Understanding Car Insurance in Israel

Bituach Rechev ביטוח רכב

According to Israeli law, a car owner is required to have at least a minimal level of car insurance in order to operate a vehicle.

Insurance Types

• Bituach Chova – ביטוח חובה – Compulsory Insurance is the sole legal requirement for car owners in Israel. The cost is determined by the type of vehicle, age of the drivers, accident history, car safety features, and usage.

Bituach Chova is a no-fault insurance policy that only covers bodily injury. It does not matter who is at fault. In the event of an accident where there is bodily injury, the injured person (including any pedestrians) will be covered by the Chova insurance of the car owner’s insurance, even if the driver is not at fault. However, it does not cover people injured in another vehicle. Each car covers its own passengers irrespective of who is at fault.

• Bituach Makif – ביטוח מקיף – Comprehensive or Collision Insurance covers damage to your vehicle and any 3rd party vehicle up to the sums insured specified in your car insurance policy. This insurance is based on who is at fault. Your own car will be insured up to its “book price” value, and therefore there will be no sum insured written in your policy for your own car.

Each policy does however have an upper limit for sums insured when it comes to the amount of damage caused to the other vehicle or property. Please note that amounts vary from policy to policy.

3rd Party Liability coverage – It is important to check what your limit of liability coverage is in the event that you cause damage to 3rd party property. One can always adjust the amount of coverage depending on need or cost

Deductible/Excess on the depreciation clause – After an accident, a Shammai – שמאי – Insurance Adjuster assesses two main things: the cost involved in repairing the vehicle (or determining if the car is deemed a total loss) and the loss in value caused to your car as a result of the damage caused, as in many instances, the resale value of the car may be impacted by the accident damage.

In the event of an appraised depreciation, the insurance companies will also pay out the depreciated value in addition to the other costs involved in repairing the car.

In many cases, once a vehicle reaches a certain age (approximately 15 years) or value, insurance companies will decline to provide Makif coverage.

Most policies have an added deductible called Hishtatfut Atzmit – השתתפות עצמית of 1.5% of the value of the car on top of the typical car policy deductibles.

It is possible to obtain policies that have no deductible on the depreciation clause, allowing you to receive full compensation for the true depreciation caused to your car.

Other self-explanatory types of coverage that are usually not automatically included in ‘comprehensive’ policies are cover for riots, strikes and commotions; and earthquake coverage. These can all be added, depending on the insurance company.

• Bituach Tzad Gimmel – ביטוח צד גימל – Third Party Insurance only covers damage to a 3rd party property. It does not cover damage to your own vehicle if it is damaged or stolen. This coverage is usually taken out by people with older cars that have less value due to age and depreciation.

Important Notes

It is advisable to ensure that you have windshield replacement and roadside assistance/towing coverage in your policy if they are not included by default.

Car insurance premiums can be impacted by:

Age and experience of drivers
Whether the car is driven on Shabbat
The number of people insured to drive the car
Number of claim-free years of driving

An Oleh Chadash, Toshav Chozer or tourist (who may only drive in Israel for up to a year on a foreign license), should obtain a letter from their insurer overseas stating their claims history, which may qualify the driver for a reduced premium. Without this letter, they may be insured as a new driver with a far higher premium.

Summary of Key Steps in choosing an insurance policy

• • Assess Needs: Match coverage to your car’s value and driving habits. Consider extras like roadside assistance (towing) or theft protection.
  • Compare Quotes: Shop multiple providers for premiums, deductibles, and benefits. Check smaller firms too.
  • Review Details: Study policy terms—coverage limits, exclusions, and claims process. Ensure it meets legal minimums.
  • Check Reputation: Look at customer reviews and claim settlement records for reliability.
• Save Money: Ask about discounts i.e. safe driver, no-claims, older drivers, Shabbat observer
  • Get insurance quotes before buying a car: costs vary by model and driver profile.
  • Use a broker if overwhelmed: professional advice can simplify your decision and a broker/agent can help navigate the many options out there.

This guide was created and translated by Shivat Zion based on articles by Chaim Apsan of Olim Paveway and Goldfus Insurance.