Buy-It In Israel

A guide to home insurance in Israel

Posted on 21. Jun, 2010 by Buy-It In Israel Staff in Insurance

There are two types of home insurance policies to provide coverage for real estate in Israel : structure and contents insurance.

1) Structure insurance – (“bituach mivneh“) includes coverage for your home in Israel against the following major risks: fire, snow, lightning, storm, hail, flood, smoke damage, water damage from burst pipes, break-in, willful damage and third party liability.

A few important points to note about structure insurance in Israel:

• In most common insurance plans earthquake coverage is an optional extra. Hence to cover damages that take place due to an earthquake – Israel has had a number of small earthquakes in recent years in all parts of the country – an extra premium will need to be paid.
• Water damage caused by burst pipes or broken installations can be fixed by either a plumber that is approved by the insurance company or by any private plumber, however this must be decided at the outset of the policy (not after the damage is done).   Where a private plumber is selected, the deductible is usually double the amount for an insurance company-approved plumber (although the quality of workmanship is likely to be higher!)
• Where an Israel mortgage is taken out to buy a property in Israel, one is required to get structure insurance, where the policy being written is in favor of the mortgage bank. Coverage must include earthquakes and water damage from broken pipes or installations. The mortgage bank usually suggests an insurance scheme, however one is free to insure via a company of one’s choice, which usually works out significantly cheaper than insuring through the bank’s suggested scheme. Furthermore, the bank’s scheme doesn’t include third-party liability and contents insurance, and doesn’t offer the private plumbing option.
• On a standard policy, third party liability is for 350,000-500,000 NIS.  This amount can be adjusted upwards where required. (Where a contents policy is also held, third party liability is up to 1,000,000 NIS).
• The rate for structure insurance is determined by the built size of the home and is based upon the cost of construction at a rate of $1,200 per square meter.
• The annual premium for structure insurance including earthquake coverage and third party liability is approximately 450 NIS per 100,000 NIS coverage. If earthquake damage is not covered, the premium reduces by around 100 NIS per 100,000 NIS.

2) Contents insurance – (“bituach techula”) will usually insure against against the following major risks: fire, snow, lightning, storm, hail, flood, smoke damage, water damage from burst pipes, break-in, willful damage, theft, burglary, employer’s liability and third party liability. In recent years, the number of burglaries in Israel, as in many other countries, has been on the rise. Therefore it is very common, whether you rent or own a property in Israel, to take out a contents insurance policy.

A few important notes on contents insurance in Israel:

• Contents insurance generally covers jewelery, TV’s, video equipment, home computers, faxes and sound equipment, bicycles, glass surfaces and windows, marble and sanitary-ware.
• All risk insurance can also be obtained for photographic equipment, cameras, video cameras etc. and for out-of-house risks for jewelry and electronic equipment.
• In most common content insurance plans earthquake coverage is an optional extra.  For such coverage, an extra premium of approximately 0.105 percent of the cost of the total contents of the house will be added.
• On a standard contents policy, third party liability is for 1,000,000 NIS.
• The rate for contents coverage is around 650 NIS per 100,000 NIS value of the contents with earthquake coverage, and 500 NIS where earthquake coverage is excluded from the policy. Rates usually decrease as the value of the contents rises.

Valuation of contents:

One of the most important procedures in taking out a home insurance policy is a proper valuation to protect you from being either over or under insured, as well as, in case of claims, to prevent there being any possible dispute as to what existed and what it was valued at.  The valuation of the content will be carried out by a licensed assessor (“shamai”) of the insurance company at no additional cost, who will put together an Assessor’s Report.

Furthermore, the assessor will also report the level of security that exists in the home e.g. floor level (ground floor dwellings are much more of a risk than higher floors), anti-burglary security devices such as bars on the windows, multi-lock front door, burglar alarm systems, etc. and then the insurance agent will determine the level required based on his/her insurance company. In some cases – when the contents value is high – a separate security assessment mat be required.

Some insurance companies provide the Assessor’s Report of the valuation of contents in English. However legally, even if an insurance company provides an English copy, it is only the Hebrew version which counts in court in case of a dispute.

Unoccupied residence:

Where a residence is to be unoccupied for more than 60 continuous days, it is important to notify the relevant insurance company.  An additional premium may be charged for both structure and contents insurance.

Deductible:

Varying from one insurance company to another, in general, the deductible is fixed at around NIS 400 to NIS 500. In the case of earthquake coverage, the standard rate for the deductible is 10 percent of the insured amount.

Choosing an insurance company in Israel:

Prices for home insurance policies can vary significantly since there is a lot of competition between the insurance companies. Buying an insurance policy directly from an insurance company without an agent through the so-called Bituach Yashir channel or Direct Insurance is cheaper. However, if there is a problem you are left on your own fighting your claim against the insurance company without an insurance agent defending your case. Hence, a good insurance agent is recommended and very important, in particular for new immigrants struggling with cultural and language barriers. It is advisable to ask around friends and family and search for recommendations for a good agent and to find out which insurance companies pay out when there is a claim with the least amount of trouble and in the shortest period of time.

© Copyright 2010

The contents of this article are designed to provide the reader with general information and not to serve as legal or other professional advice for a particular transaction. Readers are advised to obtain advice from qualified professionals prior to entering into any transaction.

Related Articles:

• The importance of burglar alarm systems in Israel
• Building structures in Israel are not prepared for strong earthquake