Client Alert Lai Leong Peng Insurance

What Happened

Lai Leong Peng insured her Porsche 911 GT3 RS for its full market value of RM1.225 million with Pacific & Orient Insurance Co Bhd. After an accident, the insurer assessed the car as beyond economic repair and offered to pay the sum insured, less the policy excess. Before payment was made, the insurer backtracked — first demanding that Lai settle customs duties on the Langkawi‑registered vehicle, and later alleging she had used a false address. The High Court rejected both defences. It found the customs‑duty demand was “misguided and in bad faith,” the address was genuine, and the insurer had never repudiated the policy. Judgment was entered for RM1.245 million, plus towing and storage costs, with interest.

Why It Matters

• An insurer cannot add conditions after a loss. Once a valid claim arises, the policy must be honoured as written. Introducing new demands — such as requiring the insured to pay customs duties — is a breach of contract.
• Repudiation must be timely and genuine. If an insurer suspects misrepresentation, it must act promptly under the law. Raising it only after a settlement offer has been made will be viewed as an afterthought.
• Documentary evidence is decisive. The court relied on confirmation from the Land Office, the Road Transport Department (RTD), and Customs to verify the insured’s address. Policyholders who keep clear registration and correspondence records hold a critical advantage.

What You Should Do Now

1. For insurers: Review declinature and settlement procedures. Ensure that once liability is accepted, no new conditions are introduced. Any suspicion of misrepresentation must be investigated and acted upon before a settlement offer is made, not after.
2. For policyholders: Document everything at claim stage. Keep copies of all correspondence, policy documents, registration records, and settlement offers. If the insurer changes its position, those records will form the foundation of any challenge.
3. For in‑house counsel: Audit policy wordings and claims protocols. Confirm that policy terms are clear on when a vehicle is considered beyond economic repair, and that claims handlers are trained not to impose extra‑contractual requirements.
4. Treat any post‑loss demand for additional payment or documentation with caution. If it is not rooted in the policy or law, it may be viewed by a court as bad faith.

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