Perreault v. Manufactuers Life Insurance Co. [2006] O.J. NO. 2623, Ontario Superior Court of Justice
Under the policy of disability insurance, it was clear and unambiguous that the long term disability benefits payable to the insured were to be reduced by any CPP disability benefits received by the insured.
The insured received long term disability ("LTD") benefits. The amount of the benefit was 55% of the insured’s pre-disability income reduced by any disability benefits paid under the Canada Pension Plan ("CPP"). The insured applied for CPP disability benefits and received 13 months of CPP disability benefits retroactively. Upon being advised of the CPP disability benefits, the insurer suspended the insured’s LTD benefits because of overpayment. The insured brought an action against the insurer for an order directing it to pay the monthly LTD benefits.
The insured’s action was dismissed. The Court held that the language of the policy was clear and unambiguous: the LTD benefits payable to the insured were to be reduced by any CPP disability benefits received by the insured. As a result of the CPP disability benefits received by the insured, there had been an overpayment under the LTD policy. Due to the overpayment, the insurer was entitled to withhold the payment of LTD benefits.
