What general rules, requirements and procedures govern the filing of insurance claims?
According to the Insurance Contract Law 1981 (the Contract Law), insureds must:
- inform their insurer about an insurance event as soon as they become aware of the event; and
- submit all of the information and documents necessary to enable the insurer to review its liability.
Insurers must notify insureds within 30 days of receiving the first notification regarding a claim. Insureds which delay submitting information could delay their insurer’s response.
Insureds who receive a late or unsatisfactory response from their insurer may file a court claim; the type of court will depend on the claim amount.
What is the time bar for filing claims?
The time bar for filing non-liability insurance claims is three years from the insured event. In liability claims, the claim is not time barred until prescribed by the insured’s claim against the insurer (ie, at least seven years or in case of a minor, the time bar is calculated from the date on which they turn 18 years of age).
Denial of claim
On what grounds can the (re)insurer deny coverage?
An insurer can deny coverage in case of a breach of the insurance contract. For example:
- fraudulent misrepresentation, either by submitting fraudulent information in the proposal form or concealing essential information relating to the circumstances of the claim;
- fraud in submitting the claim – only if such fraud is proven can the insurer deny the claim in full; in all other cases, insurers are not allowed to void the contract;
- late notification – the insurer can deny a claim based on late notification only if it can prove that the late notice caused them a loss; or
- breach of security measures – only if the insurer can prove that the breach is the direct cause of the insured’s event. In such case, the insurer‘s remedy will be proportional payment of insurance benefits in the same proportion as the premium for aggravated risk that would have been charged by a reasonable insurer compared with the premium that was actually charged.
If the alleged fraudulent activity relates to the circumstances of the claim, the insurer must prove that the fraud was intentional. Negligence or omissions in describing the circumstances of the event on the part of the insured will not be enough to reject the claim entirely.
What rules and procedures govern the insured’s challenge of the denial of a claim?
Where a claim is denied, the insured can approach the courts or the office of the controller of capital markets, insurance and savings.
If the claim is for a small amount (ie, up to NIS30,000 (approximately $7,500)), insureds can approach a small claims court, where no attorneys are allowed. For larger claims, insureds must file a claim in a regular civil court with the assistance of an attorney.
In addition, insureds may approach the controller by filing a complaint against their insurer. The controller will usually not intervene if the case had been filed before a court.
Israeli procedural law permits class actions. Therefore, in case of a declination or behaviour that may influence many potential insureds, a claim can be filed in the form of a class action (eg, where an insurer does not pay loss of value in road accidents which damage cars).
On what grounds can a third party file a claim directly with the (re)insurer?
Israeli law allows a third party to bring a direct action against a liability insurer of the tortfeasor (Section 68 of the Contract Law) in all circumstances.
Are punitive damages insurable?
No Israeli law or court ruling prohibits insuring punitive damages. The topic was never tested in Israel as the courts do not impose punitive damages. That said, such damages will usually be excluded under terms which do not form part of a private line type of policy.
What regime governs (re)insurers’ subrogation rights?
Clause 62 of the Contract Law stipulates that Israeli insurers have the right of subrogation against any tortfeasor. This right is automatically transferred to insurers after they have paid insurance benefits to an insured. However, when exercising their right, insurers cannot jeopardise any rights of an insured (for additional compensation over insurance benefits).
A recent Supreme Court precedent ruled that non-admitted insurers which cover an Israeli risk cannot use Clause 62 for a subrogation claim. Such non-admitted companies require insureds to file a claim on their behalf.