The takaful operator rejected Bernard’s own damage claim on the grounds that the covered vehicle was used for hire or reward, which constitutes a breach of the Limitations as to Use of the policy.
FINDINGS
Bernard purchased a Private Car Policy for Private Use with comprehensive cover. The Certificate of Takaful stipulates the following terms and conditions:
- Limitations as to Use
According to Your Certificate of Takaful (CT), Your Car can only be used for “Social, domestic and pleasure purposes and for the Participant’s business”. The CT also states that “The Certificate does not cover use for hire or reward, racing, pacemaking, reliability, trial speed-testing, the carriage of goods other than samples in connection with any trade or business”.
Bernard stated that the driver, Andy, was a close friend who borrowed the covered vehicle for a family trip with his permission and without any payment.
However, the takaful operator’s investigation found a Facebook advertisement showing the exact vehicle being offered for rental under ‘XXX Car Rental Enterprise.’ Bernard admitted that he operates a car rental business, owns XXX Car Rental Enterprise, and had previously used the covered vehicle for rental purposes.
KEPUTUSAN
The case manager upheld the takaful operator’s decision. The evidence suggests the insured vehicle was likely used for hire or reward, constituting a breach of the policy’s use limitations.
Although there is no proof that the vehicle was being rented at the exact time of the accident, its overall use remains relevant, as usage affects risk classification and premium determination. Since the policy expressly prohibits use for hire or reward, the cumulative evidence shows non-compliance with its terms.
The takaful operator’s decision to nullify and void the certificate is therefore justified.