Total Lost vs Insurer Cost of Repair

  1. Brief Background:-

The insured vehicle was involved in an accident on 27.8.2014. The vehicle had sustained damage and the Complainant had made a claim (own damage claim) under the Comprehensive Private Car Insurance policy. The Insurer had assessed the damage and approved the sum of RM37,664.52 as cost of repairs for the insured vehicle. However, the Complainant was not satisfied with the Insurer’s decision to repair the vehicle and requested for the vehicle to be treated as ‘Total Loss’. Based on the Complainant’s e-mail dated 15.9.2016 to Bank Negara Malaysia, it appears that the Complainant is dissatisfied on the following grounds:-

  1. Complainant did not agree for the vehicle to be repaired;
  2. No guarantee that the vehicle will be safe to use on the road.

The Case Manager handling this dispute gave her recommendation favouring the Insurer. The Complainant who does not accept the recommendation has now referred the dispute for Adjudication by the Ombudsman.


  1. Issues:-

The issues to consider here will include whether consent of the Complainant is needed for the vehicle to be repaired. Alternatively does the Complainant has a choice here whether to get the vehicle repaired or insist on ‘Total Loss’ claim.


  1. Key Findings:-

It is a principle of insurance law that parties to the contract of insurance are governed by the terms and conditions as stipulated in the policy.

In this regard, the policy provision 2 (a) to Section A provides as follows:-



2. Basis of Settlement.

(a) We will at Our option:

(i)         pay the cost of repairs to Your Vehicle, or

(ii)        pay in cash the amount of the loss or damage to Your Vehicle, or

(iii)       reinstate or replace Your Vehicle.

Based on the above policy provision, it is very clear that the option to decide on how to settle the claim is entirely at the discretion of the Insurer.

We also note that the loss adjuster’s report recommended cost of repair of the vehicle (after deduction of betterment charges – RM5,273.23) at RM37,664.52 (nett).

In this respect, it must be noted that Bank Negara Malaysia’s Guideline on Claims Settlement Practices’ (consolidated) BNM/RH/GL/003-9, para states that where there is no dispute as to liability, the Insurer is to accept the recommendation made in the adjuster’s report, as done by the Insurer in the present case.

We also note that the repair of the vehicle had complied with the Jabatan Pengangkutan Jalan’s (JPJ) repair requirements and specifications as substantiated by the Puspakom Inspection reports. The repaired vehicle had been inspected by Puspakom in the Complainant’s presence, as requested by the Complainant and the reports confirm that the vehicle had passed all the necessary tests and is roadworthy. As such, the Complainant’s fear the vehicle being not roadworthy is unfounded.


  1. Adjudication and reasons:-

Based on the above key findings, we find that there is no merit in this referral from the recommendation of the Case Manager. The Insurer’s decision to repair the insured vehicle was in accordance with the terms and conditions of the policy.

This Adjudication is in favour of the Insurer.