Insurers of Malaysian cars involved in accidents in Singapore stand to be exempted from passenger liability after a key ruling was passed by a Malaysian appeals court.
It reversed a Kuala Lumpur High Court decision, in finding that a passenger who suffered serious head injuries here in a 2010 accident is not entitled to claim compensation from the insurer because the Malaysian-registered car had a policy which did not cover its passengers.
This was despite Singapore's Motor Vehicles (Third-Party Risks and Compensation) Act, which makes it compulsory for private vehicle owners to insure liability for passengers. Malaysia has no similar compulsory coverage provision.
Madam Zuraini Mohamed suffered severe head injuries when the car driven by her husband, Mr Iskandar Mohd Nuli, collided with a lorry on Mandai Road. She sued both her husband and lorry driver Ng Kar Sze in 2013, seeking damages in a Singapore High Court case due to start in May.
Meanwhile, the car's insurer, AmGeneral Insurance, sought a declaration of non-liability. But the KL High Court ruled AmGeneral was bound by a Singapore agreement to meet the passenger liability, despite the fact that the car owner did not pay premiums for the coverage.
AmGeneral, represented by Singapore lawyer Niru Pillai here and Malaysian counsel W. Davidson, appealed.
In that hearing, Mr Iskandar's lawyer, Mr Ariff Rozhan, pointed to the reciprocal arrangement between the Motor Insurers Bureau of Singapore(MIBS) and its Malaysian counterpart. This requires the MIBS to settle any judgment sum not paid by a driver of an uninsured Malaysian vehicle entering Singapore who is held liable for an accident here.
The appeals court acknowledged a 2013 Singapore High Court case which held a Malaysian insurer was obliged to settle despite the lack of insurance coverage. It was held that if the MIBS was obliged to pay under the agreement with its Malaysian counterpart, then it could claim from the insurer in the case.
But the Malaysian appeals court ruled that this was "not the issue in this appeal". The court made clear that the special agreement does not alter an insurer's rights under the policy and preserved AmGeneral's rights in Mr Iskandar's case.
Effectively, this means that even if AmGeneral pays the MIBS, it has the right to recover the sum from Mr Iskandar. The court added that Mr Iskandar's claim that he "had no knowledge of the policy's non-coverage" was immaterial, and that he must take the policy "with all its disadvantages from his point of view, together with its advantages, and he cannot claim the benefit of anything which the policy gives him without complying with its terms".
Mr Iskandar is currently seeking permission to appeal to the Malaysian Federal Court and a hearing is due next month.
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Mandatory cover
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In Singapore, it is compulsory for drivers to have motor insurance under the Motor Vehicles (Third-Party Risks and Compensation) Act.
This insurance is sold under a private car policy, which includes three types of coverage:
COMPREHENSIVE COVER
This is bought by about 90 per cent of car owners here. It covers:
•Death or injury to other parties
•Damage to others' property, including public property
•Damage to own vehicle
THIRD-PARTY COVER
•Death or injury to other parties
•Damage to others' property, including public property
ACT COVER
•Death or injury to other parties
•Passenger liability is covered under all these options under "Death or injury to other parties".
SOURCE: GENERAL INSURANCE ASSOCIATION OF SINGAPORE (GIA)
It is understood that the Malaysian judgment means passengers or pillion riders injured on Malaysian-registered vehicles in Singapore will not be compensated for injuries by insurers if the vehicle is not covered for passenger liability.
Malaysian Judge of Appeal Vernon Ong, in the court's judgment grounds released in January, wrote: "The granting of the declaration will serve a useful purpose as it will be helpful to the parties and to the public."
