The following is a case study published in OFS Annual report:
Kenny was an employee of Thomas & Sons Sdn. Bhd. On the material date of incident, Kenny was driving the company’s motor lorry from Kuala Lumpur to Penang and entered the R&R (Rest and Relaxation) area. Suddenly, the front upper section of the lorry knocked into a metal height barrier and sustained damages.
Following the accident, Thomas, on behalf of his company, Thomas & Sons Sdn. Bhd. submitted an own damage (OD) claim for the cost of repairs to the motor lorry. The claim was rejected by the insurer on the grounds that the driver, Kenny had breached the policy condition 7(c) of the commercial vehicle policy as he had failed to take reasonable precaution to safeguard the vehicle from loss or damage.
The relevant policy provision provides as follows:
“CONDITIONS (These apply to the whole policy)
7. Other Matters
This Policy will only be operative if:
(c) You have taken all reasonable precaution to safeguard Your Vehicle from loss or damage.”
The insurer’s decision was based on the loss adjuster’s report which revealed that Kenny had driven through the height limit barrier at the R&R despite the signage indicating the maximum height of the overhead barrier of 2.1 metres. Nevertheless, upon appeal, the insurer on goodwill consideration offered to pay 50% of the cost of repair assessed by their appointed loss adjusters. Thomas rejected the insurer’s offer and referred the dispute to OFS.
Our Findings
Kenny works as a driver for Thomas & Sons Sdn. Bhd and he has been driving the company’s van and motor lorry interchangeably in the course of his employment. At the material time of accident, Kenny admitted that he saw the signage of the height indicator and was aware of the height limit. However, he had decided to drive through the barrier as he thought he was driving a van at that time, which would be within the permittable height limit. His unfortunate momentary mistaken assumption that he was driving a van at the time had caused the accident.
Outcome
The Ombudsman adjudicated this dispute in favour of Thomas & Sons Sdn. Bhd. on the following grounds:
i) In order to prove breach of condition 7(c) of the policy, it must be shown that the driver was reckless, i.e where he recognised a serious risk but deliberately did not take steps to prevent it. Most importantly, the driver must recognise a serious risk but deliberately or intentionally did not take steps to prevent it. (English Court of Appeal case of Fraser v BN Furman (Productions) Ltd (1967) Vol 2 LLR 1; Hong Leong Assurance Bhd V Yeow Seow Chiew (2004) 8 CLJ 247) ii) According to the loss adjuster’s report, even though the driver of the vehicle was aware of the height indicator, he was under the impression that he was driving a van at that time. As such, he did not recognise the risk. The act of the driver was not intentional and rather his unfortunate momentary assumption that he was driving a van at the time that had caused the accident.
iii) There is a distinction between negligence and recklessness. The word reckless connotes ‘deliberate’ which speaks of intention. This
is a motor insurance policy which covers risk of accidents, and accidents are commonly caused by carelessness or negligent acts of
drivers. (Malaysia National Insurance v Abdul Aziz (1978), I MLJ; Mc Cann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579)
iv) The Ombudsman found that it is only fair and reasonable for the insurer to pay the full claim on liability (100%) based on the loss
adjuster’s assessment of damages.