6.4 Motor Claim Procedures and OD KFK

Study Focus

Accidents must be reported to police within the statutory period. Eligible OD KFK claims preserve NCD while using the own comprehensive insurer.

Motor Claims Procedures

Following a motor collision, the policyholder must comply with both statutory obligations and contractual policy terms to preserve their right to indemnity.

Immediate Post-Accident Duties

1. Exchange Particulars: Collect the other driver's name, identification card (IC) number, telephone number, vehicle registration number, and motor insurance company details.
2. Document the Scene: Photograph the position of the vehicles, registration plates, road markings, surrounding traffic conditions, and visible damages before moving the vehicles.
3. Lodge a Police Report: Under the Road Transport Act 1987, all drivers involved in a road traffic collision must lodge a formal police report at the nearest traffic police station within 24 hours of the accident.
4. Notify the Insurer: Submit written notification and claim forms to the insurer within the policy's stipulated notice window (typically within 7 working days).

The Three Primary Claims Channels

                         +-----------------------+
                         | MOTOR VEHICLE ACCIDENT|
                         +-----------+-----------+
                                     |
        +----------------------------+----------------------------+
        |                                                         |
+-------v-------+                                         +-------v-------+
| POLICYHOLDER  |                                         |  THIRD PARTY  |
|   AT FAULT    |                                         |   AT FAULT    |
+-------+-------+                                         +-------+-------+
        |                                                         |
+-------v-------+                               +-----------------+-----------------+
|  OWN DAMAGE   |                               |                                   |
|   (OD) CLAIM  |                       +-------v-------+                   +-------v-------+
| - NCD lost    |                       | OD KNOCK-FOR- |                   |  THIRD PARTY  |
| - Excess paid |                       |  KNOCK (KFK)  |                   |    PROPERTY   | 
+---------------+                       | - NCD kept    |                   |  DAMAGE (TPPD)| 
                                        | - Check excess|                   | - Slow process| 
                                        +---------------+                   +---------------+

1. Own Damage (OD) Claim

An Own Damage claim is submitted by a Comprehensive policyholder directly to their own insurer for collision, self-damage, or hit-and-run incidents where no third party can be held liable:

• Consequences: The policyholder's NCD resets to 0% at next renewal, and all applicable excesses (compulsory, voluntary, schedule) are deducted from the final repair settlement.

2. Own Damage Knock-for-Knock (OD KFK) Claim

An OD Knock-for-Knock claim is a streamlined procedure developed under the PIAM Knock-for-Knock Agreement. It allows an innocent party to repair their vehicle quickly through their own comprehensive insurer while enjoying the financial protections of a third-party claim.

• Crucial Benefits:
  • Rapid vehicle repair without prolonged disputes with an external insurer.
  • The innocent policyholder retains their NCD when the claim meets the agreement and policy conditions.
  • Applicable excess may still be paid initially and claimed from the at-fault third party's insurer. NCD preservation does not automatically waive every excess.
• Prerequisites for an OD KFK Claim:
  • The accident involves an identifiable third-party vehicle;
  • The third-party vehicle is insured by a licensed general insurer in Malaysia;
  • Official police investigation findings conclude that the third-party driver was 100% at fault (or the third-party insurer formally admits full liability); and
  • There is no death or bodily injury claim involved, and the vehicles and insurers fall within the agreement. Certain passenger-for-hire vehicles are excluded; do not infer eligibility solely from police findings.

Behind the scenes, the innocent driver's insurer pays the workshop and recovers the full payout directly from the at-fault driver's insurer via inter-company subrogation.

3. Third Party Property Damage (TPPD) Claim

A TPPD claim is lodged directly against the at-fault driver's insurance company. It is required when the innocent victim carries only a Third Party or TPFT policy and cannot make an Own Damage claim:

• Challenges: TPPD claims typically experience longer processing times, requiring independent adjuster inspections, liability negotiations between insurers, and potential disputes regarding vehicle downtime and betterment.

The Principle of Betterment

When an older vehicle (typically exceeding 5 years of age) undergoes accident repairs, replacing damaged parts with brand-new original franchise parts places the vehicle in a better physical condition than it was immediately prior to the collision. Under the fundamental insurance principle of indemnity, an insured cannot profit from a loss.

To prevent unjust enrichment, the policyholder is required to contribute a standardized percentage toward the cost of the new replacement parts. This financial contribution is known as betterment.

Betterment applies strictly to the cost of new original replacement parts; it is not levied on repair labour charges or towing fees.

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The PIAM Approved Repairers Scheme (PARS)

The PIAM Approved Repairers Scheme (PARS) was established by the General Insurance Association of Malaysia to regulate motor vehicle repairers and standardize repair practices nationwide.

Key Objectives of PARS

• Quality Assurance: Ensures workshops possess certified hydraulic chassis alignment systems, modern paint-baking spray booths, computerized diagnostic scanners, and qualified mechanics.
• Cost Containment & Transparency: Encourages computerized repair estimates and consistent repair methods so that labour and parts costs are assessed fairly.
• Anti-Fraud Control: Reduces fraudulent insurance practices, including staged collision rings, inflated repair invoices, and unauthorized substitution of second-hand or imitation components.
• Workmanship Warranty: Approved workshops give customers a warranty on insurance-funded repair work; check the warranty period stated by the insurer or workshop.