KUALA LUMPUR, Dec 30 — There is no clause in standard insurance agreements that would preclude compensation payments in the event a "state of emergency" is declared, DAP MP Tony Pua said.

The federal DAP lawmaker said that Prime Minister Datuk Seri Najib Razak’s explanation that an emergency would absolve insurance firms of liability had prompted him to review several vehicle and home insurance policies commonly available.

According to Pua, his review found that standard vehicle insurance already states that damages will not be indemnified if any loss or liability is directly or indirectly caused by natural disasters like floods.

"Hence, given the above exclusion, it means that vehicles damaged by the massive flood would not be indemnified anyway (unless additional flood cover was purchased), regardless of whether the state of emergency is declared!" he pointed out in a statement late last night.

Vehicle insurance also does not cover damages caused by war or invasion and other similar occurrences such as rebellions, mutiny, strikes or riots, Pua said, noting that a state of emergency does not fall under any of these categories.

Property insurance agreements have similar exclusion terms, he said.

Quoting an example, Pua said that standard agreements stipulate that the insurance firm would not pay in the event of "war, invasion, act of foreign enemy, hostilities, or warlike operations (whether war be declared or not), civil war; mutiny, riot, military or popular uprising, insurrection, rebellion, revolution, military or usurped power, martial law or state of siege or any of the events or causes which determine the proclamation or maintenance of martial law or state of siege".

"Under such circumstance, if 'martial law’ was declared, then perhaps the insurance is invalidated," the lawmaker said.

"However," he added, "A ‘state of emergency’ is certainly completely different from ‘martial law’."

Property insurance is also invalidated if any destruction is “caused by cessation of work, or by confiscation, commandeering, requisition or destruction of or damage to the property by order of the Government,” Pua said.

"Surely the government is not seeking to declare a state of emergency to ‘destroy’ the rakyat’s properties?" he asked.

The Petaling Jaya Utara MP asked if Najib had been misled by his advisors into believing that declaring an emergency over the flood crisis would affect the compensation payouts by insurance firms, and urged the prime minister to reconsider his decision.

He said in light of the thousands of Malaysians affected by the floods, Putrajaya should consider declaring an emergency to enable the mobilisation of the entire government machinery to mitigate the disaster.

Despite the massive flooding that has so now forced over 200,000 Malaysians from their homes in six states in the peninsula, Najib said on Saturday that there was no need to declare an emergency.

"If the government announces an emergency, the implications that will arise include the insurance companies being absolved from paying compensation... and compensation arising from damages to property and vehicles is enormous.

"That's why if we declare (an emergency), this means it includes the 'force majeure' category, and insurance companies need not pay compensation (in this case)," he was quoted saying in a news report by Bernama.