Motor Insurance Claim Handling Process

I like this article that was written by one Ms Lim Ka Ea, on her recent experience trying to understand how the motor claims handling process works…. You can view it over at the malaysian insider.

I can understand her difficulties trying to file a claim on her own. For most times insurance can be a rather unfriendly subject especially when it comes to filing a claim. Lots of fine print issues start to crop up and at times these can be rather baffling. Therefore, it is a lot better if the claimant or policyholder consider the services of either their servicing agent or third party service providers like workshops within the insurer panel or third party adjuster. Like what most people say, “let the experts do the job to avoid surprises and teething issues”; ain’t this very true….

Getting to the gists of what Ms Lim wrote, the cautionary tale, the insurance industry more than 10 years ago allowed own damage (OD) claim to be filed by the comprehensive policyholder of private car with his or her own insurer if he or she is not at fault and the accident did not involve a third party commercial vehicles where passengers were carried for hire and drive or used for hire and drive. The insurance practitioners usually call this OD KFK.

“OD KFK is a term used for claim that is filed by a comprehensive private car policyholder who is not at fault at time of the accident against his or her own insurer, and also that other vehicle being at fault is not an excluded vehicle, ie., not for carrying passengers for hire-reward or hire-drive.”

Ms. Lim’s case was one that categorically involved a taxi, which in the sense, fall beyond the industry’s agreement termed the “knock for knock” or KFK as she had rightfully described. Since this falls beyond the KFK she would need to file a claim as a third party going after the party that has caused the damages…. She would have to foot out upfront the costs herself for the necessary repairs and then makes necessary efforts to recover from the insurer of the third party concerned.

I remember in those days, we recommend the claimant to approach certain specialist workshops to file on their behalf such nature of claim. Usually these specialist workshops will deal with the costs of repairs without the claimant like Ms. Lim having have to pay anything. After the claim is successfully recovered from the third party’s insurer the claimant will get their portion of the claim for loss of use and loss of NCD.

However at times claimants do face problems with these so-called specialist workshops – usually in situation the workshop failed to recover adequate repairs costs and they would try to recover the shortfall from the claimant’s portion of loss of use and loss of NCD recovery. And, this can be a haggling experience for the claimant like Ms. Lim….as well.

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Ms. Lim La Ea’s experience and is worth sharing to both agents and the public:
It was 1991. My classmates and I were punished for being noisy in class. We were told to stand up and remain silent for the rest of the lesson. The silence was deafening until Cikgu stormed towards the back of the classroom and barked, “Why are you smiling?! Is this supposed to be funny?”

Alarmed, we all turned around to find out who had the misfortune of inciting Cikgu’s sudden outburst. It was Lee, the boy who hardly spoke during lessons. If anything could be said about Lee, he stayed away from trouble and wore a pleasant demeanour on his face.

Cikgu repeated her question. This time with greater force. Puzzled, Lee had no choice but to answer, “Err… no. But, but, but is it a crime to smile?”

I was stunned because I didn’t know Lee had it in him to speak up against a figure of authority. “Ohhhhh… you think you’re so smart, is it? Stand on your chair now!” Cikgu decided to play the power card. They always did when they had no answers to smart questions.Lee did as he was told and the smile disappeared from his face.

Many of us still remember this incident and Lee will always be remembered as the guy who got punished simply because he smiled.

Recently, when my husband got into a minor fender-bender with a taxi driver, I was reminded of this story. As the article unfolds, I hope it will serve as a cautionary tale for all.It’ll serve you well to know that if your car has been hit by a vehicle used for carriage of passengers for hire or reward (or what is commonly known as a taxi, rental car, public bus, school bus and factory bus) to be referred to as “public vehicle” hereafter, you are not entitled to make a No-Fault Own Damage (ODN) or Knock-For-Knock (K-F-K) claims, even if you have a police investigation report proving that the other party is at fault.The only claims you can make are of your own insurance, which will then affect your No Claim Bonus (NCB) or to claim directly from the perpetrator’s insurance, which can be an insurmountable task if the latter is not co-operative.

Now, this is alarming news to me because I did not know, as I suspect many of you don’t either, about this. It got my husband and I very concerned. How and where can we find out more information? Could this be an explanation why taxi and bus drivers drive as recklessly as they do here?

Dissatisfied with my motor insurance company’s response, I’ve since then made multiple enquiries to different insurance companies, the Road Transport Department, the General Insurance Association of Malaysia (PIAM), Bank Negara and even three motor workshops.

The calls and Internet searches I made generated a lot of frustration and failed to get an answer satisfactorily why public vehicles are exempted from ODN and K-F-K claims. Only one person came up with a direct response (although not necessarily plausible or reliable) in an online public forum.

According to this person, the measure was taken to discourage people from driving private cars. See it as some form of vice tax, if you like. I’m not entirely sure whether this is indeed the rationale behind this ridiculous policy but at least someone offered an opinion other than just re-iterating what has suddenly become an obvious policy.

The Road Transport Department said that they are not responsible for insurance regulation and referred me to the Ministry of Finance. I did not pursue with the latter.

I had to make four telephone calls to obtain a written policy stating the exemption from AXA Affin Malaysia. The first call was answered by someone whose standard response seemed to be “cannot.” Period.

My husband and I have taken to calling these people Ms/Mr Cannot and they seem to dominate the service industry in Malaysia. Before you can even explain what you’re asking for, they’ll tell you with great certainty and conviction that you cannot.

Kurnia Insurans Malaysia and Etiqa Insurance have the same policy on their websites. AIA Malaysia’s telephone operator said that this should not be true but was unable to confirm. She also said that all motor insurance policy should apply across the board because they are being regulated by Bank Negara. When I called Bank Negara, there was no one who could answer my query. They promised to call me back but they haven’t.

Zurich Insurance Malaysia Berhad informed me that they, too, practise the same policy. According to their officer, the policy is a result of an agreement made by all the insurance companies. Although I was disappointed by the answer, I was pleased that they were helpful enough to explain what I could do instead.“You can claim third party insurance directly from the taxi. If you don’t want to go through the hassle of doing this, some workshops will help you. You just need to obtain the police investigation reports,” she said.

“How do you make a claim directly from the taxi? I don’t have his insurance details?”The taxi driver had conveniently claimed ignorance when I asked for his insurance details. He said he had to call his company to find out and until today, I haven’t managed to get an answer from him. I was told by several people that this is to be expected.

“I hope you have his registration number. As long as you have it, you can find out from JPJ.”
“Does the workshop charge a fee for this service and if yes, how much?” I asked. “Yes, I think they charge a fee but I really don’t know how much. What I can do is to give you a contact. You can call them and enquire. ”I called the number and to my great surprise, the lady who answered the phone said they don’t charge anything if I can furnish them with all the relevant documents. If I am unable to do so, they will charge a runner fee of RM150.

I’ve also talked to another workshop recommended by someone else and according to the workshop, as long as I send my car to my insurance panel workshop, I can make a KFK claim. My insurance panel workshop offered us two solutions:
1) submit a ODN claim but our NCB will be forfeited and our insurance will cover the cost of repair, or
2) submit a third party claim but we’ll have to pay for the NCB, adjuster fee and cost of repair first. We may be able to get it reimbursed by the taxi’s insurance later but it is entirely up to the latter’s discretion.

My husband and I haven’t quite decided yet what to do with our car. Although no injuries were inflicted (albeit a huge bruise to our morale), the simple principle of justice remains that we shouldn’t be paying for other people’s mistake. It isn’t just about the cost of repair but the time spent on dealing with it.

In my attempt to find answers, I’ve remained utterly confused and defeated. My French husband has cheekily asked me, “Why didn’t I marry a Swede? Why do you have to be Malaysian?

It’s the first time I’ve heard of such stupid policies.”Just like my friend, Lee, who shouldn’t have smiled, we shouldn’t have rejoiced so quickly with the knowledge that it was someone else’s fault when the accident happened. Just like Lee who asked the question “Is it a crime to smile?” and was then punished without any clear reason whatsoever, we are being punished in a similar fashion.

How safe can you be on the road if the rules do not punish those who inflict damage and injury to others? I can be a responsible and safe driver but it doesn’t protect me against those who aren’t. Something’s clearly wrong and how do we get to the bottom of this?

If you ever encounter an accident with a public vehicle (which I sincerely hope you won’t), it’ll be wise to obtain the vehicle’s insurance information immediately.

Meanwhile, do stay safe on the road.

(The views expressed here are the personal opinion of the columnist.)

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8 comments for “Motor Insurance Claim Handling Process

  1. Cheah
    December 14, 2014 at 21:31

    My situation is almost similar. Somebody bang my car back and turns out she is driving a rental car. The different is the rental car is not the “official registered” company car. My workshop advise me to claim against my OD-KFK and there’s 50/50 chance that my NCD will be forfeited. This is because the “Rental Car” owner’s name are not the same as the driver’s name in the 3rd Party at fault police report. I am not sure what to do now and my workshop keep pressuring me to proceed with my insurance OD-KFK first. Any advise for me?

    • December 14, 2014 at 22:17

      Sound like this rented car is not rented out legally? If it was rented out legally (ie., not kereta sapu) then i can’t see the issue. It is a norm the workshop advise you to file on OD KFK – main reasons, the workshop gets to claim the money from your insurer without fuss, and you get to take/use your car after repairs. However you stand a likely chance of losing your NCD…. and then what? By right you should have requested the workshop or you having done so, to enquire with your insurer to if OD KFK applies, if not, then you can find a workshop to help you seek a third party claim against the Owner of the rental car…. Pay your own repair bills and

      • December 16, 2014 at 00:15

        (Sorry. …) The was a break on my mobile. … ok, after you paid your repair bills, take the car and continue to pursue with the owner of the car rental or pursue with their insurance company if you have already know the insurer. This maybe a tedious process but if you don’t have the time perhaps pass it to some professional to handle for you, usually they are workshops specialising in handling third party insurance claims.

  2. Anonymous
    July 18, 2014 at 11:38

    OD KFK also not applicable if the accident involved a motorcycle. Reason being more protection to the motorcyclist.

  3. Andrew Wong
    December 26, 2012 at 23:28

    Fully agree that it is best to leave it to the industry people who, usually are the workshops. But whatever it is, filing a third party claim will require the following:-

    1. Police report, photos, investigation result and copy of police summons if possible which will incur cost and waiting time usually 2 weeks.
    2. Engage an adjusters and pay for the report.
    3. Select a workshop and pay upfront based on the adjusters report.
    4. Write to the third party insurer to demand payment for all expenses incurred in relation to the accident including loss of use.

    All the above will take time and for an ordinary person, how to obtain all police documents, where to find an adjusters, selecting a workshop and writing to the third party insurer is really a `nightmarish’ ordeal. But like it or not, that’s the motion one have to go through to succeed in a third party claim.

    This is where the workshop will comes in. If one lets the workshop to take on the case, they will assist to obtain all police documents, engage adjusters, repair your car immediately without asking upfront payment and write on your behalf to third party insurer to demand payment including loss of use. Of course you will have to sign on alot of blank documents before the go ahead repair from the workshop.

    However, one have to be tolerance and not to expect a perfect repair. If can pass 80% +/-, it should be acceptable (cos even Own Damage claim will not give one 100% satisfactory feel). Some workshops are even prepared to pay you loss of use at RM50 per day whilst in their workshop. However, when they execute the claim with third party insurer, their claim for the repair cost may be 800 to 1000% more than your actual claim and the loss of use duration may be double or triple of what they have given you.

    But then again, if they can succeed for this inflated claim, it is good luck to them I feel bearing in mind, insurers have their claims dept personnel to vet the accuracy of the claim. What we want is to restore our vehicle asap and minimize our inconvenience at all cost.

  4. Andrew Wong
    December 23, 2012 at 18:09

    If I understand well, making a third party claim will not affect the NCB. Hence the eligibility of claim should be (i) cost of repairs, (ii) Police documents, (iii) Adjusters’ Report and (iv) Loss of Use. (Provided there is no bodily injury or fatality and other contents damaged inside the car as a result of the impact). And, the rationale for Insurers excluding commercial vehicles from KFK where passengers were carried for hire or reward appear likely due to the following reasons; in my opinion:-

    1. The many hours of such vehicles operating on the road hence, it is regarded high risk exposure as compare to private vehicles.
    2. Insurer covering such `hire & rewards’ kind of vehicles are normally not among those participating insurers in the KFK Agreement. ~ Usually their insurance (those for hire & rewards) are obtained from Malaysian Motor Insurance Pool (MMIP) who is not a party to the KFK Agreement.

    My wife has just last month encountered a similar situation. Trust me, I had it resolved within 3 days.

    Any further discussion is welcome.

    • December 26, 2012 at 18:50

      If you got involved in an accident with a third party vehicle involved with hire drive or carrying passengers for hire reward, then you need to file a claim against the other party’s insurer. If you can’t get the necessary details from them it would be difficult for you to proceed unless you go back to your own insurer to file that claim, in which the case you shall have you ncd forfeited…. Thus my advice is not to take action trying to figure out what to do, you would need someone who have to know-how’s to help resolve issues. It is best the public leaves this to the industry people to help them deal with the claims.
      Of course in your case, you are already a professional and you have the network behind you.

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