QUESTION

Shahrukh, Salman and Amir are best friends. All of them has taken a different insurance policy from Good Insurance Berhad. Shahrukh bought a new van and took a motor insurance. He wrote in the form that the van was to be used for private purpose. However, he used the van for his food delivery business known as Nasi Daging Harimau Menangis. One day, while doing delivery, Shahrukh involved with an accident which caused severe damage to the van.

Salman who is a farmer owns a lorry which is used to transport his farm produce to the market. He had taken a third-party motor policy for his lorry which contains a clause exempting the insurer from liability for death of person carried in a vehicle other than a passenger carried by under the contract of employment. One day, while on the way to the market, Salman stopped and give a lift to hitch-hiker name John before both of them involved in an accident. Due to that, Salman suffered minor injury and John died on the spot.

Amir agreed to apply for life insurance which his wife, Kajol will benefit from the policy upon his death. He was told by Good Insurance Berhad that no insurance contract could take place until the first premium was paid. Unfortunately, before the first premium was paid, Amir suffered from heart attack and died.

Shahrukh, Salman and Kajol comes to you for advice as Good Insurance Berhad refused to pay the sum insured to them. Advise the parties involved on the validity of their insurance policy. Support your answer with the provision in the Financial Service Act 2013 and decided cases (if any).