For small business owners, every decision carries weight—but when illness strikes and the ability to work is compromised, the stakes rise dramatically. Filing a claim on private disability insurance isn’t just a paperwork exercise: it’s a pivotal moment that can shape your business’s future, your income, and your well-being.
Beyond the fine print: Decoding your disability policy
Private disability policies aren’t one-size-fits-all—understanding what yours actually covers is the first challenge. Owners often overlook critical distinctions:
- Own Occupation vs. Any Occupation: Early on, benefits may hinge on an inability to do your precise role—say, running a bustling brewery. But after two years, policies often become stricter, requiring proof you can’t work in any suitable role for which you’re trained or educated.
- Do You Have an Own Occupation Rider: Many private disability policies offer a type of Own Occupation coverage that only pays benefits if you are disabled from your own occupation and any other gainful occupation. If you purchased a “Rider” (an optional level of coverage for higher premiums), you may be able to receive benefits if you can’t work in your precise role but are able to work in some other gainful occupation that doesn’t require the same level of skill or training.
- Partial and Residual Disability: Some policies go further and pay even if you’re working reduced hours or earning less. But qualifying is never automatic—the road to approval is paved with strict definitions of “significant” loss of income or duties. Miss a step and you could find the safety net isn’t there when you need it most.
When to hit “go”: The critical timing of your claim
The moment you’re sidelined by sickness, clocks start ticking. Filing too late—even for valid reasons—can sometimes result in technical denials, as many policies demand action within a prescribed period of time, often 30-90 days after your elimination period finishes. Think waiting until the business is in dire straits is smart? Insurers base payouts on prior earnings, so the longer you wait (or reduce your responsibilities), the smaller your claim cheque could be. Delays may also sink your business reputation and profitability before benefits even arrive.
Paperwork, proof—and pitfalls
Insurance companies rarely hand out benefits easily. Robust, ongoing medical documentation is the gold standard for proving your diminished capacity. And don’t go it alone: a strong physician’s statement is crucial. Insurers lean heavily on doctors’ notes—missing or ambiguous support often leads to denial.
What about the business?
Don’t expect insurers to take business revenue at face value. Claims often hinge on your personal earnings, so keep clear records distinguishing your actual draw or salary from overall business results. If you soldier on with light duties, know that surveillance and audits are not uncommon—insurers watch for activity that could undermine your claim.
The numbers behind partial and residual disability
Policies can differ wildly, but here’s what’s at stake:
- Partial Disability: Usually pays a fixed percentage (say, 50%, then 25%) for a set time.
- Residual Disability: Typically matches your lost income—lose half your normal earnings, and collect half your monthly benefit. Precise calculations vary, so check your contract closely and gather proof before you file.
Call in the experts
Policy wording is famously dense, and deadlines are unforgiving. Disability lawyers are more than a backup—they’re your frontline: clarifying rights, interpreting policies, and helping build a watertight claim. Hit a snag (missed deadline or rejected claim)? Legal help can salvage your benefits—but only if you move fast.
Five moves to protect your business—and yourself
- Scour your insurance contract for the nitty-gritty: definitions, deadlines, calculations.
- Get immediate medical assessment backed by a supportive doctor.
- Meticulously record work hours, duties, business changes, and medical events.
- Apply for benefits before you’ve scaled back significantly—delay can mean lost dollars.
- Talk to a disability lawyer before changing your role or hiring help; expert advice now can prevent disaster later.
The bottom line: When illness threatens your ability to lead and earn, don’t try to tough it out alone. Act early, document everything, and lean on professional advice—your business, income, and health deserve nothing less.
David Share is the President, Managing Director, and co-founder of Share Lawyers. David’s practice is devoted to disability insurance litigation and he represents disabled clients with compassion and sensitivity. https://sharelawyers.com/
