Victim of drink-driving accident? Insurer must compensate by law

KUALA LUMPUR – In the past decade alone, over a thousand people in the country have been killed by road accidents involving drunk drivers.

Naturally, such cases have caught public attention, with many calling for harsher penalties for those driving under the influence, while others urge for a more effective compensation system for the victims’ families. 

There has also been some ambiguity over whether victims and their families would be compensated by the driver’s insurer, as many policies include terms and conditions that, if breached, render them null and void. 

These terms include driving under the influence of alcohol or drugs. 

Concerns have been raised that accidents caused by drink-driving may free motor insurance companies to repudiate cover in the event the third party – injured or killed – or next-of-kin are awarded compensation by the court. 

However, personal injury claims practitioner Kenneshwaran Kandiah told The Vibes that this is not the case. 

According to Kandiah, while it is common for exemptions, like in the event of drink-driving, to be included in the terms and conditions when signing for a premium, these are only enforceable against the insured (first-party driver).”

“What this means is that if the driver is drunk and crashes his car into a tree or a ditch without injuring any third-party individuals, then the insurance company can choose not to cover insurance, provided the term is included in the policy,” he said. 

Such terms, however, are not applicable when a third-party claim arises, pursuant to Section 95 of the Road Transport Act 1987, which obligates the insurers to cover the compensation, Kandiah explained. 

“The rationale behind this is that the third party doesn’t know head or tail about the first party’s mental or physical condition prior to the accident and therefore, acting as a social legislature, Section 95 favours the third party,” he said. 

Kandiah said in the event the insurer fails to address the third-party claim, the latter can appoint solicitors to lodge a civil claim for negligence. 

If the insurer still fails to fulfil the civil claim, the third party can then secure a court judgment against the first party (insured driver) and enforce the judgment on the insurer. 

“So, yes, the insurers must still pay for the compensation to the third party. The law is very clear, even if there are terms on drink-driving, that they do not apply to the third party,” he said. 

Scenarios allow insurers not to meet third-party claims

However, Kandiah pointed out that there are certain scenarios that allow insurance companies to obtain a court declaration for them to not pay compensation. 

These include instances where an accident with a third party involves an insured car that has been stolen, where the insured did not pay to renew the policy, or if the insured car has been sold but the full transfer of ownership has not been completed. 

Separately, he said Section 96 of the Road Transport Act also stipulates that the insurer may be entitled not to pay claims if the third party did not notify it of court proceedings within seven days or if the motor insurance policy has been cancelled by mutual consent before the accident. 

On calls for a no-fault liability vehicle insurance scheme to be introduced in Malaysia, Kandiah said this is not feasible, considering the population and high number of road accidents. 

He said the idea, modelled after New Zealand, had been debated in Malaysia previously but proved to be undesirable, as it would overwhelm the party in charge of claims beyond manageable. 

“The population in New Zealand is five million compared with 32 million in Malaysia. Between 2015 and 2019, New Zealand averaged 300 fatal crashes and 10,000 injury crashes per annum. 

“Malaysia, on the other hand, averaged 560,000 road accidents and 4,500 fatal crashes in 2019 alone,” he said.

Claim amount to be decided by judge

Speaking to The Vibes, lawyer S. Ravenesan said the amount to be compensated to a victim or next-of-kin depends on the judge who hears the case and several factors are to be taken into account. 

For drink-driving accidents that cause injuries, he said, the compensation would include the medical cost to treat the injured party. 

In the event the accident causes death, the judge would decide a reasonable compensation based on the victim’s last drawn salary, the number of children they have, their education and future fees, as well as their financial support for parents, among other things. 

Ravenesan is currently representing the family of Irwan Herman Kamarudin, who was killed in May last year after his car was rammed by another vehicle going against traffic driven by Teoh Kian Peng, who was allegedly drunk at the time. 

Teoh was charged under Section 302 of the Penal Code for murder on June 1, 2020, which carries the mandatory death penalty upon conviction. 

Concurrent to the criminal case, Irwan’s family is also pursuing a civil case to claim for compensation from Teoh’s vehicle insurance company. 

The case is supposed to be heard on June 22, although Ravenesan said it may be postponed to a future date due to the current pandemic and lockdown. – The Vibes, June 14, 2021