Israeli Insurance 101
Whether we like it or not, insurance is a part of everyone’s life. The subject may elicit a host of emotions and connotations, and it is one of the few things that gets bought with the hope that it is never used!
Whilst the field of insurance can be complicated in one’s own country, dealing with insurance in a foreign country, with different laws, commercial norms and even language, becomes all the more taxing.
Therefore, this month we will give an outline of the three basic types of insurance in Israel, mentioning the pertinent points to look out for, as well as providing some tips along the way. We will also list other types of available insurance so that our readers can ensure that they or their loved ones living in Israel know what is available, and can seek appropriate cover where necessary.
With so many people owning homes in Israel, whether they actually live here or not, Home Insurance is a good place to start. It is important to understand that there are two categories of home insurance:
(i) Buildings Insurance (Bituach Mivneh) – This covers damage to the structure of the building. The plumbing insurance is usually part of this policy as well. There are two ways to cover the structure:
Rebuild Value (Erech Kinun)– The cheaper option, covering a pre-specified amount that is supposed cover the costs of rebuilding the property if it suffers total damage.
Market Value Insurance – (Tosefet Karka) – Covering the value of the property at the time the policy is taken out (it is essentially the rebuild value + land value). With house prices in Israel having increased so much in recent years, it is important to update the value of the insurance policy from time to time.
(ii) Contents Insurance (Bituach Techulah) – This policy covers the movable objects in the property. An estimate of value is given to the insurance company upon which the premium is based, and above a certain amount the insurance company will send a valuer over to the property in order to conduct an accurate evaluation. This evaluation is very important as it means that if a claim needs to be made, the insurance company cannot argue that the claim should be lower, or ask for proof that certain items really existed and what their value was. It also removes the possibility of over or under insurance, both of which can be detrimental to the policy holder.
The basic buildings policy allows for the insurer’s own plumbers to repair any water damage. How efficient these plumbers are is open to debate, and therefore some customers prefer to purchase the premium plumbing add-on, meaning that the the policy holder, in conjunction with the insurance company, can use their own workmen.
It is possible to add cover for electrical appliances at a relatively low cost. There is of course a deductible that will be applied, however with the high cost or repairs for certain larger items (such as fridges, air conditioners, etc) this can be a useful add-on to have.
If one wants certain items such as jewelry or laptops to be insured even whilst outside of the home, one needs to ensure that the policy includes this explicitly. In Hebrew it is called kol sikun.
It is important to ensure that the above policies include a sufficient level of 3rd party liability insurance, so that there is cover for someone or something that gets damaged whilst visiting the property, or if an adjacent property is damaged as a result of something happening in the property (e.g. a leak in one apartment causing damage to the apartment below).
For properties that are vacant most of the year, a special policy is needed, usually more expensive than the regular policy, with various conditions attached to it (e.g. all utilities must be switched off at the mains whilst no one is there).
It is possible to have one policy that combines both types of home insurance, or to have them as separate policies. Combining can often lower the cost of the policy.
Anyone who has been on the road, or even near a road for that matter, knows just how important this kind of policy is! Whilst a basic requirement for anyone owning a car, it is often a source of much confusion, as car insurance in Israel too is split in to two parts:
(i) Compulsory Insurance (Bituach Chovah) – As the name suggests, this is a must, and no car can be on the road without it. It is usually the cheaper part of the overall car insurance costs, and covers bodily damage to anyone in the car at the time of the accident, or anyone hurt as a direct result of the car irrelevant of who was at fault for the accident.
This policy comes with a certificate that is usually kept in the car, and needs to be shown at certain junctures, such as the annual road test.
(ii) Comprehensive Insurance (Bituach Makif) – This covers damage to the vehicles involved, including fire and theft, and payout is dependent on who was at fault for the accident. The policy also includes cover for the reduction in the resale value of the car as a result of the damage that was caused.
It is the splitting of the cover in to two parts that causes the above-mentioned confusion, and it will often be two separate insurance companies providing the different parts of the car insurance.
Anyone moving to Israel should make sure to get a no-claims letter (if applicable) from their car insurer overseas. In many cases they will be able to provide this to the Israeli insurer and receive the discount that the no-claims history provides.
There are certain add-ons that can be included, such as windscreen cover, replacement with original parts only and breakdown services.
Sabbath- observant drivers can get a reduction in their premium as their car is only on the road 6 out of 7 days a week, and because statistically car accidents are most likely at weekends. Whilst one not need to worry about receiving a visit from the insurance company’s in-house Rabbi on a Friday night, if one has claimed Sabbath-observance but duly gets in to an accident on the day of rest, then none of their costs are covered.
One can increase/reduce the cost of the policy by altering the deductible that needs to be paid in the event of a payout
In Israel, there is basic healthcare for all residents through the government-supported health funds (Kupot Cholim). As well as the basic cover, the health funds offer various levels of upgraded health insurance plans for a relatively low cost. The funds have to accept anyone who wants to join to these upgraded plans, irrespective of medical history and other conditions.
Nonetheless, these upgraded health plans too have their limits, and for those who want the highest level of cover, there are the Private Health insurance policies that are provided by the insurance companies. Under the ‘private health policy’ wrapper, there are various sub-policies that, since the reforms of February 2016, can be purchased separately as the customer sees fit. Without getting in to the gory details, the separate sub-policies provide additional cover for:
Operations in Israel
Operations outside of Israel
Transplants outside of Israel
Medicines and treatments that are not included in the national health basket
Consultancies and checks by expert doctors
Whilst most people take all of the above so that they have maximum coverage, if one feels that a sub-policy is unnecessary, or is happy with the lower coverage they receive from the health funds in for a particular area, then they can pick and choose which sub-policies to take, thus reducing their cost.
There is a cheaper private health policy, which includes elements that, as opposed to the standalone health policy above, are supplementary to the health fund's upgraded policies. That is, they would first need to go through the health funds for cover and the shortfall will be made up by the private policy. Whilst the level of cover attained can be similar to standalone policies, they do not enjoy all of the same advantages (e.g. they will not have the advantage of much lower waiting times that the standalone policies provide for certain procedures or scans because they have to first go through the health fund).
The above policies can be described as three of the most commonly bought insurance policies in Israel. Whilst the first two are basic necessities for anyone living in a property or owning a car, health insurance is also very popular, especially with people who have moved to Israel from countries where private healthcare was a given.
We will finish the article with a simple list of other insurances that are available. Each one of course has their own quirks and characteristics, however we will not delve in to them here. It is nonetheless important to make mention of them so that our readers are aware of what is available out there, and so that they know to speak to a professional should any of the below catch their eye as being important for them or for a loved one living in Israel.
Critical Illness Cover – A lump-sum payout upon diagnosis of a certain list of illnesses.
Life Insurance - Both regular and mortgage-linked.
Loss of Income Cover – A monthly payout of up to 75% of monthly earnings (this is very often purchased by a person’s pension fund or employer).
Long Term Care Cover – A monthly payout should one become a long-term care patient (Siudi).
Accidents and Illness Insurance – Pays out should one become disabled (even temporarily) or ill due to an accident.
Professional Liability Cover – Certain professionals can buy insurance to cover them if they are sued by a customer.
Business Insurance - Covering a range of areas, such as damage to stock, loss of profits, 3rd party liability, etc.
For any advice on Insurance in Israel please feel free to contact us.