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Case Review: Insurance
Summary of some of the decisions made by the Mediators on some of the complaints received by FMB.
This summary is for information only and should not be used for other purpose.
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FMB/GI 0545 - Whether Insured is Bound by Terms & Conditions of Policy
The insured purchased a Contractor's All Risk policy and a Cover Note was issued on 10.7.2004. The policy was issued on 19.7.2004 but was only delivered to the insured on 28.7.2004.
The insured submitted a claim for indemnity for the damages due to collapse of slope which occurred on 24.7.2004. The insurers declined the claim on the ground that the insured had failed to take the necessary loss prevention measures prior to the commencement of construction as required by the Vibration, Removal or Weakening of Support Clause stipulated in the policy.
The insured maintained that he was not bound by the condition as the document containing the condition was sent to him only after the conclusion of the contract.
The Cover Note which was issued to the insured on 10.7.2004 provides as follows:-
"The cover hereby granted is declared and agreed to be subject to all terms, conditions and endorsements of the company's standard policy form for this class of insurance"
In Chop Eng Thye v Malaysian National Insurance Sdn Bhd [1977] 1 MLJ 161 the court held that when a Cover Note expressly allows an insurer to incorporate the terms and conditions of the insurers' standard policy, the cover note is governed by those terms and conditions and the parties are bound by those terms and condition.
Since it is clearly stated in the Cover Note that the cover is subject to the terms and conditions of the insurers' standard policy, the parties to the contract are bound by the terms and conditions stipulated in
the policy. Based on the said authority the Mediator confirmed the insurers decision in repudiating liability on the claim.
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