Important Note: This article is for general information and educational purposes only—not legal advice. It draws on the judgment of the Kuala Lumpur High Court dated 28 May 2026, as reported by Free Malaysia Today, New Straits Times, Says.com, and The Malaysian Reserve.
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What a RM1.245 Million Award Means for Policyholders and Insurers
The Kuala Lumpur High Court has recently ordered an insurance company to pay RM1.245 million to the owner of a totalled Porsche, after the insurer reneged on a promise to pay, introduced a new condition, and attempted to repudiate her policy.
The episode began in October 2022 when Lai Leong Peng’s high‑performance car, a Porsche 911 GT3 RS, was involved in an accident. Lai had insured her car for its full value of RM1.225 million with Pacific & Orient Insurance Co Bhd. Following the accident, the insurer assessed the Porsche as beyond economic repair (BER). Lai then lodged a claim, and in December of the same year, the insurer offered to pay RM1.225 million, less the policy excess. The policy stated that the insurer was contractually obliged to compensate the holder—based on the agreed insured value—if the vehicle was declared BER.
Before any payment was made, the insurer backpedalled. In June 2023, the company, through its solicitors, approached Lai with a new settlement offer. The condition: Lai paid the customs duty on the vehicle—which was registered in Langkawi under a tax‑free regime—failing which the insurer would settle the duty and disburse only the balance to her. Under the Langkawi duty‑free scheme, imported cars are exempt from customs and excise duties, but must be used primarily on the island.
Lai refused those terms and took the matter to court. She argued that neither the insurance policy nor Malaysian law required her to settle customs duties before receiving compensation.
The company raised misrepresentation and non‑disclosure in its defence, alleging that Lai had used a false Langkawi address to obtain customs duty exemption for her Porsche.
The case came before Justice Leong Wai Hong at the Kuala Lumpur High Court, who examined the insurer’s defences and ultimately found in favour of Lai. His ruling, delivered on 28 May 2026, ordered Pacific & Orient to pay the sum insured plus costs.
The Insurer’s Failed Defences
Pacific & Orient advanced two main grounds for refusing to pay. First, it demanded that Lai settle the customs duty on her Porsche. Second, it alleged that Lai had provided a false Langkawi address, amounting to misrepresentation.
The court rejected both. Justice Leong described the customs‑duty demand as “misguided and in bad faith” and found that it did not form part of the insurance contract. He also noted that the insurer had already accepted liability by classifying the car as BER and making a settlement offer, without raising any issue of misrepresentation or non‑disclosure at that time. Its later U‑turn was untenable.
On the misrepresentation claim, the court held that the alleged false address was, in fact, genuine. The Langkawi District and Land Office confirmed it existed and was traceable; both the Road Transport Department and the Royal Malaysian Customs Department had accepted it for the vehicle’s registration and had taken no enforcement action. Moreover, the judge pointed out that even if there had been misrepresentation, the insurer should have acted under Section 19 of the Contracts Act 1950 to repudiate the contract. It never did. Even the insurer’s own witness conceded that the policy had not been repudiated. Having already offered to pay, the company could not later invent new grounds to escape liability.
The Court’s Decision
Having rejected both defences, Justice Leong Wai Hong entered judgment in favour of Lai. The court awarded her a total of RM1,245,000, which comprised the sum insured under the policy and costs. Additionally, the insurer was ordered to pay towing charges and storage fees. The court also ordered that the insurer pay interest at 5% per annum on the judgment sum from the date the suit was filed until full settlement.
The insurer has since filed an appeal to the Court of Appeal.
Practical Takeaways
- An insurer cannot rewrite the policy after a loss. Once a valid claim arises, the insurer must honour the contract. Adding new conditions—such as a demand that the insured pay customs duties—is a breach.
- Repudiation must be exercised in good faith and in a timely manner. If an insurer suspects misrepresentation, it should act promptly under the law, not after it has already offered to pay.
- The courts will enforce insurance contracts strictly. If the policy is valid and the loss is covered, the insurer will be ordered to pay the sum insured, together with costs.
- Policyholders should not be deterred by technical or unrelated objections. Lai’s case shows that even when an insurer raises regulatory or administrative issues, the court will examine whether those issues genuinely affect the validity of the contract.
- Documentary evidence is crucial. The court relied on confirmation from the Land Office, RTD, and Customs to find that Lai’s address was legitimate. For policyholders, keeping clear records of registration and correspondence can be decisive.
A Closing Thought
Lai bought a policy to protect herself against exactly the kind of loss she suffered. Instead of receiving the promised compensation, she was met with a shifting set of demands and an accusation of dishonesty. The High Court’s decision is a straightforward reminder: an insurance policy is a promise, and when an insurer breaks that promise, the courts will hold it to its word. For policyholders and insurers alike, the case reaffirms that the law expects both sides to act in good faith—and that breach of that duty comes at a price.
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