Disability insurance is insurance coverage that is purchased to protect employees from wages they may lose during a period when they are disabled, or unable to work. While the employee is disabled, income will be paid to them weekly or monthly in the form of disability insurance.

Individual disability insurance policies define disability insurance in one of the two following ways:

  • General disability insurance; or
  • Occupational disability insurance.

General disability insurance provides benefits to an individual who cannot perform any job that they are qualified for due to sickness and/or injury. If the policyholder can still perform certain jobs that they are qualified for, they cannot recover.

Occupational disability insurance provides benefits to an individual who cannot perform their regular job due to sickness and/or injury. An individual must be employed at the time the disability occurs.

The distinction between the two types of disability insurance can be extremely important. For example, if a surgeon loses a hand, they may not be able to perform surgery. If the surgeon has an occupational disability policy, they will be able to recover although they can still work as a doctor in a non-surgical field. If the surgeon has a general disability insurance policy, they would not be able to recover, even if the only possible employment alternative is to be a tour guide.

What Do Disability Insurance Policies Cover?

Disability insurance policies are designed to cover certain expenses when an individual becomes chronically, though usually not permanently, disabled and/or unable to work. Generally, the disability is the result of a work-related injury. The federal government and many state governments provide disability insurance for injured and/or ill employees.

There are generally two types of disability, total disability and partial disability. Total disability occurs when an employee is prevented from performing any work at all because of an injury and/or condition. In general, this is defined as loss of the use of both legs, arms, hands, and/or eyes, or any two parts such as a leg and an arm. Total disability can include impairment due to a serious occupational disease.

Partial disability is any type of disability in which the employee is unable to perform their duties at full physical capacity. This is typically due to a work-related injury and/or illness. Benefits may be paid to the employee if they suffer the loss of the use of a part of the body due to a work-related injury. In this context, loss typically means the inability to use the body part in the same manner as it was used prior to the injury.

There can be significant differences in the remedies for total and partial disability. Legal remedies for partial disability usually include compensation for lost wages resulting from the injury. However, it may result in a lower pay rate for the employee because although they are still able to work, they may not be able to perform the same tasks as before.

On the other hand, total disability may result in compensation for lost wages but it may also result in additional damages for issues including loss of future earnings and/or lost earning capacity because the employee generally cannot perform any work. In some serious cases, loss of future earnings may be claimed for a partial disability.

It is important to note that in order for an individual to collect a disability paycheck, the disability has to be permanent. Under these circumstances, permanent means that the disability and/or injury is lasting and permanent, rather than a temporary condition. Both total and partial disabilities can be permanent, in other words, a worker can sustain either permanent total disability or permanent partial disability.

What Are Some Different Types of Disability Insurance Policies?

In general, there are three major types of individual long-term disability policies. These include:

  • Non-cancelable policies;
  • Guaranteed renewable policies; and
  • Conditionally renewable policies.

The premiums for a non-cancelable disability insurance policy are fixed over the term of the policy. The insurer cannot:

  • Suddenly increase rates;
  • Decrease benefits; and/or
  • Cancel and/or refuse to renew the policy.

With a guaranteed renewable disability insurance policy, the premium can be raised. However, the change must affect an entire category of occupations, policyholders, etc.

For a conditionally renewable disability insurance policy, the premiums can increase. Coverage can also be cancelled if certain conditions that are stated in the policy are triggered.

How Much Income Will My Policy Pay While I Am Disabled?

A disability insurance policy will pay out a percentage of an individual’s income or a set dollar amount. Each specific policy defines how much the insured will be paid. It also defines how soon after disability occurs payments will begin as well as when they will terminate.

Benefit periods in a disability policy may depend on whether the disability was caused by an accident or by an illness. In general, the longer the benefit period, the higher the premium, or cost of the policy. It is important to note that injuries and/or illness resulting from employment may also be covered under workers’ compensation.

Workers’ compensation is state-mandated insurance that provides compensation to employees who suffer a job-related injury. These benefits are guaranteed regardless of who is at fault for the injury. However, in exchange for these benefits, an employee usually forfeits the right to sue their employer for damages related to the injury.

How Do I Obtain Disability Insurance?

There are many different ways to obtain disability insurance. There are also many different kinds of disability insurance. Some disability insurance plans are available from an individual’s employer through a group health package and/or a private insurer.

An individual may also obtain disability insurance through one of the various public sector programs including Social Security Disability and State Disability Insurance programs. Some individuals are covered by federally-sponsored programs, including:

  • Veterans;
  • Members of the armed forces;
  • Civil servants; and
  • Coal miners.

Are There Any Special California Laws Regarding Disability Insurance?

Yes, there are special laws in California regarding disability insurance. There are 5 states that have mandatory disability insurance, including:

  • California;
  • Hawaii;
  • New Jersey;
  • New York; and
  • Rhode Island.

In California, employee disability insurance is covered by a tax that is deducted from an employee’s paycheck. This covers physical disabilities and paid family leave. Paid family leave permits an employee to take time off for maternity or paternity leave and/or to care for a seriously ill family member.

In general, the benefits of this program equal 55% of the employee’s pay, up to a certain maximum amount. If an employer in one of the previously mentioned states does not carry disability insurance for their employees, they may face a lawsuit.

Do I Need a California Attorney to Help with My Disability Insurance Case?

Yes, it is important to seek the assistance of a California lawyer to help with your disability insurance case. Disability insurance claims can involve multiple complex legal issues. Additionally, insurance companies usually vigorously defend claim denials.

It is important to seek an experienced insurance claims and bad faith litigation attorney to evaluate your case. If you cannot afford to hire an attorney, you may request an attorney who works on a contingency fee basis, meaning they only get paid if they win your case.

It is common for cases against disability insurance providers to be taken on a contingency basis. If this occurs, the attorney will investigate and evaluate the case before filing a complaint. The attorney advances the costs of investigation and litigation and only receives attorney’s fees if you recover on your claim.