Scenario:
Mr. Lam's and Mr. Chan's cars collided in a car accident. It was proved that Mr. Chan was liable for the accident. Mr. Lam asked for compensation for the damage to his car from Mr. Chan's insurance company (ABC Insurance Company). However, ABC Insurance Company refused to settle the indemnity – the reason being that Mr. Chan had not paid the third party property damage excess to them.

Question:        
Does ABC Insurance Company have the right to refuse payment of the third party property damage compensation to Mr. Lam on the grounds that Mr. Chan has not settled the excess to them? 

Answer:        
The excess is simply a deduction of an agreed amount from the payment which the insurer is obliged to make to indemnify the insured. In the absence of a specific provision in the policy to the effect that payment by the assured of the excess amount is a condition precedent to the insurer's obligation to pay, insurers are not entitled to insist upon payment of the excess before they provide the indemnity.

In the above scenario, ABC Insurance Company does not have the right to decline Mr. Lam's claim unless the motor policy contains a provision which renders the payment of third party property damage excess by Mr. Chan a condition precedent to ABC Insurance Company's obligation to make compensation.

We, at MSIG, aim to provide high-quality service to our valuable customers. If you are unsure of proper rights under motor policies, please contact us. We are always there to help.

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