Your Rights in Disability Insurance Denials Depend on Several Factors [infographic]

Disability insurance claims are denied for a variety of reasons, including bad faith acts by insurers, but state and federal laws provide certain rights to protect consumers. When a disability insurance claim is denied by an insurer, the policy holder’s rights can depend on several factors including the type of disability plan, policy limitations and restrictions, waiting periods, and state filing statute of limitations.

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Consumer Rights in Disability Insurance


Types of Disability Plans

Individual disability policies include short-term and long-term disability plans. Individual short-term and long-term disability insurance plans are governed by state insurance laws. Claim disputes governed by state laws allow more rights and protections for policy holders.

Long-term disability plans may be offered through employment group plans. These plans are governed by strict federal laws under the Employee Retirement Income Security Act (ERISA). Unfortunately, ERISA law allows insurance underwriters to write disability policies as they wish, so many provisions favor the insurer. If a lawsuit is filed, ERISA offers no state protections for emotional distress, punitive damages or bad faith.

Policy Limitations and Restrictions

The definition of “disability” varies among insurance companies and between policies. Each insurance company interprets their own terms when determining to pay or deny benefits due to sickness or injury. An insurer’s interpretation of its policy limitations and restrictions that govern pre-existing conditions, medical evidence, and disclosures creates confusing language and terms that lead to claim denials seen by a disability insurance attorney.

Waiting Periods

All policies have required waiting periods to receive benefits after the onset of a disability. Although a thirty day waiting period is common, many claims are denied during the initial review process. When this occurs, a claimant has 180 days to respond by filing an appeal which then goes through an internal administrative appeals process. If the appeal is denied, a claimant has the right to file a lawsuit against the insurance company.

Statute of Limitations

The statute of limitations for filing insurance claims in Nevada is based on statutory grounds or common law. Claims filed under statutory grounds must be filed within three years of the violation, while claims filed under the common law must be filed within four years. Bad faith insurance claims can be filed under statutory grounds or under common law. ERISA does not provide a statute of limitations for actions, however, group disability plans may have a contractual limitation period that goes into effect when a claim is filed.