In Need of a Trusted Individual Disability Insurance Lawyer in Colorado?
Individually purchased disability insurance is designed to be the best income replacement protection available for professionals and business owners whose income depends on their ability to work. These policies, often called IDI policies, are typically more expensive than employer group plans and, when written correctly, more protective. They are also the source of some of the most aggressively contested disability claims in the country.
When an insurance company denies or terminates an IDI claim, the claimant is usually a physician, dentist, attorney, executive, or other professional whose disability benefits represent a significant portion of their financial stability. The insurer knows that too, and the claims process reflects it.
McDermott Law, LLC represents Colorado professionals whose individual disability insurance claims have been denied, delayed, or terminated. Shawn E. McDermott has more than 30 years of experience handling IDI disputes and understands how these policies work and how insurers challenge them. Call (303) 964-1800 for a free consultation.
| Individual disability policies are a different animal from group plans. The policy language tends to be more favorable to the claimant, but insurers fight these claims vigorously because the benefit amounts are typically more substantial than group insurance products. When I review an IDI denial, I start with the policy definition of disability. That language is everything in these cases.
— Shawn E. McDermott, Attorney |
What Is Individual Disability Insurance?
Individual disability insurance is coverage purchased directly from an insurance company rather than through an employer. Unlike group disability plans, which are provided as part of an employee benefits package and governed by ERISA, individual disability policies are governed by state insurance law and the specific terms of the contract.
That distinction has significant legal consequences. Colorado’s bad faith laws apply to individual disability policies. They do not apply to ERISA-governed group plans. For claimants with IDI policies, the legal framework is considerably more favorable than it is for group plan claimants.
Individual disability policies are most common among higher-income professionals who need coverage that reflects their actual income and their specific occupational risk. A physician whose hands are injured, a surgeon who develops a neurological condition or an attorney whose cognitive impairment prevents them from practicing law are the most common claims we see in the IDI market.
How Individual Disability Insurance Policies Work
IDI policies vary more than group plans because they are individually underwritten. The specific terms of each policy, including the definition of disability, the benefit period, the elimination period, and any riders or endorsements, are negotiated at the time of purchase and reflected in the policy contract. Understanding the specific language of your policy is essential to understanding your rights.
The Own-Occupation Definition
The most important feature of a high-quality IDI policy is an own-occupation definition of disability. Under this definition, you are considered disabled if you cannot perform the material duties of your specific occupation, even if you could work in some other capacity. A surgeon who can no longer operate due to a hand tremor is disabled under an own-occupation policy even if they could teach or consult. A dentist whose chronic back condition prevents them from working chairside is disabled even if they could work in some other setting.
Some policies define the relevant occupation by specialty. Others define it more broadly. The difference between a “physician” definition and a “surgeon” definition can determine whether a benefits dispute exists at all.
Benefit Periods, Elimination Periods, and Residual Benefits
IDI policies specify how long benefits will be paid and how long the claimant must be disabled before benefits begin. High-quality policies often provide benefits to age 65 or even for a lifetime. Elimination periods are typically 90 days but vary by policy.
Many IDI policies also include residual or partial disability benefits when the claimant can perform some, but not all, of the duties of their occupation, or when they suffer an income loss due to disability even if they continue to work. These provisions are often contested because they require demonstrating both a functional limitation and an income loss that the insurer attributes to disability rather than other factors.
How Insurers Challenge Individual Disability Insurance Claims
IDI claims attract aggressive insurer scrutiny in part because the benefit amounts are significant and the benefit periods are long. The patterns of challenge are recognizable.
Disputing the Own-Occupation Definition
When a policy provides own-occupation benefits, the insurer may argue that the claimant’s specific job duties do not fall within the policy’s definition of their occupation, or that the condition affecting the claimant does not actually prevent them from performing those duties. These disputes often require detailed evidence about both the specific functional demands of the claimant’s practice and the specific functional limitations imposed by their condition.
Challenging the Medical Evidence
IDI insurers frequently challenge the treating physician’s opinion by having internal or retained physicians review the record and reach contrary conclusions. For IDI claims, where the benefit amounts justify significant insurer investment in the claims process, this can involve multiple rounds of internal review and sometimes IME evaluations.
Surveillance and Activity Documentation
Insurance companies conduct surveillance of IDI claimants, particularly professionals with high-value policies. Addressing surveillance evidence requires placing the observed activity in the context of the full medical record and the difference between occasional activity and sustained professional function.
Disputes About Residual Disability Income
When a claimant is working in a reduced capacity under a residual disability provision, the insurer may dispute the calculation of income loss or argue that the income reduction is not attributable to the disability. These disputes can become complex when the claimant is a business owner or partner whose income structure involves distributions, overhead recovery, or other non-salary components.
Colorado Law and Individual Disability Insurance Claims
Because individual disability insurance policies are not governed by ERISA, Colorado state law applies. The policy is interpreted under Colorado contract law, which generally construes ambiguous terms in favor of the insured and against the insurer that drafted the policy.
Colorado’s bad faith statutes also apply to IDI claims. When an insurer unreasonably denies or delays payment on an individual disability policy, those statutes may provide significant additional remedies beyond the benefits owed.
How McDermott Law, LLC Handles Individual Disability Insurance Cases
Every IDI case is built on the same foundation: a thorough reading of the policy contract. Unlike ERISA group plans, where the legal framework is largely standardized by federal law, IDI cases turn on the specific language of the individual contract. Own-occupation definitions, residual benefit provisions, elimination periods, and policy riders all vary by policy and insurer, and those specifics shape every decision about evidence and strategy.
The firm has handled IDI disputes for physicians, dentists, attorneys, executives, and other professionals across Colorado and surrounding states. The work typically includes:
- Reviewing the policy in detail to understand the applicable disability definition, benefit structure, and any relevant riders or endorsements
- Analyzing the denial letter to identify the insurer’s stated grounds and evaluate whether they are supported by the policy language and the medical record
- Working with treating physicians and specialists to develop opinion evidence that addresses the specific functional demands of the claimant’s occupation and the specific limitations imposed by their condition
- Evaluating the potential for a bad faith claim under Colorado’s statutes when the insurer’s conduct does not have a reasonable basis
- Handling litigation in Colorado state court, including both the underlying contract claim and any applicable bad faith claim
- Assessing residual and partial disability benefit disputes where income loss calculations are contested
Because IDI cases proceed in state court rather than federal court, discovery is available and the case is not limited to an administrative record. That means evidence can be developed through the litigation itself, which is a meaningful difference from ERISA cases where the appeal record is generally all a court reviews.
Nationwide Representation Including Colorado
McDermott Law represents disability claimants nationwide, including throughout Colorado and the Rocky Mountain region. Because most disability insurance disputes are governed by federal ERISA law or insurance contracts, the firm handles cases by phone and video conference and does not require in-person meetings regardless of where the client is located.
Colorado clients include those in Denver, Colorado Springs, Boulder, Fort Collins, Greeley, Longmont, Loveland, Grand Junction, Pueblo, Castle Rock, Durango, and communities throughout the state. The firm also represents claimants in Kansas, New Mexico, Nebraska, Utah, Wyoming, Oklahoma, and Montana.
If your claim was denied anywhere in the country, call (303) 964-1800 to discuss your situation.
Talk to a Colorado Individual Disability Insurance Attorney
McDermott Law, LLC offers free consultations for professionals whose IDI claims have been denied or terminated. Call to discuss your policy and your options at (303) 964-1800
Free consultation. No fee unless we win.
Frequently Asked Questions for Colorado Individual Disability Insurance Attorney
What is the difference between individual disability insurance and an employer group plan?
Individual disability insurance, or IDI, is purchased directly from an insurer and is governed by state law and the specific policy contract. Employer group disability plans are provided through the workplace as part of a benefits package and are typically governed by ERISA, a federal law.
The distinction matters because ERISA limits remedies and preempts state law, including Colorado’s bad faith statutes. IDI claimants have access to those state law remedies. Group plan claimants generally do not.
What does own-occupation disability mean for a physician or dentist?
Under an own-occupation definition, a physician or dentist is considered disabled if their condition prevents them from performing the material duties of their specific specialty or practice type, even if they could work in some other medical or dental role. A surgeon who can no longer perform operations due to a hand or neurological condition may be disabled under an own-occupation policy even if they are capable of other medical work. The specific language of the policy determines exactly how the definition applies.
Can my IDI insurer terminate benefits after years of payments?
Yes. Individual disability insurance policies allow for periodic review of ongoing claims. An insurer can terminate benefits if it concludes that the claimant no longer meets the policy’s definition of disability, even after years of approved payments. Those terminations are subject to challenge under the policy terms and, where the insurer’s conduct was unreasonable, under Colorado’s bad faith statutes. If your IDI benefits have been terminated, the termination letter will explain the insurer’s stated grounds and should include information about your dispute rights.
What is a residual disability benefit and how is it calculated?
Residual disability benefits apply when a claimant can perform some but not all of the duties of their occupation, or when they suffer an income loss attributable to disability without being totally disabled. The calculation is typically based on the percentage of pre-disability income lost due to the disability. These provisions vary by policy and can be complex when the claimant’s income structure involves practice ownership, partnership distributions, or other non-salary components.
Does Colorado bad faith law apply to my IDI policy?
Yes, for individually purchased policies that are not governed by ERISA. Colorado has well-developed “bad faith insurance” laws developed over the years by the courts. In addition, Colorado Revised Statutes sections 10-3-1115 and 10-3-1116 often apply to non-ERISA insurance policies and provide for two times the covered benefit amount plus attorney fees when an insurer unreasonably denies or delays payment of a covered benefit. Whether your denial meets the statutory standard for unreasonableness depends on the specific facts of your case.
How is an IDI lawsuit different from an ERISA lawsuit?
IDI cases are brought in Colorado state court under state contract law and, when the facts support it, Colorado’s bad faith statutes. Unlike ERISA cases, IDI litigation typically allows for more traditional discovery, including depositions and document requests. The court is not limited to an administrative record. The case proceeds more like a conventional civil dispute, with the ability to develop evidence during litigation that was not available at the time of the denial.