MOTOR INSURANCE is the major segment in the insurance sector in Malaysia. It is mandatory under the Road Transport Act 1987 for owners of motor vehicles using Malaysian public roads to have a valid motor insurance policy.
Why do you need motor insurance?
Some circumstances while we are on the road could be beyond our control and having motor insurance provides financial protection if we or our passengers are injured in an accident as well as physical damage to the vehicle or other party’s vehicle/property or bodily injury to others.
A basic policy provides coverage against the vehicle of a third party whilst a more comprehensive policy extends financial protection against damage and theft of your vehicle.
How to make a motor insurance claim:
What should you do if your motor claim gets rejected?
Not all claims submitted are eligible to be reimbursed by the insurance provider. An insurance policy is a contract between you and the insurance provider, and the protection provided is subject to terms and conditions stated therein.
Based on the cases handled at OFS, we found that most complainants fail to read and understand the policy as well as the basic procedure when making a claim.
Many purchase insurance policies without sufficient understanding on policy coverage which includes terms and conditions that must be adhered to as well as exclusions that may apply to claims made against the policy. As such, not every damage or loss will be covered by the insurance company.
Late notification/submission of claims to the insurer
The highest number of rejections by insurers in relation to motor cases are for late notification/submission of claim by the insured i.e. failure to notify incidents within a specific period.
In addition to making a police report, claimants must notify any incident to insurers as soon as possible or at least within seven (7) days. If they are physically disabled or hospitalised following the incident, they are given a minimum of thirty (30) days or as soon as practicable to inform their insurers. Any unreasonable delays may prejudice the claim.
Basis of settlement
Some claimants were dissatisfied with the basis of settlement offered by the Insurer. Consumers usually have wrong perception that when their vehicle are damaged in an accident, they have the right to determine how the insurer should settle their claim i.e., whether their vehicle is to be repaired or whether they should be compensated with cash.
The terms and conditions in the policy provides that the option as to how the claim is settled is entirely at the discretion of the insurance company. The insurer has the option to either pay the cost of repair, reinstate or replace the vehicle with the same make, model, age and general condition or declare the vehicle as ‘Beyond Economic Repair’ or total loss and pay the cash.
Failure to take Precaution
Most, if not all insurance policies contain exclusion clauses or general exception clauses written as:
“Section D: General Exceptions – these apply to the whole Policy
This section lists down circumstances under which this Policy does not provide cover at the time of happening of the Incident.”
Under the general exception clause, the Insurer could deny liability and one most common being the failure of the Insured in taking precaution to avoid/prevent damage or loss. The policy wording is read as follows:
“7. Failure to take Precaution:
We will not pay for any additional damages if after an Incident or breakdown: You left Your Car unattended or failed to take proper precaution to prevent further loss or damage; or You continue to drive Your Car in an unroadworthy condition before any repair is done.
We will also not pay for claims that arise if, when using Your Car, You do not take reasonable precaution to keep Your Car secured. This includes but is not limited to leaving Your Car unattended while unlocked or with ignition key left in or on Your Car.”
Common occurrences of such repudiations are when the vehicle is stolen while it was left unattended with the engine running when the insureds stop at a shop to purchase something. This is tantamount to “failure to take precaution” to safeguard the vehicle from loss.
Another example is when insured drive their vehicles with worn-out tyres without realising that their vehicle may be considered as not roadworthy and thus may fall within the general exception.
If you feel that your claim is unreasonably rejected by the insurance provider, you are entitled to appeal. If you are still dissatisfied with the final decision of the insurance provider, you may approach the OMBUDSMAN FOR FINANCIAL SERVICES (OFS).
How OFS resolves your dispute?
Once you have received the final decision letter from your insurance provider, you may lodge a complaint with OFS. If your dispute is within OFS’ jurisdiction, we will proceed to register the complaint. We will gather all the pertinent information and documents related to your case and begin our investigation.
We look at each case independently and impartially and we do not take sides. OFS weighs all the facts and evidence provided by the eligible complainant and the insurance provider. We also take into account what is fair and reasonable in resolving the dispute.
Claimant failed to notify her insurer of an accident on time
Ms Rani’s (not her real name) met with an accident on the 17/1/19 but only informed her insurance company on the 18/9/19. Consequently, her Own Damage claim was repudiated by her insurance company for late notification of claim. Ms Rani was not satisfied with the outcome and approached OFS.
Ms Rani admitted to OFS that she only informed her insurer of the accident after more than eight (8) months from the date of the accident. She failed to contact them even after receiving the police investigation report two months later. Ms Rani said that the reason for the delay was because at the material time her husband had heavy workload involving local and overseas projects. She also claimed that she was not familiar with the claim process and had to look after her three children.
The delay in notification had deprived the insurance company of its right to conduct an immediate investigation into the accident. The insurance company was unable to verify the authenticity of the accident. Since there was an inordinate delay on the part of the insured and the reasons given for the delay in notification could not be deemed as reasonable, Ms Rani’s claim was rejected.