On 15 October 2018 the Israeli Supreme Court dismissed the appeal of the Hachshara Insurance Company and declined its allegation that it should be exempt from liability towards a third party when the insured drove the vehicle under the influence of alcohol.(1)
The Supreme Court determined that the standard policy for motor vehicle insurance is aimed at protecting the insured in regard to the insurer, and that the insurer's liability should not be narrowed and the damage caused by a driver who drove under the influence of alcohol should not be excluded from coverage.
On 19 January 2015 a chain accident occurred, where the vehicle driven by Israel Polikov hit the vehicle driven by Orly Anteby and, as a result, two other cars were also hit. Polikov's vehicle was insured by Hachshara and the other vehicles by other Israeli insurers.
In the criminal trial, Polikov was convicted upon his admission of traffic offences such as the failure to keep to a safe distance while driving, causing a road accident in which a person was injured and driving under the influence of alcohol.
Anteby, the other drivers and their insurers submitted a claim to the magistrates court against Polikov and Hachshara, which was accepted by the court. The magistrates court declined Hachshara's allegation for discharge from coverage due to the fact that Polikov was driving under the influence of alcohol when the accident occurred. The magistrates court determined that driving in a drunken state is not one of the standard policy's exclusions. The occurrence was accidental which brings it within the definition of an 'insured event' in the standard policy. In addition, the magistrates court declined Hachshara's allegation for reduced insurance benefits due to Polikov's contributory negligence.
Hachshara filed an appeal which was dismissed by the district court, and then requested leave to appeal to the Israeli Supreme Court. The Supreme Court granted leave and heard the appeal on its merits.
The Supreme Court dealt with three of Hachshara's allegations for full or partial exemption from liability under the policy, due to driving under the influence of alcohol thus causing an accident.
All Hachshara's allegations were declined by the Supreme Court, as summarised below.
How should the court interpret the absence of an exclusion for driving under the influence of alcohol? According to the exclusions in the standard policy, the insurer was exempt from liability when the insured drove the vehicle under the influence of dangerous drugs.
Hachshara alleged that this exclusion should be interpreted to include cases when the insured drove under the influence of alcohol, since there is no substantive difference between the two situations.
The Supreme Court examined other laws in this respect and concluded that when the legislature wanted to relate to the influence of dangerous drugs as well as to the influence of alcohol, it was done specifically and clearly.
According to the court, in the framework of the standard policy, the legislature's decision specifically not to include driving under the influence of alcohol as an exclusion was made deliberately. Such an exemption cannot be added to the policy by way of interpretations.
This determination is in line with the standard policy's purpose – the legislators sought to protect the insured from the insurer's preferred power.
Does driving under the influence of alcohol constitute the intentional causing of an insured event? Hachshara alleged alternately that it is exempt from its liability under the policy due to Clause 26 of the Israeli Insurance Contract Law which states: "Where the Insured event was caused by the Insured or by the beneficiary intentionally, the Insurer is exempt from liability."
Hachshara alleged that an insured who drives a motor vehicle under the influence of alcohol can expect at the highest certainty that an accident will occur.
The Supreme Court determined that the question as to whether an insured intended to cause an insurance event is a factual question which has to be decided in each case according to its merits.
The magistrates court heard the testimonies and inspected the evidence filed and concluded that Polikov did not intend to cause the accident. The appellate court did not intervene in factual and reasoned conclusions of the lower instance.
Does the insured's negligence justify full or partial exemption of insurer's liability? Hachshara alleged that contributory blame should be attributed to Polikov, thus diminishing Hachshara's liability accordingly.
The Supreme Court declined this allegation as well. The court reviewed previous lower-instance judgments which discussed the contributory blame rule (not yet decided by the Supreme Court). Accordingly, the court determined that the principal object of the insurance policy is also to protect the insured from their own negligence when an insured event occurs. In respect of this risk, the insured signed an insurance agreement with the insurer and this risk is included in the premium that is paid by the insured.
The Supreme Court stated that discharge or reduction of insurance benefits due to the insured's negligence (standard negligence or greater negligence) empties the aim of the Insurance Contract Law.
The Supreme Court also commented that the insurer failed to include in the policy a condition imposing a duty of care on Polikov and therefore, there was no room to impose contributory negligence.
In its final remark, the Supreme Court pointed out that the felony of driving under the influence of alcohol must not be undervalued. However, the tools required to deal with these felonies are in the field of education, in the legal field and in the framework of criminal law but not in the insurance law field.
For further information on this topic please contact Ronit Warshai at Levitan, Sharon & Co by telephone (+972 3 688 6768) or email ([email protected]). The Levitan, Sharon & Co website may be accessed at www.levitansharon.co.il.
Endnotes
(1) Hachshara v Israel Polikov, Leave to Appeal 2843/18 given by Justice Y Vilner.
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