Breach of Policy Conditions

The following is a case study published in OFS Annual report:

Clara was involved in an accident with Shannon, and Shannon was found to be the driver at fault. Clara filed a claim with Shannon’s insurance company for the costs of repairing her vehicle.

The insurer repudiated Clara’s claim because Shannon did not own a competent driving licence at the time of the accident. The insurer relied on a breach of condition by their own insured to deny liability to the third-party claimant.

The insurer did an online search on the Road Transport Department’s (Jabatan Pengangkutan Jalan) system with Shannon’s IC number and found that she did not possess a valid driving licence at the time of the accident. Section 26 of the Road Transport Act 1987 (RTA)
provides that driving without a licence is an offence. One is liable to a fine, imprisonment, or both.

Since the insurer’s decision is by the terms and conditions of the motor policy wording, the case manager issued a recommendation in favour of the insurer, which Clara accepted.

The remedy for Clara would be to bring legal action against the driver in her capacity since there is no privity of contract between the claimant and the insurer. Laws 91 and 95 of the Road Transport Act 1987 only provide remedies for personal injury claims in the above
circumstances and not for property damage.