An insured driver was involved in an accident with Donna in November 2022, prompting her to lodge a claim against the third party’s insurer for loss of use and betterment charges. However, the third-party insurer repudiated the claim, citing that their insured driver did not possess a competent driving licence at the time of the accident, thus breaching the policy conditions.

OUR FINDINGS

An online search by the third-party insurer at the Road Transport Department’s system revealed that the insured driver did not possess a valid driving licence at the time of the accident. Consequently, the insurer repudiated the claim based on the breach of condition by their own insured.

New franchise parts were used to repair Donna’s vehicle. These parts were manufactured in 2013, making them nine years old at the time of the accident.

OUTCOME

The insurer’s decision to repudiate the claim aligns with the policy’s terms and conditions, specifically General Exception 1, due to the insured driver’s lack of a valid licence during the accident. On using new franchise parts to repair Donna’s vehicle, ‘betterment’ charges were applied, a practice for vehicles aged five years and above as per the Bank Negara Malaysia’s guidelines.

A motor policy is based on the principle of indemnity (which restores the claimant to their original position before the loss of damage). Since new original parts were used to repair the vehicle, it is in better condition than before the damage occurred. The case manager recommended it in favour of the insurer, as their decision adheres to the terms and conditions outlined in the policy.