Why doesn't car insurance policy cover all passengers?

When I bought my car from Borneo Motors, it came with an insurance policy from AIG - Toyota Auto Protector.

As it would have cost more to get a different policy, I accepted it without reading the clauses.

Now, a year later, I have just renewed the policy and was shocked to read the endorsements.

They include clauses stating that in cases where there are unnamed passengers, only those between ages 16 and 65 are covered. Passengers must also not be under the influence of intoxicating liquor or drugs.

This means that young children or elderly parents would not be covered, nor would a tipsy friend getting a lift home from a sober driver.

The policy does not allow for the naming of passengers, and applies to passengers of the other car as well.

I thought the intent of making car insurance compulsory was to at least provide cover to other parties, including passengers.

Could AIG or Borneo Motors clarify this issue? Shouldn't such material information be made known at the point of sale? Is this an industry norm?

Tan Siak Khian

A version of this article appeared in the print edition of The Straits Times on June 02, 2016, with the headline 'Why doesn't car insurance policy cover all passengers?'. Print Edition | Subscribe