Exclusion clause - Riding Without A Valid Driving License
This is a group insurance policy of workers who are represented by the National Union of Plantation Workers (NUPW). The Insured’s claim under the accidental death benefit was repudiated by the Insurer on the ground that the Insured had no driving licence at the material time of accident and as such the claim falls under the policy exclusion.
The Case Manager handling this dispute gave her recommendation in favour of the Insurer. The Complainant (NUPW) who did not accept the recommendation, referred the dispute to the Ombudsman for adjudication.
The issue to consider here is whether the Insurer was justified in relying on the exclusion clause to reject this accidental death claim on the ground of no valid driving licence.
The relevant exclusion clause provides as follows:
““6.2 Assurance B
The Company shall not be liable for any injury resulting in Loss suffered, as a result of, including of any of the following whether directly or indirectly;
6.2.6 as a result of the Assured Life committing, attempting or provoking an assault or a felony, or from any violation or attempted violation of law by the Assured Life or resistant to arrest.”
- It is not in dispute that the Insured had no valid driving licence.
- There is no evidence to show nexus/causation linking the unlawful act (driving without licence) and the accident.
Adjudication and Reasons
We adjudicate this dispute in favour of the Insured for the following grounds:
- Interpretation of insurance policies:
- Public policy :
- Insurance policies must be interpreted to give effect to the object of the contract:
- Fair and reasonable as a guiding principle:
The Insurer here is relying on the words any violation or attempted violation of law to repudiate this claim. The words “any violation of law” are general words following specific words of “an assault or a felony”. The rule of ejusdem generis will apply here in that driving without licence is not in the same category of committing an assault or felony which are offences of crime. Driving without a licence on the other hand is a traffic offence. We have taken note of the legal opinion provided by the Insurer on this issue but we are unable to agree because it is not necessary to distinguish between serious crimes and less serious crimes. The distinction here is between a crime and a traffic offence. No matter how serious a crime is, it is still classified as a crime as opposed to traffic offences. We further note that the case of PP v Wan Khairil Wan Isa (2007) 9 CLJ 557 cited in the opinion was taken out of context to the present case. That case dealt with a charge of causing death by reckless or dangerous driving and it has no relevance to an insurance claim. It is probably due to the above flaws that the opinion was not conclusive and merely of the view that there is a reasonable argument that the Insurer can repudiate the claim on that ground. In any event it is only an opinion which is subject to scrutiny.
On the issue of public policy, another legal opinion provided by the Insurer states as to what type of unlawful acts will justify a public policy exclusion. This remains inconclusive based on the case authorities cited in the said legal opinion. However, in the counsel’s opinion there has to be sufficient nexus/causation between the unlawful act and the event to invoke the public policy exception. In this respect, it is pertinent to note here that there is no evidence in the present dispute to link or connect the unlawful act to the accident. Further, a perusal of all the case authorities show that to justify a public policy exclusion, there must be some element of crime or criminal act. A relevant case here is the Federal Court case of Malaysia National Insurance v Abdul Aziz Bin Mohamad Daud (1979) 2 MLJ 29 (not taken into account in the legal opinions) where the question of public policy was raised. The case also dealt with a claim under an insurance policy while driving with expired licence. The court went on to say the principle in the context of insurance law is that no man is allowed to profit at another person’s expense from his own conscious and deliberate crime. On the other hand, the motor manslaughter cases are not within these classes of cases and public policy does not prevent the enforcement of an indemnity. The reason behind it seems to be that the act to be indemnified is one intended by law that people should insure against. The logical test is whether the person seeking indemnity is guilty of a deliberate, intended and unlawful violence or threats of violence. Road traffic cases are not wilful and culpable crimes which make them contrary to public policy to disallow a person to be indemnified. In the circumstances, having carefully reviewed the question of public policy, we do not think it applies in this case.
This is an accidental death benefit policy. As such accidental death can come in various ways. A distinction must be drawn with motor insurance policies. In motor insurance policies, the Insurer is entitled to repudiate the own damage claim as a result of an accident if the Insured was driving without a valid driving licence because there is a specific clause in the policy that requires the driver to hold a valid driving licence. However, this is an accidental benefit policy and there are no specific clause in the policy other than the general exclusion clause. In the case of McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579, it was held that :-
“Policies must be interpreted to give effect to the object of the contract and avoid making the contract a commercial nonsense.”
One of the main difference between Ombudsman Scheme and a court is that an Ombudsman decides each case according to what he/she considers to be fair and reasonable in the circumstances of the particular case. In the case of R (on the application of IFG Financial Services Ltd v Financial Ombudsman Services (2005) EWHC 1153, the English court expressly supported the right of the Ombudsman to make an award which differs from that which a court would make, as long as it is fair and reasonable in all the circumstances of the case. The decision was approved by the English Court of Appeal in R v EOS (2008) EWCA Civ 642.
Taking all the above into account, we adjudicate this dispute in favour of the Insured.