Adjudication 1: Vehicle damaged during fire – Claim declined due to evidence of Tampered Chassis Number

Brief Background

The insured vehicle was damaged due to a fire and the Insured submitted an “Own Damage” claim to the Insurer. The Insurer repudiated the claim on the ground that the findings of the forensics’ investigation revealed that the chassis number of the vehicle had been tampered. Therefore, the vehicle, according to the Insurer is not the insured vehicle as stated in policy.

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

Issue

The only issue to determine here is whether the Insurer’s decision to repudiate the claim is justified based on all the facts of this dispute.

Key Findings

  1. The Insured purchased the car from a used car dealer on 7.2.2013. Prior to that, the vehicle had undergone Puspakom inspection on 17.1.2013, and the result was approved.
  1. The Insured had insured his vehicle with the Insurer for the following period:-
    1. 19/12/2013 to 1/12/2014 (agreed value)
    2. 19/2/2016 to 18/2/2017 (agreed value)
  1. The Insurer had inspected the vehicle in January 2017 when the Insured/agent requested to amend the policy to an agreed value policy. Upon inspection, the Insurer approved and agreed to endorse the policy with agreed value.
  1. Apart from the forensic investigation which revealed that the chassis number of the subject vehicle has been tampered, the loss adjuster’s report concluded that the fire did occur and the damages sustained were consistent. It is also important to note here that the report has no incriminating evidence against the Insured with respect to the tampering of the chassis number as well as the fire incident.

Adjudication and Reasons

Based on the above key findings, we find the following:-

  1. Insured is a bona fide purchaser for value of the vehicle and as a layman, cannot be expected to have knowledge to detect the tampering of the chassis number of the vehicle.
  1. Insured had paid premium for the motor policy and the damage to the insured vehicle by fire is a covered risk.
  1. The loss adjuster’s report did not indicate any prejudice to the Insurer.In this respect, Bank Negara Malaysia’s Guidelines on Claim Settlement Practices (BNM/RH/GL/003-9) provide that an insurer should not repudiate a claim on technical breaches, unless it had prejudiced the interest of the insurer.

In view of the above circumstances, we find that it is fair and reasonable to adjudicate this dispute in favour of the Insured.