Adjudication by Ombudsman Life & General Medical

1. Brief background

The Insured’s claim for accidental daily hospital income was repudiated by the Insurer on the ground that at the material time of the accident, he was riding a motorcycle without a valid driving licence which falls under section 5 1(a) of the General Exclusion of the Policy.

The case manager handling this dispute gave her recommendation favouring the Insurer.  The Insured who did not accept the recommendation has now referred the dispute to Ombudsman for Adjudication.


2. Issue

The only issue to determine here is to see whether riding a motorcycle without a valid licence falls within the General Exclusion of the Policy.


3. Key findings

The relevant policy provision provides as follows : -

i)          5.         GENERAL EXCLUSIONS

                5 1          Your policy will not apply to any event arising directly or indirectly out of :

                                (a)          Deliberately self-inflicted injury, suicide or, criminal or illegal act ;


ii)         Section 26(1) of the Road Transport Act 1987 states that an individual must      possess a valid driving licence before being permitted to drive on the road and can             be prosecuted under section 26 (2) and upon conviction is liable to fine or jail or both.


4. Adjudication and reasons:-

The Oxford Dictionary defines an illegal act as an act forbidden by law.

In the case of Y.Y. Lee v United Oriental Assurance (1998) 5 MLJ 763, the learned Judge interpreted “unlawful act” to mean any act forbidden by law.

It is our view that based on the above findings, riding a motorcycle without a valid licence would fall within the above General Exclusion since it is an offence under the Road Transport Act 1987 and contravention of that law can be punished with fine or imprisonment.

The Insured in his grounds of referral have raised the issue that his licence has expired and he could not renew his licence because he was blacklisted by JPJ for various offences.  It is pertinent to note here that it has been more than 10 years since his licence expired and this long period of lapse is as good as not having a licence.

The Insured also raised the issue of obtaining damages in a civil suit he brought against the Insurer and that the court was not concerned by the fact that he did not have a valid driving licence in determining who was at fault.  We wish to emphasize here that the above civil suit was brought based on the law of tort of negligence and not on contractual law.  It is a principle of insurance law that the rights and liabilities of the parties to the contract of insurance are governed by the terms and conditions as stipulated in the policy. 

Based on the above, we find that the repudiation of the claim by the Insurer was in accordance with the terms and conditions of the policy and the case manager handling this dispute gave the correct recommendation.

This Adjudication is in favour of the Insurer.