would driving with an expired licence breach your insurance?

There has been some misunderstanding in this subject matter. Many people thinks that if your driving licence is expired, your motor insurance stop coverage too. This is mainly due to the policy wording in the insurance policy that says:

“Unlicensed Drivers – There is no cover under this Policy if You or Your Authorised Driver do not have a valid driving licence to drive Your Car.”

Many people would interpret that an expired driving licence is not valid, thus breach the insurance policy.

However, there is a case that was brought to FMB attention (FMB/GI0086)

The insured vehicle was involved in an accident on 16 Nov 2004. A police report was lodged by A stating that he was the driver of the insured vehicle at the material time of the accident. In the course of the adjuster’s investigation into the claim it was revealed that the actual driver at the time of the accident was B. B has requested A to lodge the police report as his (B) driving licence had expired. The insurers declined the claim on the ground of false police report.

There would be no effect on the insurance claim even if the name of the actual driver (B) was stated in the police report since the actual driver had an expired driving licence and driving with an expired driving licence is not a breach of policy condition (there is no evidence that he had been disqualified by the court from holding or obtaining a driving licence). On the authority of the Federal Court decision in Malaysian National Bhd vs Abdul Aziz Bin Mohamed Daud [1979] 2 MLJ29 the proviso on authorized driver imposed in the policy is not applicable to the insured driver in the natter under reference. Thus the insured would not receive any benefit from the act of the authorized driver in switching the identity of the driver. Having known the facts it is up to the police to charge the driver for any offence that he had committed but the offence does not have any effect on the insurance claim unless it also constitutes a breach of policy condition.

The real issue is whether a misstatement of the driver in the police report would justify the insurers in repudiating liability on the claim. The insurers received the adjuster’s report on 12 Dec 2004 and the statutory declaration of B on 31 Dec 2004 in which he admitted having driven the insured vehicle at the material time of the accident. Thus, when the insurers issued the decision on 24 Jan 2005 the full and true facts related to the matter as reported by the adjuster were within the insurers’ knowledge. The insurers were not misled into believing that it was A who drove the insured vehicle. The adjusters also reported that the accident was genuine and the damages to the insured vehicle were consistent with the circumstances of the damage.

On that circumstances the Mediator found the insurers liable to indemnify the insured for the damages to the insured vehicle.

So, in the above case, you will realized that driving with an expired licence would not breach your insurance. However, if your driving licence is only for motorbike, and you drive a car, that would breach your insurance, either expired or not.