Public Liability


Two third party claims for damages to vehicles were rejected by the Takaful Operator on the ground that there was no negligence on the part of their Participant which was a petrol station. The two third party claimants had filled up petrol at the Participant’s petrol station and subsequently both their vehicles stalled resulting in damages. A check by the repairers of both the vehicles confirmed the fuel was contamination with water.

The Takaful Operator contended that the Standard Operating Procedure (SOP) had been followed by their Participant in ensuring there was no adulteration of the petrol and therefore no negligence can be attributed to their Participant.

Under the Public Liability Takaful Certificate, the Takaful Operator will indemnify the Participant against all sums which the Participant shall become legally liable to pay as damages or compensation in respect of loss or damage to property arising from the business and occurring during the period of Takaful.

Investigation and Findings

The following findings were noted:-

  1. It was noted that the Takaful Operator had repudiated the claims of the third parties without appointing a loss adjuster. The Takaful Operator was informed that the BNM Guideline on Claims Settlement Practices required a loss adjuster to be appointed within 7 working days of the receipt of the claim. It was pointed out to them that under the BNM Guideline, a loss adjuster is professional and independent and therefore he will be the most suitable person to ascertain whether their Participant was negligent or not.
  1. Subsequently, the Takaful Operator appointed a loss adjuster who confirmed with the Participant that one of their fuel-tank was contaminated with water when they conducted a ‘dipping test’.Further test carried out by the tank supplier confirmed that the fuel-tank was leaking and repairs were subsequently carried out.
  1. The loss adjuster in their final report commented that being the operator of the petrol station, the Participant has a duty of care to ensure that the fuel they were selling is free of water contamination and that it would not cause damage to the third party vehicle.
  1. The loss adjuster concluded that the Participant can be held legally liable for the damages sustained to third party vehicles.
  1. Based on the above, OFS is of the view that it is incumbent on the part of the Takaful Operator to comply with the requirements of the BNM Guideline. Takaful Operators should be reminded that their decisions to repudiate claims should only be made after thorough investigations had been carried out by loss adjusters. They should not wait for OFS to remind them of their duties and responsibilities.


The Takaful Operator in this case subsequently settled the claims of the third parties.