Israel has a no-fault system for road accident compensation under the Road Accident Victims Compensation Law. According to the law, drivers must have a valid insurance policy that covers all bodily injuries. This mandatory insurance system ensures that drivers, passengers and any third parties receive compensation when injured in a road accident. Further, it provides compensation to pedestrians who have been hit and injured by an insured motor vehicle.
The Jerusalem District Court recently dismissed a liquidator claim against an insurer based on a claims-made policy that had been issued 20 years previously and expired four years later. The court stated that it could not accept a claim filed 16 years after a company had stopped paying its claims-made insurance premiums as doing so could create a situation in which a policy never ends, which would be unreasonable.
A recent Tel Aviv Economic District Court case examined the issue of an insured's disclosure duty versus an insurer's obligation to conduct independent investigations. The court determined that an insured has a broad disclosure obligation during the underwriting of a policy, and that an insurance contract is subject to duties of good faith and fairness. Therefore, an insurer is entitled to rely on the information provided to it by an insured and is not obliged to conduct additional independent investigations.
In 2003 the commissioner of insurance ordered the dissolution of Avner Insurance Co, a joint operation of which every Israeli insurer that insured bodily injury caused by road accidents was a member. This created significant interest in the Israeli motor vehicles bodily injury market. Now each insurer must find its own way to protect itself against such risk.