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Rewriting Our Private Car Insurance Policy In The Era Of Plain Language Policy Wordings
I have to say, “All of us are passengers…. either at this very moment or sometimes in the near future”, but how much do you know about your rights to insurance coverage as prescribed in the Road Traffic Act 1987? This aspect is specifically outlined in Section 91(1) of the Act (previously it was under Section 75(1) of the Road Traffic Ordinance 1958) making it mandatory for insurers to automatically include them into the motor insurance policy.
What is this Section 91(1) Road Traffic Act all about? The following is the relevant wordings….
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Requirements in respect of policies
91. (1) In order to comply with the requirements of this Part, a policy of insurance must be a policy which—
(a) is issued by a person who is an authorized insurer within the meaning of this Part;
and
(b) insures such person, or class of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor vehicle or land implement drawn thereby on a road:
Provided that such policy shall not be required to cover—
(aa) liability in respect of the death arising out of and in the course of his employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment; or
(bb) except in the case of a motor vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, liability in respect of the
death of or bodily injury to persons being carried in or upon or entering or getting onto or alighting from the motor vehicle at the time of the occurrence of the event out of which the claims arise; or
(cc) any contractual liability.
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Section 91(1) simply means the motor insurance policy insuring the motor vehicle must provide insurance in respect if any liability (passengers or otherwise) which may be incurred by the persons specified in the policy for the death of or bodily injury to any person caused by or arising out of the use of the motor vehicle or land implement drawn thereby on a road.
However, this section provides that the following liabilities need not be compulsorily insured:
(aa) liability in respect of the death, or bodily injury sustained by any person arising out of and in the course of employment of such person. (the legislators felt this is more appropriately covered under a Workmen’s Compensation Insurance policy).
(bb) liability in respect of the death of or bodily injury to persons being carried in or upon or entering on to or alighting from the motor vehicle at the time of the occurrence giving rise to the claim. But, this exception should not apply in the case of a motor vehicle, (i) in which passengers are carried for hire or reward, or (ii) by reason of or in pursuance of a contract of employment. (Simply say, liability towards these passengers (categorised as (i) and (ii)) is compulsorily to be insured or insurable).
(cc) liability arising from contracts, which understanding is very much straightforward.
In short, if you are the passenger in a motor vehicle you should be covered if you are
- a fare paying passengers,
- travelling (including entering and alighting from the motor vehicle) by reason or in pursuance (or pursuant) of a contract of employment,
other than the above, you are likely not covered in as far as this Section 91(1) is concerned…. but there are other legal aspects to contend with, where the phrase of “….arising in the course of employment….with the Insured party(ies)” and “….by reason of or in the pursuance of a contract of employment” are concerned. I am not about to open another area for discussion, suffice to say here, the former phrase is straightforward and as mentioned in Section 91(1) (aa) it is not passenger specific, and the latter phrase is passenger-centric, more of having have to travel in order to discharge an employment-related contractual obligation.
“The following appeal cases come and go…. Tan Keng Hong & Anor v Fatimah bt. Abdullah & Ors [1974] 1 11 MLJ 156; Union Insurance (M) Sdn Bhd v Chan You Young [1999] 1 MLJ 593 and Mary Colete John v South East Asia Insurance Berhad [2008] [Federal Court] touching on the core issues of what is deemed to be ‘in the course of employment’ and ‘for reason or in the pursuance of a contract of employment’. “
As courts decisions unfolded where liability to passengers are concerned, insurers were quick to do patch-up jobs over the motor insurance policy so much so the policy coverage in respect of third party liability, in particularly those of legal liability to passengers was jumbled up and twisted to a large extent…. (You can review the article: BUYING YOU MOTOR INSURANCE WITH PASSENGER LIABILITY EXTENSION COVER? ).
[I would deal with the Private Car Motor Insurance Policy only which I think is a lot more important to illustrate a point on consumerism] What exactly was jumbled up? Take a look at Section B on Liabilities to third parties cover, in particularly sub-section 5 on exceptions to section B where (a), (b) and (d) are concerned.
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1. We will indemnify You or Your authorized driver for the amount which You or Your authorized driver are legally liable to pay (including claimants’ costs and expenses) for:-
(a) death or bodily injury to any person except those specifically excluded under Exceptions to Section B
(b) damage to property as a result of an accident arising out of the use of Your Vehicle
provided Your authorised driver also complies with all the terms and conditions of the policy that You are subject to.
2. Limits of Our Liability (in respect of any one claim or series of claims arising out of one event)
• Our total liability under this Section B1(a) is unlimited
• Our total liability under Section B1(b) is limited to RM3 million
3. Cover for Legal Representatives
Following the death of any person covered under this Policy We will indemnify that person’s legal representatives for liability covered under this Section, provided such legal representatives comply with all terms and conditions of the policy.
4. Legal Costs
We will pay legal costs incurred up to a maximum of RM2,000.00 for defence of any charge including the charge of causing death by driving the Motor Vehicle (other than murder) if Our prior written agreement had been secured.
5. EXCEPTIONS TO SECTION B
We will NOT pay for:
(a) death or bodily injury to any passenger being carried for hire or reward.
(b) death or bodily injury to any person where such death or injury arises out of and in the course of the employment of such person by You or by Your authorised driver.
(c) damage to property belonging to or in the custody of or control of or held in trust by You an/or Your authorized driver and/or any member of Your and/or Your authorized driver’s household.
(d) liability to any person who is a member of Your and/or Your authorized driver’s household who is a passenger in Your Vehicle unless he/she is required to be carried in or on Your Vehicle by reason of or in pursuance of his/her contract of employment with You and/or Your authorized driver and/or his/her employer.
(e) any claims brought against any person in any country in courts outside Malaysia, the Republic of Singapore or Negara Brunei Darussalam.
(f) all legal costs and expenses which are not incurred in or recoverable in Malaysia, the Republic of Singapore or Negara Brunei Darussalam.
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[ENDORSEMENT 100] As it is currently practised Section B is jumble up with Endorsement 100 if the policyholder (or Insured) did not extend to cover Legal Liability to Passengers, so ENDORSEMENT 100 is an automatic inclusion into the basic motor policy:
The cover provided under Section B1(a) of this Policy shall not apply to death of or bodily injury to any person being carried in or upon or entering or getting on to or alighting from Your Vehicle (other than a passenger required to be carried in or on Your Vehicle by reason of his/her contract of employment with You and/or Your authorised driver and/or his/her employer). Subject otherwise to the Terms and Conditions of this Policy.
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If you have read the relevant section B of the Motor Insurance policy together with E 100, I guess that would have made your mind turned upside down…. but don’t worry, most motor insurance personnel are equally baffled by them. You can read the previous article ” BUYING MOTOR INSURANCE WITH PASSENGER LIABILITY EXTENSION? ” for the explanation.
Actually Section B in its originality is already in a contradictory mode especially where exception in 5 (b) is concerned making compliance with Section 91(1) rather difficult, but of course the coverage is much wider where passenger risks (non- employment aspects) are concerned.
As it is, exception 5 (b) has a two sided shot, ie. passenger and non-passenger specific. When this E 100 is added onto it the interpretation went haywire…. (although much of the wordings were to right the wrongs against Section 91(1)) as E 100 was intended to add back the rights of passenger who is travelling by reason of or in pursuance of a contract of employment as prescribed under Section 91(1)(bb) to the insurance coverage – the laws state that if you are travelling as a passenger by reason of or in pursuance of a contract of employment then you are entitled to be covered with no condition attached.
Changing Policy Wordings (Private Car) In Line With The Plain Language Policy Wordings Regime
Having said what need to be said…. I would still think sticking to what I have had written in the previous posting on the subject of passenger liability (aka liability to passenger) makes better sense. I would like to do another summary here for the benefit of those who are interested to know and for agents to better explain them to their customers:
| PROPOSED WORDINGS | COMMENT FROM THE SIDE |
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5. EXCEPTIONS TO SECTION B
We will NOT pay for: (a) Death or bodily injury to any person who is a passenger in Your Vehicle while being carried for [April 29, 2013 | amended] hire or reward, or carried in or upon or entering or getting onto or alighting therefrom. However this exception shall not apply where the passenger is being carried by reason of or in pursuance of a contract of employment or in the course of employment with You and/or Your authorised driver and/or his/her employer. (b) Death or bodily injury to any person who is not a passenger in Your Vehicle where such death or injury arises out of and in the course of the employment of such person by You or by Your authorized driver.
(c) damage to property belonging to or in the custody of or control of or held in trust by You an/or Your authorized driver and/or any member of Your and/or Your authorized driver’s household.
(d) any claims brought against any person in any country in courts outside Malaysia, the Republic of Singapore or Negara Brunei Darussalam.
(e) all legal costs and expenses which are not incurred in or recoverable in Malaysia, the Republic of Singapore or Negara Brunei Darussalam. |
The existing (b) is a problem as it did not differentiate passenger and non-passenger perspectives in the exclusion. We can easily accept this exclusion where the third party is not a passenger but if he or she is a passenger then legal issues surface as to what’s deemed “….in the course of employment….” and what was meant in “….by reason of or in the pursuance of a contract of employment….” Anyway, this is for the private car insurance policy so there is really nothing to differentiate along such line – the industry might as well be a good ole gentleman and accept them as not necessary for differentiation for the purpose of claim settlement. The current (b) and (d) are combined and reorganised for easy understanding as well as to comply with Section 91(1) of the RTA 1987. There is now a differentiation between passenger liability aspects and those that are of non-passenger liability…. Also, the proposed (a) would have also caught the existing exception (a) on excluding passengers being carried for hire or reward. [April 29, 2013 | amended] It is good to be aware of possibilities of “kereta sapu” and “unlicensed taxi” in which you may think are irrelevant but you will never know for sure how the courts view things. |
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EXTENSION TO COVER LEGAL LIABILITY TO PASSENGER
E 100 This policy is extended to cover legal liability for death or bodily injury to any passengers being carried in including getting on to or alighting from Your Vehicle but exception to those being carried for hire or reward, or they being members of your and/or your authorised driver’s household unless they are being carried by reason of or in pursuance of a contract of employment. [April 29, 2013 | amended]
ALTERNATIVE | E 100
This policy is extended to cover legal liability for death or bodily injury to any passengers being carried in including getting on to or alighting from Your Vehicle but exception to those being carried for hire or reward, those while under the course of employment by you and/or your authorised driver or they being members of your and/or your authorised driver’s household unless they are being carried by reason of or in pursuance of a contract of employment. [April 29, 2013 | amended]
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Making E 100 as an extensional cover for legal liability to passenger is a lot more easier for understanding rather than the current method of excluding and then deleting when passenger liability cover is requested. [April 29, 2013 | amended] It does not matter if the wordings extended the cover in respect of passengers whilst they are travelling in the course of employment with the policyholder and/or the authorised driver; rightfully such cover should be part of the Workmen’s Compensation or SOCSO cover rather than taking it as part of motor insurance. If that is a concerned then consider an alternative wordings as depicted under ALTERNATIVE on the left hand-side. |
Of course there is a need to further simplify the above in line with the plain language policy regime but we shall not do this here. There is also a need to look at option to cover family and household members and also liability to passenger whilst vehicle is being driven in Singapore.
Do let us have your comment so that can further improve on how we word this in the coming plain language policy draft…. Hope to hear from you – never if suggestion is misaligned, we just want to hear more of your concerns.
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is s.91 only apply to the passenger in the insured car? what if there was an accident and the other car have a passenger. Can the passenger ask for claim?
This passengers’ rights can also be read from another perspective as in this posting:
http://www.malaysiainsurance.info/malaysian-insurer-liable-for-passengers-injury-in-any-road-accident-involving-malaysian-vehicle-that-occurred-in-singapore
Another great development for consumers’ rights, especially for those passengers travelling in a Malaysian insured vehicles crossing over into Singapore.