Failure to take reasonable precaution
Key in the ignition was left in the vehicle with the presence of Insured who was asleep
Adjudication by Ombudsman - Motor
The Insured’s theft claim of his vehicle was repudiated by the Insurer on the grounds of late notification and failure to take reasonable precaution to keep the car secured.
The Case Manager handling this dispute gave his recommendation favouring the Insurer. The Insured who did not accept the recommendation, referred the dispute to the Ombudsman for adjudication.
Investigation and Findings
- The relevant policy provision provides as follows: -
7. Failure to take Precaution
We will not pay for any additional damages if after an Incident or breakdown You:
a. left Your Car unattended or failed to take proper precaution to prevent further loss or damage; or
b. 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.
- It is not in dispute that there was a delay of two months in notifying the Insurer. However, this was attributed to the fact that the Insured was waiting for the investigation report from the police and as a lay person he was not familiar with the legality of an insurance policy. In any event, based on the loss adjuster’s report this delay has not caused any prejudice to the Insurer in investigating the genuineness of this claim.
- The loss adjuster’s investigation revealed the following salient facts:-
- On 26.05.2017 at about 12.01am, Insured was at Jalan PJS 8/2, Petaling Jaya and parked his vehicle opposite the KK Mart. Insured was inside his car with the engine switched off and the vehicle key left at the ignition switch with the window wound down. Insured had consumed alcohol, became intoxicated and fell asleep on the driver’s seat for 7 hours. In the morning at about 7.00am, when Insured woke-up, he discovered his vehicle key in the ignition switch, hand phone and wallet were missing.
- Insured alighted from his vehicle to seek help. At that time two (2) Indian men approached him offering help and Insured then followed them in an unknown car. After taking Insured around the area they could not find anyone who may have stolen his items, they sent Insured back at a Cyber Café near to the place where his vehicle had been parked. They told Insured to wait for them at the Cyber Café saying that they would return. Insured waited at the Cyber Café until 9.00am but the two (2) men did not return. Insured then walked back to the place where he had parked his vehicle but found his vehicle missing.
Adjudication and Reasons
Based on the above key findings, we adjudicate this dispute in favour of the Insured on the following grounds:-
- The delay of two months in this dispute is not an inordinate delay considering the Insured is a lay person not familiar with the legality of Insurance claims. Further, the delay has not prejudiced the Insurer in any way based on the loss adjuster’s report. This is purely a technical breach and in this respect Bank Negara Malaysia’s Guidelines on Claims Settlement Practices (BNM/RH/GL/003-9) para 126.96.36.199 state that an insurer should not repudiate a claim on technical breaches which are not material or unconnected to the circumstances of loss unless it has prejudiced the interest of the insurer or has exceeded time bar as provided under the law. In the present dispute we don’t find any prejudice to the Insurer nor the time bar has exceeded.
- We also find that based on the factual matrix of this dispute, the Insured had in no way left the car unsecured or unattended. It was not a situation where the key in the ignition was left in the vehicle without the presence of the Insured. Here is a situation where the Insured was sleeping in the car and as such still retained control of the vehicle. A distinction must be drawn where the key in the ignition was left in the vehicle without the presence of the Insured in the vehicle. Similarly, it is not unreasonable for the Insured to seek help from the two passers-by when he woke-up and realized that the vehicle key in the ignition was missing together with his phone and wallet. Furthermore, considering the fact that the keys were also not in the car, we are of the view the Insured did not leave the car unattended. It cannot be denied that the Insured was a victim of an orchestrated theft syndicate.
- We don’t deny the fact that the Insured may have some contributory negligence on his part in this incident. However, this not sufficient to deny the claim. In the case of Tokio Marine Insurance (Malaysia) Bhd v WTS Elecrical Engineering & Anor (2012) MLJU 667, the court held that for the Insured to lose protection against coverage for theft, its conduct must be such that it was reckless or had deliberately court danger. In this respect there is a difference between negligence and recklessness. The court in the above case went further to quote Lord Diplock LJ in Fraser v BN Productions Ltd (1967) 2 Lloyd’s LLR 1 where reasonable means as between the Insured and the Insurer having regard to the commercial purpose of the contract, which is inter alia to indemnify the insured against liability for his (the insured’s) personal negligence. The court in Tokio Marine Insurance (supra) eventually held that the Insured was not reckless or had deliberately court danger even though the key was left in the two vehicles and the gate to the compound was not closed or locked on the day of the incident. In the present dispute it is also important to consider that the vehicle was not parked in remote or isolated area but in front of KK mart which was installed with CCTV. The Insured was also sensible in not driving the vehicle after consuming alcohol. Even though, the issue of intoxication was raised by the Insurer but it is not a relevant consideration here because the Insured was not driving at the material time and further there was no evidence as to the level of intoxication of the Insured at the time.
- Taking everything into account, a very strict and literal interpretation of the policy exclusion clause will result in a harsh and unfair outcome for the Insured. The purpose of insurance policy is to protect unexpected incidents such as this. It is only fair and reasonable for the Insurer to pay the theft claim to the Insured. It must be remembered that ‘fair and reasonable’ is the key consideration in OFS’s Terms of Reference. Thus, being more able to provide redress for consumers, than the strict legal approach offered by the courts.
This adjudication is in favour of the Insured.