Compensation for Assessed Repair Time

Adjudication by Ombudsman


This Motor Third Party Property Damage claim involve the offer for loss of use of vehicle [Compensation for Assessed Repair Time (CART)] as well the betterment charges and documentation charges. The Claimant is not satisfied with the amount offered by the Takaful Operator.

The Case Manager handling this dispute gave her recommendation favouring the Insurer. The Claimant who did not accept the recommendation has now referred the dispute to the Ombudsman for adjudication.


The only issue to determine here is whether the amount offered by the Takaful Operator is in accordance with the Claim Settlement Practices and the Guidelines issued by Bank Negara Malaysia for such compensation.

Key Findings

  1. Bank Negara Malaysia’s (BNM) Guideline On Claims Settlement Practices (consolidated) 

     states as follows: -

“Where a claim for compensation for assessed repair time (CART) is payable, the Insurer should adhere to the scale of CART agreed by the industry (as per Appendix II) and explain how the amount is derived in its offer of settlement to the claimant”.

The extract of Appendix II – Scale of Compensation for Assessed Repair Time (CART) is as follows: -


Vehicle Type


Private Use Vehicles

Up to 1500cc

Above 1500cc up to 2000cc

Above 2000cc






“Terms and Conditions

1.         The above scale defines the minimum amount payable by third party insurers for CART claims where the claimant is unable to produce satisfactory documentary evidence, receipts, etc. to support his/her claim for CART.

2.         In cases where receipts can be produced for vehicle rentals, insurers shall pay the amount shown in the original receipts and original car rental agreement subject to the principle of indemnity and subject always that the claimant shall be entitled to the rental of a vehicle of an equivalent nature to the damaged vehicle. Such rental must be only from a rental agency/company duly registered and licensed by the relevant authority.

3.         The number of days for computing of CART shall be based on the independent loss adjuster’s recommendation on the number of days for repair of the damaged vehicle subject to the Insurer’s discretion to apply an additional seven working days grace period for unforeseen delays.”


  1. The scale of betterment is as follow:

In regard to betterment charges, the BNM Guidelines, para 8.4 provides ‘betterment’ charges are applied when new franchise parts are used for vehicles aged 5 years and above, and the scale of betterment is as follows :


Age of Vehicle/Years

Maximum Rate of Betterment (%)

Less than 5 years












10 and above



  1. The Claimant’s vehicle which is 1596 cc would fall under the category of RM 40.00 per day.


  1. The Independent loss adjuster had recommended 10 days for the repairs. The Insurer at                  

their discretion added another 7 days based on the guidelines above.


Adjudication and reasons: -

Based on the above key findings, the Insurer had complied with the Guidelines on Claims Settlement Practices issued by Bank Negara Malaysia for such compensation.

It is important to note that the calculation for Compensation for Assessed Repair Time (CART) is determined by the number of days required for the repair of the damaged vehicle as assessed and recommended by the adjuster and shall exclude any delays, and/or by whomsoever caused which may occur before and/or after the assessed repair time. This would mean in assessing the claim the delay as a result of time taken by the Insurer to assess the claim, the time taken by the adjuster to come out with a report and the delay taken by the workshop in conducting the repair works will not be taken into consideration.

As to the betterment charges, since the vehicle was 6 years old at the material time of accident, betterment charges would apply since new franchise parts have been used on the said vehicle .In the case of Reynolds v Pho In Reynolds v Phoenix Insurance Co., (1978) 2 Llyod’s Rep 440, it was held that the principle of betterment was too well established in insurance law to be departed from.

Forbes J said :

“Now the principle of betterment is so well established in the law of insurance to be departed from at this stage even though it may sometimes work hardship on the insured.  It is simply that an allowance must be made because the assured is getting something new for something old.”

As for the documentation fee, the Takaful Operator was unable to pay since it was not supported by receipts.

We take note of the Claimant’s contention that guidelines are meant to guide and there can be exceptions. However, we are constrained to follow the above guidelines until such time it is revised.  

Accordingly, we find that the Case Manager here had made the correct recommendation in this dispute.

This adjudication is in favour of the Takaful Operator.

Please be informed that this adjudication is final and there is no appeal. However, the Claimant’s right to commence legal proceedings against the Takaful Operator still remains.