Malaysian Insurer Liable for Passengers Injury in any Road Accident Involving Malaysian Vehicle that Occurred in Singapore

Malaysian Insurers are now liable for passenger liability in any road accident involving Malaysian vehicle that occurred in Singapore regardless whether a liability to passenger cover is extended or not in the main policy.

The Motor Insurers’ Bureau of Singapore (“SMIB”) has successfully filed a case against Pacific & Orient Insurance Company Berhad (“P&O”) in the Singapore High Court – a case of Pacific & Orient Insurance Co Bhd v Motor Insurers’ Bureau of Singapore [2012] SGHC 202 before the Honourable Justice Quentin Loh, where the parties commenced cross-applications against each other to determine contractual liabilities.

The case revolved around the issue of whether P&O, which operates from Malaysia with no Singapore presence, was liable to satisfy a Singapore judgment obtained by an injured Malaysian pillion rider against its Malaysian policy holder, the rider of the motorcycle, arising from a road traffic accident. The accident occurred in Singapore and the terms of the motor insurance policy issued by P&O expressly excluded coverage for legal liability to passenger (or termed as passenger liability). However, under Singapore law, motorists and motorcyclists have to undertake compulsory insurance coverage for passengers and pillion riders, henceforth the decision.

Ruling of the Court
The Court found in favour of the SMIB holding that P&O had taken on the liability to satisfy such judgments by signing a Special Agreement with the MIB of West Malaysia (MIBWM) on 15 September 1975. The Special Agreement bound P&O to comply with the same obligations that Singapore insurance companies (which are all members of the SMIB) are bound by under a Memorandum of Agreement with the SMIB dated 22 February 1975. This is notwithstanding that in Malaysia, it is not compulsory by law for a driver of a motor vehicle to procure insurance coverage for passenger liability.

The Court’s central finding concerned the interpretation of the definition of “Insurer Concerned”, a concept created by the Memorandum of Agreement between the SMIB and its members. The Court accepted the SMIB’s arguments that the “Insurer Concerned” concept includes situations where, although the insurance policy expressly excludes one type of coverage, as long as the insurer is providing an insurance against any liability required to be insured by law, the insurer will have to satisfy a judgment obtained by an injured passenger against its policy holder who was driving the vehicle, even if the judgment is in respect of a liability expressly excluded by the insurance policy. The Court rejected P&O’s contentions that the Special Agreement should be read subject to Malaysian legislation on compulsory motor insurance and to the terms of its insurance policies.

Implications of the Case
The decision has major implications for the motor insurance industry in Singapore and Malaysia. Victims injured in road traffic accidents in Singapore involving Malaysian vehicles can now seek redress against the relevant Malaysian insurance companies with the knowledge that these companies are contractually obliged to the SMIB via the MIBWM to satisfy such judgments.


On its part, the SMIB will be relieved from the great financial burden of satisfying such judgments – a financial burden which ultimately falls on the shoulders of Singapore insurance companies and hence Singaporean policy holders, as the MIB is primarily funded by calls on its Singaporean members.

Simply put, Malaysian insurers would have to pay up once Singaporean courts decide in favour of the passenger or in this case pillion rider, even if there was no passenger liability extension to the main policy.

Since “pay-up” is the word, then it is important that Malaysian insurers must ensure that all policies issued to vehicles travelling to Singapore be extended with a legal liability to passenger cover. At least some premiums are collected for this new found exposure on Singapore roads.

That’s the story and we would like to thank Rajah & Tann’s write-up in, which this decision certainly adds more burden to the Malaysian motor insurance industry.

And, Johoreans must be prepared to pay more if they indeed need to travel down south….

The Malaysian insurer, notwithstanding, has a right to subsequently sue the policy holder to recover the sum paid to the victim. 

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2 comments for “Malaysian Insurer Liable for Passengers Injury in any Road Accident Involving Malaysian Vehicle that Occurred in Singapore

  1. Samuel Tsen
    March 31, 2014 at 09:21

    Hi, is this a settled law decision?

    • April 1, 2014 at 18:53

      Yes, is a Singapore courts’ decision but is enforceable in Malaysia by way of a cross border MIB agreement.

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