Life insurance, mortgage and work disability: diffuse contractual links

It is increasingly common to agree on life insurance with an insurance company, linked to a mortgage loan and among whose insured risks is the permanent disability of the insured. In the case resolved by the Judgment of the Supreme Court —Civil Chamber— of January 31, 2023, Jur. 47260, the clause referring to this coverage established that: «By virtue of this coverage, the Insurance Entity guarantees the advance payment of the insured benefit for the main risk of death, in the event that the Insured is affected by absolute and permanent disability for all work in an irreversible manner, which gives him right to receive a pension from the public treasury or alternative pension entity. […] It will be understood that the date of occurrence of the disability coincides with the date established by the public body or alternative welfare entity, in the document accrediting the disability, which determines the right to receive a pension in favor of the Insured». The policy designated the bank as the first beneficiary (in this case, Caja de Ahorros) and the insured himself as the second.

After a temporary disability process, the National Social Security Institute issues a resolution declaring the situation of permanent disability due to common illness, when the insurance contract was no longer in force. However, the insured claims against the insurer requesting the payment of the corresponding amount, as compensation provided for in the policy for absolute permanent disability. The court of first instance upholds the claim, considering that the date of the accident is the date of sick leave (temporary disability) and, therefore, the policy is still in force. Otherwise, the terms of the contracted policy would be left to the efficiency or speed in the processing of the public body. Hence, a formal declaration of disability is considered required, but relating to a causative illness produced during the policy period. Consequently, it orders the defendant to indemnify the plaintiff, a solution also endorsed by the Provincial Court.

As indicated in the Supreme Court Judgment of January 31, 2023, unlike what happens with accident insurance, the Insurance Contract Law does not provide a definition of disability, possibly because disability or disability insurance permanent, is not regulated as such by law, and is usually introduced in insurance practice as complementary coverage in life insurance. In the specific field of Social Security legislation, permanent disability is defined in article 193.1 of the General Social Security Law (hereinafter, LGSS), but it is not enough to be in the situation described in the precept, but that, to be a beneficiary of the corresponding benefit, said situation must be expressly declared by the competent Social Security bodies (articles 195 and 200 LGSS). Its regulations specify that the event causing the benefit shall be deemed to have occurred on the date on which the temporary disability from which the permanent disability is derived has been extinguished. In the cases in which the permanent disability is not preceded by a temporary disability or this has not been extinguished, the causative event will be considered to have occurred on the date of issuance of the opinion-proposal of the disability assessment team.

Since, in this case, there was continuity between the non-extinguished temporary disability and the permanent disability, since the insured was first laid off work (on a date when the insurance contract was still in force) and was finally declared in a situation of permanent disability by resolution of the National Institute of Social Security (when the contract was no longer in force), it is necessary to delimit the date of the insured claim. Well, the jurisprudential doctrine of the Social Chamber indicates that, as a general rule, to determine the date of the causative event, the date of the opinion of the disability assessment team must be used, but, as an exception, the date of the causative event it can go back to the actual moment in which the consequences are revealed as permanent and irreversible. And, in this sense, the Civil Chamber deems it necessary to coordinate its jurisprudence with that of the Social Chamber and, thus, if the general rule is taken into account —date of declaration of permanent disability— the claim will be would have occurred outside the policy period. But the medical data show that the disease causing the —permanent— disability was revealed as definitive and irreversible from the first diagnosis —temporary disability—, when the policy was still in force, and the exception should be applied.