While all sympathize with the plight of the Israelis whose homes were destroyed or damaged in last week’s wave of conflagrations, the question that has now arisen in their aftermath is who will pay for the damage. According to many insurance industry experts, Israelis who are unable to return to their homes may find themselves homeless for quite awhile – while the government and the insurance companies wrestle with whose responsibility it is to pay for rebuilding homes and compensating victims for their expenses.
Usually, terror-related expenses are covered by the government, which has a special department (mas rechush) dedicated to assaying damage and evaluating payments due to acts of terror. Home protection insurance policies usually do not cover damage due to terror, with the intention that those expenses will be paid by the government.
Thus, the question of how to classify the fires – as due to negligence aggravated by the hot and dry weather, or due to terror – has emerged as a major issue for the government, insurance companies and especially for victims of the fires. Insurance industry experts quoted in the Israeli media have said that the tendency for companies is to wait with payments until an official declaration of responsibility is determined – usually after a lengthy police investigation – but that this could take time. Despite declarations by numerous government officials, including Prime Minister Binyamin Netanyahu, that they saw the fires as acts of terror, those declarations are not a legal basis for payments by either the government or the insurance companies.
To help victims get back on their feet, Finance Minister Moshe Kachlon promised over the weekend that the government would cover all direct expenses related to the fires, and that the government had allocated tens of millions of shekels for this purpose. On Sunday, Kachlon promised that the aid would be quick to arrive. “I have ordered officials to evaluate all the damage to homes by Thursday the latest. The adjusters will quickly make their report, and we will transfer the funds due to each household within 24 hours.”
However, industry experts said, Kachlon’s reassurances may not be enough. The criteria for payments due victims from the government for terror attacks and from insurance companies is likely to differ; specific household items that were insured via riders to home policies taken out with the latter are unlikely to be paid for by the former, for example. The government will also use its own criteria in order to evaluate damage costs, as well as the market value of a home, and that, too, could differ considerably from the compensation a victim would get from an insurance company.
Speaking to Israel Radio, Ehud Hameiri, chairman of the Israeli Insurance Adjusters Association, said that victims will be much better off if the fires are not declared to be acts of terror. “The government insurance policy for payment of damage to household items is limited to NIS 100,000,” he said. “Anyone who was insured for more than that is going to lose out, because the insurance companies will not pay the difference.” While some would benefit – specifically poorer Israelis or those who did not have household protection policies – the areas where homes were damaged or destroyed were generally wealthier areas, where residents were likely to have policies.
In response, coalition chairman MK David Bitan (Likud) said that the government was working with insurance companies to ensure that all victims were fully compensated, regardless of how the police classify the fires.