According to Clause 31 of the Insurance Contracts Law 1981, the limitation period for insurance benefit claims is three years from the date on which the insured event occurs (although the legislature is considering extending the limitation period for such claims to four years). This period is shorter than the seven-year general limitation period set out in the Limitation Law 1958.
The acknowledgement by an insurer that the insured has a right to receive insurance benefits may extend the period of limitation.
On July 25 2001 Ahmad Badarna was involved in a car accident. At the time of the accident, the plaintiff was insured under a personal accident policy issued by the Israel Phoenix Insurance Company Ltd, which included coverage for disability. Following the accident, the plaintiff demanded insurance benefits from the insurer for his disability which, according to him, prevented him from working for a period of 30 months.
On December 28 2003 the plaintiff was examined by an orthopedic expert appointed by the insurer. Based on the expert's opinion, the insurer declined coverage under the policy, stating that the damage caused fell within the deductible.
Following correspondence exchanged between the parties, on July 20 2006 the insurer accepted the plaintiff's offer that he be examined by an expert of occupational medicine, who would also act as an arbitrator between the parties. However, the parties did not reach an agreement regarding the identity of the expert and therefore no such expert was ever appointed.
On April 21 2009, eight years after the insured event, the plaintiff filed a claim against the insurer before the Haifa Magistrates Court.(1) The insurer filed a motion to dismiss the claim in limine (ie, before hearing the main issue), due to limitation.
The plaintiff argued that Clause 9 of the Limitation Law applied and therefore the limitation period should be prolonged and the claim should not be dismissed. Clause 9 provides, among other things, that if the defendant has admitted - either in writing or in court - that the plaintiff's right exists, the limitation period will begin on the date on which the admission was made. An act of acknowledgement of part of the right will be considered as an admission of the rights.
The court ruled that the Limitation Law provisions, including Clause 9, apply even in cases where the limitation period has been shortened, as under the Insurance Law. The court further ruled that the parties' negotiations continued beyond the limitation period set in the Insurance Law. During negotiations the insurer acknowledged the plaintiff's right for insurance benefits, but argued that his disability level fell under the required disability level specified in the policy. Furthermore, in July 2006, after the limitation period had allegedly expired, the insurer agreed in writing to appoint a medical expert that would act as arbitrator.
The court concluded that the insurer's acts constituted an admission under Clause 9. As the claim was filed in April 2009, less then three years after the insurer's admission, the limitation period had not ended.
For further information on this topic please contact Aviv Klepner at Levitan, Sharon & Co by telephone (+972 3 688 6768) or by fax (+972 3 688 6769) or by email ([email protected]). The Levitan, Sharon & Co website may be accessed at www.levitansharon.co.il.
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