Make insurance coverage compulsory for all car passengers, says lawyer

A recent Federal Court ruling reaffirmed that those travelling for work purposes may claim from the vehicle’s insurer should an accident occur.

PETALING JAYA: 

A recent Federal Court decision has renewed discussions on whether Malaysia should mandate insurance coverage for passengers in private vehicles to ensure compensation in the event of accidents.

Senior lawyer JS Naicker said both Singapore and the UK already have such laws, including the Motor Vehicles (Third-Party Risks and Compensation) Act 1960 and the Road Traffic Act 1988, that require passenger coverage as part of motor insurance policies.

“Malaysia should follow the lead of these jurisdictions by amending the Road Transport Act (RTA) 1987 to make passenger coverage mandatory in all motor insurance policies,” he told FMT.

Naicker said there is a need for safeguards to ensure that compensation reaches accident victims and is used for their long-term welfare.

“The government should also amend the RTA to channel motor accident claim payouts to the public trustee, ensuring that compensation is preserved for the long-term welfare of victims,” he said.

He said this would help prevent misuse or dissipation of funds intended for the victims’ care and recovery.

Naicker also said that making passenger coverage mandatory would simplify the claims process, allowing those implicated to file claims directly without proving liability.

He said Bank Negara Malaysia, the insurance industry regulator, should direct insurance companies and their agents to encourage vehicle owners to purchase passenger coverage as an optional add-on.

“Currently, very few motorists opt for this coverage due to a lack of awareness about its benefits,” he said.

The debate follows a Federal Court ruling in Chen Boon Kwee v Berjaya Sompo Insurance Bhd on Nov 14 that only passengers travelling for work purposes are entitled to compensation from a vehicle’s insurer for injuries sustained in an accident.

Justice Vazeer Alam Mydin Meera, who delivered the court’s unanimous ruling, said Section 91(1)(b)(bb) of the RTA protects third-party accident victims travelling in an insured vehicle for work purposes.

“Any passenger travelling pursuant to his employment is intended by Parliament to be a ‘third party’ which the RTA protects,” said Vazeer.

Chen, a passenger in a car owned by his wife, Tan Saw Kheng, and driven by his colleague, Masri Tamin, sustained injuries when the vehicle collided with a lorry on the Pagoh-Yong Peng highway on June 15, 2015 while on work purposes.

Chen had previously won a RM200,000 judgment against the vehicle’s owner in the Batu Pahat sessions court and sought to enforce it against Berjaya Sompo, the insurer.

However, Berjaya Sompo sought to disclaim liability for the judgment because the policy did not cover members of the vehicle owner’s household.

Lawyer KN Geetha said the annual premium for this additional coverage was small and would spare vehicle owners from many problems should their passengers sue for injury or death.

She said the premium varies based on factors, such as the vehicle’s manufacturing year and engine capacity.

“Still the premium is affordable, but many do not buy this additional policy as it is optional,” she said. - FMT