Takaful Motor - Criminal Breach of Trust

Whether the loss of a vehicle falls under a criminal breach of trust if the custodian driver and the thief are friends.


The Participant’s claim for theft of his vehicle was repudiated by the Takaful Operator on the ground that circumstances of the case fall under criminal breach of trust and not theft.

The Takaful Operator contended that for theft to occur, the covered vehicle must be taken out of the possession of the custodian driver without his consent.

In this case, the vehicle was taken by a friend of the custodian. The Takaful Operator was of the view that the claim is not payable as it is not covered by virtue of the ‘criminal breach of trust’ clause in the Certificate which reads as:

“We will not pay for loss or damage including theft caused by or attributed to the act of cheating or criminal breach of trust by any person”


Investigation and Findings

The following findings were noted:

  1. The loss adjusters appointed by the Takaful Operator to investigate the matter disclosed in their report the following:
      The custodian of the vehicle met a friend and continued their conversation at a hotel room;
      The custodian had parked his vehicle at the hotel car park;
      The custodian went to toilet for about 5 – 10 minutes and when he came out he found his friend missing. Also missing was his wallet, phone and car keys;
      The custodian immediately went down to the hotel car park and found his car ‘missing. He made a police report on the loss.

  2. “Criminal Breach of Trust’ is defined in the Certificate as:

    whoever, being in any manner entrusted with property, or with any dominion over property, either solely or jointly with any other person dishonestly misappropriates, or converts to his own use, that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits ‘criminal breach of trust’”

  3. The above definition clearly laid down that for criminal breach of trust to apply, there must be entrustment of the property, i.e. whether the custodian had entrusted his vehicle to his friend.
  4. The police report by the custodian and the loss adjuster’s report do not indicate any element of entrustment of the vehicle by the custodian to his friend.
  5. TUnder the circumstances, we are of the view that the Takaful Operator cannot rely on the exclusionary clause of criminal breach of trust if they are unable to prove entrustment of property.
  6. In this case, we opine that the Takaful Operator had presumed the application of criminal breach of trust just because the custodian and the purported thief were friends.



OFS’ view was explained to the Takaful Operator who then offered settlement to the Participant.