied, contact us online or call 416 640 2667.
