You have just taken ownership of a new car and was showing to your friends. As a new car owner, you invite your friend to test drive your car. Each of your friends take turn to drive it around, and you are so proud. You did not sit in the car when your friends took it for a round. After few round of driving, you too forgotten who actually is driving your car. Half and hour later, you realize that it has taken longer than expected. You start asking around who is driving your car? You then realize that a friend of your friends, whom you also know, but not too closed has drove off your car and cant be contacted now.
You started to get worried after few hours of not able to contact him, and you decided to make a police report for a stolen car. You too contacted your insurance agent to lodge a claim, since your comprehensive insurance cover loss from theft.
However, you are shock to be told that your insurance does not cover for such loss as it was not stolen, but a case of breach of trust. You are deceived by your friend, and you willingly hand-over your keys to other party whom you trusted. Your insurance policy has this exclusion clause that read:
Cheating or Criminal Breach of Trust
Any loss or damage, including theft, caused by or attributed to the act of Cheating or Criminal Breach of Trust by any person
So, your insurance will not cover for such losses. Below is a actual case study that was brought to OFS :
The participant’s claim for loss of his vehicle was repudiated by the takaful operator on the ground that the claim falls within the exclusion of the
certificate’s provision, i.e. the loss was due to ‘Cheating/Criminal Breach of Trust’ as defined in the Penal Code.
INVESTIGATION AND FINDINGS
It was observed that:
i) The takaful operator’s decision was based on the terms and conditions of the certificate which states as follows:
– ‘We will not pay for the following losses:
(ix) Any loss or damage, including theft, caused by or attributed to the act of cheating or criminal breach of trust by any person.’
– Criminal breach of trust is defined in paragraph 8 of Section F of the certificate as follows:
Criminal breach of trust
This follows the meaning as defined under Section 405 of the Penal Code:
Whoever, being in any manner entrusted with property, or with any dominion over property, either solely or jointly with any other person dishonestly misappropriates, or converts to his own use, that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits ‘criminal breach of trust.’
ii) Findings by the loss adjuster:
– The insured vehicle was handed over by the participant to his friend, Mr A, voluntarily when he went for holiday during Hari Raya.
– Mr A subsequently surrendered the insured vehicle together with the car key to Mr C for safekeeping as he also went for holiday.
– Mr A realised that Mr C had absconded with the vehicle after he returned from holiday as he was unable to locate Mr C and the insured vehicle.
– Mr A and Mr C were known to each other as ‘friends’ for some time.
Based on the facts and circumstances of the case, the Case Manager was of the view that the takaful operator had repudiated the claim in accordance with the terms and conditions of the certificate on the following grounds:
i) The loss of the insured vehicle was not a theft as the vehicle was voluntarily handed over to a Mr C. Mr A had committed a breach of entrustment by surrendering the insured vehicle and its key to Mr C who absconded with the vehicle.
ii) The participant failed to establish that the loss was a peril that is payable and not excluded by the certificate. Based on the investigation carried out by the loss adjuster, the loss is attributable to criminal breach of trust which is an event excluded by clause 1(b)(ix) of Section A of the certificate.