Total and permanent disability insurance

Posted on February 27th, 2015

Share on LinkedInTweet about this on TwitterEmail this to someoneShare on Google+Print this page

by Tony Cavanagh

Tony Cavanagh is a Director at Mullane & Lindsay in Newcastle and specialises in commercial dispute resolution & litigation, and employment law.

Many Australians now have Total and Permanent Disability Insurance (TPD), particularly self employed individuals. Commonly, TPD is arranged through a superannuation fund and both the fund trustee and the insurer have to be satisfied of an entitlement to a policy benefit before it will be paid.

In Banovic v United Super Pty Ltd [2014] NSW SC 1470, a manual labourer who injured an arm made a claim for a TPD benefit. Eligibility depended on him proving that he was unlikely to ever be able to engage in “any” occupation for which he was suited, by reason of ‘education, training or experience’. The medical evidence showed he would never return to heavy labouring; but the claim was declined on the basis that there were other jobs, that were less physically demanding, that Mr Banovic could still perform.

The insurer and the superannuation trustee argued, amongst other things, that a forklift licence obtained after the date of accident indicated Mr Banovic was qualified to work as a forklift driver. It also made a related submission that just because a person had no prior experience in a particular field, was not determinative of their chance of getting future work in it, provided the person had the skills or experience to do that work. The Court said the insurer and superannuation trustee had to undertake a “practical and realistic” assessment of the likelihood (or not) of the worker obtaining future work. The exercise was not an analysis of a theoretical possibility, but a “real world” assessment. That required that the worker’s age, training, education and experience (or lack thereof) be taken into account. On the particular facts, the Court was satisfied the refusal of the claim was wrong. Mr Banovic was granted his TPD benefit – together with interest and costs.

Claims of this kind are always extremely fact dependent, however this decision illustrates that a refusal to pay a TPD benefit on the basis that the claimant allegedly had capacity for future paid employment, needs to be closely examined in a “real world” rather than a theoretical fashion.

Tony Cavanagh is a Director at Mullane & Lindsay, and practises extensively in Commercial and other Litigation and Employment Law. If you require any assistance in these areas please contact Tony Cavanagh or contact our Newcastle office.

Share on LinkedInTweet about this on TwitterEmail this to someoneShare on Google+Print this page