INSURANCE LAW 1QUESTION 11

NUR HIDAYAHTUL NABIHAH BINTI MANAS2011440904

LWB05D

Timoptol had completed a proposal form to insure his pick-up van with Easy Insurance. The following are answers given to the questions asked in the proposal form: Q What are the purposes for which the pick-up van would be used?A Delivery of fruits and vegetables.Q Nature of goods to be carried?A Fruits and vegetables.Q Have you ever been convicted of a traffic offence?A No. Timoptol indeed delivers fruits and vegetables but occasionally he transports furniture. Timoptol has also been convicted twice for parking near a fire hydrant along Jalan Mati. Timoptol had submitted a claim recently for an accident that took place while the pick-up van was carrying fruits and vegetables, although it had transported furniture earlier in the day.

PARTIES

TIMOPTOL EASY INSURANCE

TYPE OF INSURANCE POLICY

MOTOR INSURANCE POLICY

ISSUES

WHETHER TIMOPTOL HAS INSURABLE INSTEREST OVER THE

INSURED PICK-UP VAN

WHETHER EASY INSURANCE CAN RESCIND THE POLICY DUE TO NON-

DISCLOSURE OF MATERIAL FACTS BY TIMOPTOL

FIRST ISSUE:INSURABLE INTEREST

NIK RAMLAH“the relationship between the people

who taking out an insurance policy with the subject matter of the

insurance”

SECTION 5(2) OF MARINE INSURANCE ACT

“Legal or equitable relation to insurance property”

LUCENA v CRAUFORD“the insurable interest as a right in the property or a

right that derivable out of some contract about

property which may be lost upon some contingency

which affecting the possession or enjoyment of

that property”

IN MALAYSIA

SECTION 152 OF INSURANCE ACT 1996

only governed the life policy

HALSBURY’S LAWS OF MALAYSIA VOL. 4:

•Person has the insurable interest• Time

MACAURA v NORTHERN

ASSURANCE CO

NANYANG INSURANCE CO LTD v SALBIAH & ANOR

APPLICATION

•At the time of accident occurred

•The pick-up van belonged to Timoptol

•He is the owner of the property

CONCLUSION

Timoptol as the owner has the insurable interest in the pick-up

van

SECOND ISSUE:DUTY TO DISCLOSE

CARTER v BOEHM“contract uberrimae fidei”

Must disclose the material facts to another party

EFFECT NON-DISCLOSURERescind the policy

MATERIAL FACTS

IVAMY1. Subject matter is exposed to the

greater danger2. Proposed assured is activated

by some special motive3. Liability of the insurer might be

greater4. Moral hazards5. Knowledge of the proposed

assured are material to the insurer

IN PRACTICE• Specific questions• Rate of premium

• It is depending on the nature of insurance

policy

TESTS

THE REASONABLE INSURED

THE PRUDENT INSURER

LAMBERT v CO-OPERATIVE INSURANCE SOCIETY LTD“The test should applied is the prudent insurer test”

BURDEN OF PROOF

JOEL v LAW UNION AND CROWN INSURANCE CO

THE INSURER MUST PROVE:•Fact did not disclosed was

material fact•Within the knowledge of

the insured person•Not communicated to the

insurer

CONTAINER TRANSPORT INTERNATIONAL INC v

OCEANUS MUTUAL UNDERWRITING ASSOCIATION

(BERMUDA) LTD

THE INSURER MUST SHOW:• The prudent insurer would

rejected the risk or charged the higher premium if they had

known the non disclosed facts

IN MALAYSIA

SECTION 149(4) OF THE INSURANCE ACT 1996

“The insurer must display warning”“If non-disclosure, entitled to rescind the

policy”

SECTION 150 OF THE INSURANCE ACT 1996

• The insured person must disclosed• The facts that are material• He know or ought to know

•Reasonable man could expected to know• Relevant to the insurer’s decision

(rejecting/accepting, rates of premium, terms)

UNITED MALAYAN INSURANCE CO LTD v LEE YOON HENG

Purpose of the vehicle to be used for

TAN KANG HUAY v SAFETY INSURANCE CO LTD

Previous insurance claims

NEW INDIA ASSURANCE CO v PANG PIANG CHONG

Previous criminal/statutory convictions

APPLICATION

Timoptol has not fully disclosed:

• delivering not only fruits and

vegetables but also furniture

•Twice convictions for parking near a

fire hydrant

•MATERIAL FACTS?•AFFECT THE DECISION OF EASY

INSURANCE?-prima facie: material facts

HOWEVER,-Accident happened during Timoptol delivered the fruits and vegetables-Convictions of parking offences are

less likely to caused an accident

CONCLUSION

Easy Insurance has no right to avoid the policy due to the

non-disclosure of immaterial facts by Timoptol.