Compulsory Car Insurance

As you may already know, in Israel the only insurance a car owner must have is the famous “Bituah Hova” or a compulsory car insurance that in fact, does not cover the car but personal injury only.

Unfortunately Mr. Doe did not know the rules when he decided to buy his first car in Israel. Mr. Doe looked for a second hand car waiting to get used to the Israeli traffic before buying a brand new car using his rights as a new immigrant.

Mr. Doe bought an old car deciding not to have a comprehensive insurance, but a third party insurance only. He was surprise to find out how inexpensive they were and how much competition between the insurers for a small insurance policy. He ended up taking the insurance from an Israeli “direct insurance company” and paid only 700 shekels for it. He paid using his American credit card.

Due to difference in prices, he bought the compulsory insurance from another agent. The agent did not speak good English and was unable to give the explanations Mr. Doe needed. As learned after the accident, the insurance agent did not understand Mr. Doe’s questions and Mr. Doe did understand any of the explanations, but the deal was sealed and the insurance paid again by the same credit card.

Mr. Doe was supposed to pay the compulsory insurance (“Bituah Hova”) by credit card for the total amount of 1,600 shekels. Somehow the credit card was not charged and the credit card company abroad declined the payment for the compulsory insurance.

Mr. Doe’s bad luck did not end there. The agent tried to contact Mr. Doe by phone but without success. The agent decided to send a letter to Mr. Doe that same day but as bad hunts bad luck, Mr. Doe had a car accident the next day and was not to be found until two days later when released from the hospital.

Had Mr. Doe hit a wall or a lamppost it would be his problem and he would not be covered, but he also hit a pedestrian and another car, therefore 3 people were slightly injured. All three were taken to the hospital by ambulances (they were all released within 24 hours).

When entering an emergency room in a hospital, the injured must sign a legal document in which he undertakes to pay all costs or to make up a commitment from the National Medical Insurance – “Kupat Holim”.

Mr. Doe went to his “Kupat Holim” but was refused because the coverage does not include any type of car accident therefore Mr. Doe had to pay a few thousand shekels for the treatment and hospitalization.

Mr. Smith, the pedestrian, ended up having a few stitches and some physiotherapy and his bill for the hospital was also a few thousand shekels. Mr. Smith’s payment was refused by his “Kupat Holim” therefore he sued “Karnit” the governmental insurance company in charge of all those who are injured in a car accident but have no insurance. This special insurance covers everyone except the car’s owner who has no compulsory insurance. In our case: Mr. Doe.

After paying Mr. Smith, “Karnit” sued Mr. Doe for the expenses but now, lawyers were involved therefore the total amount was higher.

The only one person who did not have any problem was Mr. Brown, the driver in the second car because he had compulsory insurance and his insurance covered everything. The difference was that Mr. Brown’s insurance company could not by law sue Mr. Smith even if Mr. Doe was negligent and eventually found guilty of driving without caution and had his license suspended for six months. Mr. Brown’s insurance covered all his expenses.

Mr. Doe, in despair, sued the insurance agent but lost his case in the preliminaries. The Judge explained to Mr. Doe that his obligation to drive a car with a valid compulsory insurance is undisputed and this is solely his responsibility (I think the court decision was wrong and the insurance agent should be held responsible).

The total costs to Mr. Doe including lawyers, compensation and the traffic criminal case were more than 40 thousand shekels and his dream of a new car will have to wait because he now cannot afford a new car. In addition to these losses he had to pay an extra 10 thousand shekels to fix his own car plus an extra thousand shekels for his deductible in the third party damages paid by his “direct insurance” (“Bituah Iashir”).

Mr. Doe was lucky because the first payment for 700 shekels was not refused by his credit card. If this payment had been refused he would have to pay the third party entire damage (for the car). Can you imagine if Mr. Doe had no third party insurance and had hit a brand new Mercedes Benz in Israel where a car cost four times more?

A word of wisdom:

Like many of us Mr. Doe thought he had valid insurance, but he was not cautious enough to have the insurance in his hand before driving his car. This insurance can be paid by credit card or by phone and the insurer will mail or fax it to you but you cannot drive without at least a copy with you for the police control.

Be sure you understand what you are buying. Be careful and drive safely.

Sincerely,
 

Tzvi Szajnbrum, Attorney at Law