The Law of Motor Insurance

PREFACE
If you would not be forgotten as soon as you are dead and rotten, either write things worth reading or do things worth writing' —Franklin Roosevelt

The motor industry has seen a surge in the last few decades. With the increase in motor cars on the road there will naturally be an increase in motor vehicular accidents. Many lives have been lost and many a body maimed as a result of motor vehicular accidents. Malaysian drivers have not been known to be the most careful or courteous. The numerous road safety campaigns undertaken by the both government and non-governmental bodies have not shown any positive results in reducing the number of accidents or road manners. The courts are clogged with claims for compensation by third parties injured in accident and the insured for indemnity under the policy. There is an air of uncertainty as to the rights of the parties concerned i.e. the insurer, the insured and the third party. To the insured, the law seems harsh and the general principles of insurance law seem to enable the insurer to rely on a breach of a condition precedent or a warranty to defeat a claim when the breach is unrelated to the loss and has not caused any prejudice to the insurer. There has led to a general feeling that the insurers have a tendency to repudiate claims for the slightest of reason. To the third party who are victims of road accidents, they clamoring for an insurance scheme to secure proper compensation and they complaining about the delaying tactics of the insurers in processing their claims and the delay in the court system as well. To the insurer, they are guided by commercial principles of profit making and as a stronger party have a tendency to resort to both legal and other means to rely on a contract that they formulated and at times unfair to the insured. The United Kingdom has mitigated this harshness to some extent by the Association of British Insurers' Statement of General Insurance Practice 1986; the powers of the Financial Services Ombudsman Bureau and the Unfair Terms in Consumer Contract Regulations 1999. Unfortunately, not enough has been done in Malaysia. Against this backdrop, the courts have been driven by the notion that insurers ' are big companies and have a lot of money' and hence have handed down judgments based on sympathy rather than considerations of legal principles, which have unfortunately thwarted the growth of law in this area.

Motor insurance has become an integral part of the legal system and affects the rdationships of motor vehicle owners, victims of accidents, the insurance industry and the legal fraternity who prosecute and defend these claims and in view of the large number of claims registered yearly, it paramount that all parties affected have a clear understanding of the legal principles involved vis a vis all the parties concerned. This book therefore attempts to lay down the fundamental principles and concepts of motor insurance and how if affects the rights of the parties involved. The statutory duties of insurers and car owners under the road transport legislation, the rights of third parties to enforce judgments directly against the insurer and the contractual rights between the insurer and insured are explained in detail. Though this book is based on the Malaysian law it includes references to the relevant authorities and statutes for other common law jurisdictions like inter alia Singapore, Hong Kong, India, Australia, New Zealand and the United Kingdom. It is my hope that this book will provide a comprehensive coverage of motor insurance as a whole. To this end, an attempt has been made to explain the legal concepts in as simplified a manner as possible though it is unavoidable that many legal concepts have been included for the sake of precision and to acquaint the reader with the language of the law. I have also suggested some recommendations on uncertain areas and proposed review on certain sections of the existing Road Transport Act 1987, decisions of the Courts and policy wordings and have also offered reasoned arguments for the same. It is my wish the legislators, the Judiciary, Bank Negara Malaysia and the Persatuan Insurans Am Malaysia (PIAM), the Bar Council and the other stakeholders of the industry, study them in depth and implement and/or make the necessary changes in the future.

This is my fifth book and I hope it would get the support and response as my other publications. Many have asked me why I labour on with writing books (it is surely a laborious effort each taking about 2 years to conceive) which is in no way lucrative in the commercial point of view. The answer to this is found in a little story.

In the old age, Pierre Auguste Renoir, the great French painter, suffered from arthritis, which twisted and cramped his hand. Henri Matisse, his artist friend, watched sadly while Renoir, grasping a brush with only his fingertips, continued to paint, even though each movement caused stabbing pain. One day Matisse asked Renoir why he persisted in painting at the expense of such torture. Renoir replied: "The pain passes, but the beauty remains."

I wish to record my very special appreciation to the Late Dato' Gopal Sri Ram, retired Judge of the Federal Court, Malaysia who graciously contributed to the foreword to my book and who has been a source of inspiration from the time of my chambering days. To my parents, the late Mr. Savarinathan and Madam Mariamah, it has been an honour to be your son and thanks for all the pain and sacrifices both of you went through to educate us and to bring us up as a strong, united and loving family. To Sundari, my wife and Rueben, my son, thank you for your continuous support, understanding, encouragement, inspiration and love. I also extend my sincere appreciation to Mr. Ting who had painstakingly and meticulously read the manuscripts and made many constructive and practical suggestions to improve the book. I am also appreciative of to Ms Wendy Beh for assisting me in all the little but important things related to the book and Mr. Edwin Marsden, my publisher, for his advice and assistance in yet again publishing my book. Last but not the least, the God Almighty for garnering my thoughts and whose Presence led me through every sentence I wrote in this book.

The views expressed and the shortcomings of this book are my sole responsibility and I have made every effort to state the law as at August 2009.

"We shall steer safely through every storm as long as our heart is right, our intention fervent, our courage steadfast and our trust fixed on God." — St. Francis de Sales
S. Santhana Dass