Utmost Good Faith Binding Between Insured And Insurer Part V

Utmost Good Faith Binding Between Insured And Insurer Part IV

Two policies cover the same consignment, small claim response, but the insurer rejected bigger sun insured claim.  The story of the insurer not following the Utmost good Faith rule by the insurer.

In Malaysia, it is common for the insured or a transporter to protect themselves by purchasing Good In Transit policy even though the shipper did cover either CIF or FOB. The reason being the logistic company often being sued by a shipper for negligent of carrying their good.

2 Policies

One of my clients had been with me for several years.  Every year the insurer issued the insured name as   XXXX Logistics and nominated sub-contractor on 19 July 2000 for RM250,000.00 each and every loss for 1st policy.

They secured another big contract carrying handphone chip from a manufacturer. Another insurance with the inception date from 1 Nov 2000 for RM500,000.00 for each and every loss with the insured name as XXXX Logistics and YYYY Manufacturer., F.T.R.R.& I. for 2nd policy.

A daylight theft

On 23 March 2001, I received a call from the CEO of the XXXX Logistics.

” Mr. my vehicle no 123 was stolen along with the good around RM950,000.00. It parked at NS Highway rest station 2 cars lot away from the police patrolling car during the Friday prayer time. The driver went to answer his natural call. The lorry vanished in 10 minutes later.  A daylight theft. What shall I do now?” He panicked

” Calm down and relax, tell your driver to make a police report at the nearest police station. I will take care the rest.  Do not worry you had the cargo insurance.” I calmed him down.

We proceed with the claim.  To our horror, the insurer rejected the claim for 2 reasons.

Reject claim

2nd policy, ” Warranted carrying land vehicle must not be left unattended at any time.”

1st policy, YYYY Manufacturer was excluded from that policy.

Wasn’t it the biggest joke in my insurance career?

I did my best to appeal on behalf of my client to the Bank Negara Insurance Mediation Bureau. The insurer replied to my client they only settle for the small claim amount on the 1st policy. i.e RM250,000.00.  After realizing from other sources, the insurer terminated my agency contract with them.

Like adding fuel to the fire, when my client filed to claim the RM500,000.oo with a local prominent lawyer. The insurer canceled the 2nd policy with effect from 3 June 2001.  This policy is deemed to canceled with a refund of the pro rata premium. Did the insurer carried out Utmost Good Faith Binding Between Insured And Insurer Part IV?

The lawyer after checking all my qualification, she asked me to be an expert’s opinion for appearing in the court.

Court Case

In the court, the defendant’s lawyer asked me ” Mr, are you an agent or broker for XXXX Logistics”

To the amused of everyone present in the court.

The Judge said, “Mr. is representing the insured, he is a broker.”


” The same event, the same driver, the same consignment, the same time, the same logistics and the same manufacturer, the same insurer, the same broker, the same location, the same theft, why the insurer does not apply the same treatment”  I argued my point out.

After hearing the defendant lawyer congratulated for winning the case.

A  palm oil lorry tanker rammed downhill causing very severe impact damage to the front portion of the house beside, the main road. Whom to claim for damaged in my coming post?.

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Utmost Good Faith Binding Between Insured And Insurer Part V 1



8 replies to “Utmost Good Faith Binding Between Insured And Insurer Part V”

  1. I think you need to be careful with any type of insurance. We had to fight our corner with our house insurers, who replaced a broken piece in the toilet first time around, and when it broke again, they refused to act initially saying they should never have obliged in the first instance. Luckily we had the job completed, but we had to put our foot down, but had to pay extra. Sometimes there is so much small print to read when taking up insurance policies. A daylight robbery, as you mention!!

    1. Thanks for your reading and comment. A simple rule when you renew your house insurers, make sure no exclusion broken piece in the toilet. All dealing must be in black and white, no oral communication with them. All Important letters to them must be chop and signed by the insurer’s staff or by Registered post.

  2. This is interesting. Thanks for sharing.

    But where can I find the previous parts? There isn’t any clear link to them on this page…

    1. thanks for the comments. Utmost Good Faith Binding Between Insured And Insurer Part IV
      Utmost Good Faith Binding Between Insured And Insurer Part III
      Utmost Good Faith Binding Between Insured And Insurer Part II
      Utmost Good Faith Binding Between Insured And Insurer. or you can http://yesnoclaim.com/ and scroll down to read the previous post. If you still some problems, pease let me know.

  3. It is crazy how many insurance companies work these days. You assume you are covered only to find out that you not because of some tiny loophole that was intentionally placed in there for the sole purpose of you over looking it and them not having to pay out. Interesting read!

    1. When I study the 1st year insurance course, The 1st thing the insurer always deny liability. If you read through the insurance policy wording, one sentence could be over 100 words just to confuse and mislead the public. You have to be smarter than the underwriter and claim specialist.thank for your comment.

  4. Insurance can be a backstabbing industry and having a good faith binding between the insured and insurer is an extremely valuable relationship to have. This has been a great series and thanks for all your information!

    1. Thanks for reading this article and your valuable comment. Both insured and insurer must play their role in imparting their own information, not biting around the bushes.

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