Scenario 1: The Insured vehicle sustained damages in an accident.
The Insurers repudiated liability on the claim for indemnity for damage
to the insured vehicle on the ground that "the engine has been
changed and the same was not disclosed to us".
Scenario 2: The Insured's motorcar met with an accident after
it skidded, veered to the left and collided against the hill slope on
the left side of the road. The car sustained damage to the front section.
It was sent to a workshop and inspections were carried out by the Insurer's
appointed adjuster and the Insured's adjuster on separate occasions.
It was found that the motorcar's front left tyre was defective.
The Insurers repudiated the claim by relying on condition 3 of the policy which is as follows: "The insured shall take all reasonable steps to safeguard the motor vehicle from loss or damage and to maintain the motor vehicle in efficient condition."
In these instances, do the Insureds have any recourse to resolve their respective disputes?
According to PIAM, if the senior management of the Insurer has considered the Insured's complaint and the Insured is still not satisfied, he or she can approach the Financial Mediation Bureau to consider the matter.
The Financial Mediation Bureau was set up by Bank Negara Malaysia in 2005 to replace the Insurance Mediation Bureau established in 1991. The Financial Mediation Bureau provides an independent and impartial method in resolving disputes between insurers and policyholders.
The independence of the Mediator is guaranteed by the council of the Bureau whose membership consists of people representing public and consumer interests and representatives of the members of the Bureau.
The Mediator can investigate and decide on a complaint, dispute or claim between the Insured and the Insurer.
For scenario 1, the Mediator at the Bureau noted the following condition that applies to the Insured's whole policy:
"7. This policy will only be operative if -
The Mediator also pointed out that there was relevant provision in the Guidelines on Claims Settlement Practices concerning the matter:-
"An insurer should not deny any claim merely on grounds of technical
breaches of warranty or policy condition which are not material or connected
to the circumstances of loss, unless fraud is suspected."
In the matter under reference the engine was changed to another with the same cubic capacity. Moreover, the JPJ had been formally notified and the necessary endorsement had accordingly been made in the record. There was no question of the new engine being overpowered that could affect the judgement of the underwriters to underwrite the risk neither was there any evidence of fraud.
In view of the above, the Mediator held that the Insured's decision in changing the engine of the Insured vehicle to another with the same cubic capacity was a technical breach which was not material to the circumstances of loss. Accordingly, the Insurers were liable to indemnify the Insured for the damages to the insured vehicle.
However, in Scenario 2, the Mediator noted that the expression "efficient condition" in this context means "roadworthy condition". Hence, the poor condition of the front tyres, that was essential if not integral parts of the vehicle, made the vehicle unsafe. That is to say the vehicle was not maintained in an efficient roadworthy condition.
In this instance, the Mediator confirmed the decision of the Insurers to repudiate the claim.
If you feel that your insurers have turned down your claim unreasonably, you can approach the Bureau for assistance. However, before you do that, your complaint must :
How to make a complaint?
You can explain your complaint in writing to the Mediator at:
Financial Mediation Bureau
The Mediator will also require your Insurer to provide all its files
on your case.
When the Mediator makes a decision, he will send it to you and to your Insurer. You can accept or reject it.
If you accept it and you are entitled to compensation, your Insurer
must pay you any award up to:-
- RM200,000 (Motor & Fire insurance)
If you reject it, you are free to act as you wish. A rejected decision does not affect your right to take legal action.
PIAM's Complaints Action Bureau can also assist to resolve any consumer complaints from either policyholders or third parties against its member companies.
In instances when the complaint remains unresolved, and if such complaint involves a personal claim of less than RM200,000, the Complainant may be recommended to refer the matter to the Financial Mediation Bureau.
PIAM's Complaints Action Bureau is located at:
3rd Floor, Wisma PIAM
When making complaints to either the Financial Mediation Bureau or to PIAM's Complaints Action Bureau, you can ask for your complaint to be investigated into if:
Please send your questions on general insurance to:
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