When an insurer treats you unfairly after you’ve made a claim for long term disability benefits, you may be entitled to more than just the disability payments you’re owed. Understanding the difference between punitive vs aggravated damages is a crucial part of Canadian law that can impact your claim.

These two types of damages represent different ways the law compensates or punishes insurers for misconduct. Knowing when and how aggravated and punitive damages apply can increase the value of your claim and help you get the justice you deserve.

What Are Punitive Damages?

In Canada, punitive damages in LTD cases are awarded only if it can be proven that the insurance company acted improperly and the conduct is considered to be egregious. They are intended to prevent similar behavior by the insurer in the future, not necessarily to compensate the person filing the claim.

Punitive damages require a very high standard of proof - a “marked departure” from general good faith practices such as denying disability benefits improperly, ignoring evidence, or deliberately delaying your claim. They are not granted for things like an incorrect denial of benefits.

Punitive damages are not automatic, even if the insurer’s conduct is questionable.

Punitive damages are rarely awarded. When they are, it’s because the insurer’s behaviour was malicious, oppressive, or showed a blatant disregard for your rights.

Key Points:

• Punitive damages penalize wrongdoing.
  

• They are only awarded in exceptional cases of bad faith or egregious misconduct.
  

• The aim is deterrence and to send a strong message to insurers.

What Are Aggravated Damages?

Aggravated damages focus on the harm you suffered as a direct result of the insurer’s breach of contract, such as unnecessary mental distress, anxiety, or loss of dignity.

• These damages are compensatory – meant to make up for real suffering caused by the insurer’s conduct, not just to punish them.
  

• Aggravated damages are more commonly awarded than punitive damages in LTD cases.
  

• The threshold is lower: you do not need to prove separate bad faith, just that the insurer’s denial caused additional harm.
  

Examples of losses aggravated damages may cover:

• Severe anxiety or depression caused by a denied claim
  

• Reputational harm or humiliation
  

• Unnecessary financial hardship (eg. being forced to sell your home)

Punitive and Aggravated Damages in LTD Claims

Punitive vs aggravated damages remains a consideration for anyone whose disability benefits have been wrongly denied, as each serves a very specific purpose in holding insurers accountable for their actions.

The courts consider:

• Was your claim denied despite clear medical evidence?
  

• Did the insurance company ignore your doctor’s reports or misinterpret evidence?
  

• Did they delay or deny your claim without properly investigating?
  

• Was their process unfair, demeaning, or meant to pressure you into giving up?

Checklist: When to Consider Aggravated and Punitive Damages

• Your disability claim was denied without a valid medical reason.
  

• The insurer engaged in deliberate delay tactics or ignored evidence.
  

• You experienced significant mental distress due to the denial.
  

• There’s evidence of the insurer acting in bad faith, with oppressive or egregious conduct.

Why Seek Disability Lawyer Assistance?

If your disability benefits have been denied or you believe your LTD claim was handled unfairly, it’s vital to get the right legal advice. Navigating the complexities of punitive vs aggravated damages is challenging, and insurers often have powerful legal teams working against you.

Disability lawyers know how to build strong cases and push for not only the benefits you’re owed, but also the additional compensation you may be entitled to in cases of bad faith.

How Share Lawyers Can Help You with Your Claim

Share Lawyers has decades of experience standing up to insurance companies in LTD claims. If you believe you’ve been treated unfairly, our team will:

• Review your claim and the insurer’s decision in detail.
  

• Gather all required medical evidence to support your case.
  

• Identify if you may qualify for aggravated and punitive damages in addition to your regular disability benefits.
  

• Negotiate forcefully with the insurance company for a fair settlement.
  

• Represent you in court, if necessary, to fight for maximum compensation.

If you or someone you care about has been treated unfairly by an LTD insurance company, it’s important to know that Canadian law allows for aggravated and punitive damages in some but not all situations. It’s important to contact a disability lawyer to understand if these types of awards apply to your case.

Getting advice from Share Lawyers can help you fully understand your options and what steps you need to take to receive all the compensation you may be owed. If you believe your insurer has handled your claim wrongly, reach out to discuss your case and get guidance on how to protect your rights.