INSURANCE LAW by HELMI ZAHARIN

1. HELMI BIN ZAHARIN 2010950061 LAW478 (A)
PREPARED FOR: PM RAMLAH MOHD NOH
Question 2 :
Aloo was absolutely drunk whilst driving along Jalan Klang Lama. At the junction of Jalan Templer he
swerved to avoid a monitor lizard crossing the road. As a result, he lost control and knocked into the
divider of the road. Aloo escaped unhurt but his pick-up van was badly damaged. The local police
have issued Aloo with two traffic summonses, one for driving under the influence of alcohol and the
other for careless driving.
Aloo had bought a comprehensive motor policy from Big Motor Insurers Bhd that covered “damage
to property of the insured as well as bodily injuries or death caused by an accident. He had also
bought a Personal Accident Policy from Semua Insurance Bhd. Aloo submitted a claim for the
following:
a) Damage to his pick-up van
b) Bodily injuries that were in fact sustained by him in a football game of the same evening.
Advise Big Motor Insurers Bhd and Semua Insurance Bhd on the claims submitted by Aloo.
The issue in the problem above is that; whether the claims submitted by Aloo to Big Motor Insurers
Bhd and Semua Insurance Bhd will succeed?
In the problem above are Aloo as the insured person and policies holder of two policies, which (1.)
motor insurance policy by Big Motor Insurers Bhd and (2.) personal accident policy by Semua
Insurance Bhd.
The motor insurance policy subscribed from Big Motor Insurers Bhd covers damage to property of
the insured as well as bodily injuries or death caused by an accident. And the second personal
accident policy subscribed from Semua Insurance Bhd, it does not state its coverage, however
standard personal policy normally covers death, permanent total disablement or loss of or use of
limb.
In the above mentioned situation, Aloo suffered loss. His pick-up van was badly damaged result of
knocking into a road divider when he tries to avoid a monitor lizard crossing the road. He was driving
under the influence of alcohol, i.e. he was highly intoxicated.

2. HELMI BIN ZAHARIN 2010950061 LAW478 (A)
PREPARED FOR: PM RAMLAH MOHD NOH
First, we shall take a look with the construction of the policy. An ‘accident’ does not include
something that happens naturally. The term ‘accident’ covers an event which happens unexpectedly
or fortuitously. In Mills v. Smith, a householder’s liability policy covered damage to property caused
by accident. The root action of a tree in the insured’s garden caused the foundation of his
neighbour’s house to fracture. The insured, which was as a result made liable to the neighbour for
damages, claimed under his policy. It was held that the loss was the result of an accident as what
happened was both unexpected and unintended.
Now that we have looked at the construction of the policy, next we shall proceed with the causation
of loss. The active, efficient cause that sets in motion a train of events which bring about a result,
without the intervention of any force starting and working actively from a new and independent
source as stated in the case of Becker, Gray & co v. London Assurance Corporation.
This is vital in determining whether the insured’s loss is covered by his policy. This is because the
insurer is only liable for a loss which is proximately caused by the insured event, this is a fundamental
principle, and it is a question of fact.
There must be direct link between cause and result. That, in the problem above, the cause is, Aloo
was driving off his pick-up van whilst he was absolutely drunk. And the result is him knocked with
the road divider when he tries to avoid a monitor lizard crossing the road. Hence his pick-up van
badly damage.
The active and efficient cause is a logical prediction possible as to what the next event in the train of
events will be. Usually, something causes the loss and made the event happen. It is easy to establish
the first cause and its result. However, a difficulty arises if there is some new force has intervened to
supersede the first cause as the event causing the loss. Therefore, we should apply the test of
causation. That we start with the first event, that in this problem, Aloo was highly intoxicated whilst
driving his pick-up van. And what is the next logical event to happen when one driving in the state of
drunkenness? If the answer leads to the next event, even after repeating this steps few times, then
the first event is the proximate cause of the loss.
However, if at some stage, there is no obvious connection between one event in the chain and the
next event, then there is break in the in the chain of causation, something else is the cause of the
loss. As in the situation above, it could be argued that, if it were not cause by the monitor lizard
crossing the road, Aloo would not meet with the accident. Yes, he would not meet with the accident;

3. HELMI BIN ZAHARIN 2010950061 LAW478 (A)
PREPARED FOR: PM RAMLAH MOHD NOH
provided that he is not in the state of intoxication, reasonable man would be easily avoid the
crossing monitor lizard.
Therefore, could Aloo claim succeed? The answer will be no. Since the accident was the result of his
negligent act. He was driving in the state of intoxication. Plus, he was issued with two traffic
summonses, one for driving under the influence of alcohol and the other for careless driving. It is an
offence for driving while you are in the state of intoxication.
When a loss under an insurance policy takes place while an insured is doing an illegal act, recovery
under the policy is barred by the rule of public policy. In Asia insurance Co. Ltd v. American
International Assurance Co. Ltd it was decided that it was against public policy to allow an insured to
recover an indemnity for a loss which took place while the insured was engaged in an unlawful
activity. The plaintiffs were insurers. The insured goods belonging to a firm called Bian Hoe Company
for $410,000. The plaintiffs reinsured the risk with the defendant company for $97,500. During the
currency of the policy, the insured premises were damaged by fire and the plaintiff paid out a sum of
$245,000 to the insured for the damage to their premises. The insurers sought to recover a sum of
$60,131 from the defendants under their reinsurance policy. The defendants disclaimed liability for
the loss. They contended that the plaintiffs were under no legal liability to indemnify the Bian Hoe
Company because the company had no license under the Municipal Ordinance and the Rubber
Dealers Ordinance to operate their smoke houses. In operating the smoke houses without a license,
the insured were committing an illegal and a criminal act.
Therefore Aloo first claim with Big Motor Insurers Bhd under his motor insurance policy will fail,
since the accident was the result of his illegal act, driving in the state of intoxication.
Now, will his second claim fail as well? The answer is yes. Under the principle tort of volenti no fit
injuria, if someone willingly places themselves in a position where harm might result, knowing that
some degree of harm might result, they are not able to bring a claim against the other party in tort
or delict. Volenti only applies to the risk which a reasonable person would consider them as having
assumed by their actions; thus a boxer consents to being hit, and to the injuries that might be
expected from being hit, but does not consent to (for example) his opponent striking him with an
iron bar, or punching him outside the usual terms of boxing. As in the situation above, Aloo sustained
bodily injury in a football game, bodily injury in a football game is very common, when there is
chances you being kicked or collided with other player.
Therefore, Aloo’s second claim for the bodily injuries sustained in a football game will also fail.