Compensation Due to Businesses Following Operation Shomer Hamot
During the operation guarding the walls, the damage was caused to many businesses throughout the country, both direct damage to property and loss of income.
Also, as part of the operation, we were able to see that the circle of victims is much wider than what we were used to from previous operations. This is in light of the expansion of the quantity and the range of vulnerability and also in light of the many damages caused as a result of the riots in the cities involved.
In this article, we will review the options available to business owners for receiving compensation for the various damages arising from the operation, both by the state and by the insurance policies.
Compensation Due by Law
The Property Tax and Compensation Fund Law, 1961 – 1961, and the regulations pursuant to it (hereinafter: “the Law”) establish compensation from the state as a result of direct damage caused to property due to acts of war or due to other acts of hostility against Israel, and even under certain conditions for compensation for loss of income.
In fact, by virtue of the law, businesses that were damaged as a result of the fighting (for example, missiles, shrapnel, etc.) can file a claim for the direct damages. You can also file a claim for loss of income for the period required to renovate the property. Business owners located in the book settlements are also entitled to compensation for loss of income without the need for physical damage.
Regarding the riots that took place in the cities involved, business owners are entitled to compensation under the law only for the direct damage caused to the property. Although, the government may establish temporary instructions on the subject, which will also extend the compensation for loss of income due to the aforementioned riots.
It is important to note that the compensation provided by law is only partial and based on the real value, not the value of the property as new. Regarding the loss of income, this is limited compensation, as mentioned, unlike insurance policies, where the amount of indemnity that can be claimed is sometimes much higher.
Compensation Provided Under the Insurance Policy
According to the property policies for the business, it is also possible to purchase coverage for loss of income. In this way, you can also ensure coverage for loss of income, provided that the loss of income is caused by physical damage to the property, unlike cyber insurance, for example, which requires the occurrence of a cyber incident in order to compensate for the loss of income. Although, the standard business policies, for the most part, exclude damages caused as a result of terrorism. Thus, within the standard policy framework, there will be no coverage for damage caused by missiles and shrapnel. On the other hand, regarding the riots that occurred, the situation is ambiguous.
On the one hand, business property policies sometimes cover damages that were caused as a result of riots and malicious damage. On the other hand, the insurers are expected to try and claim that the riots that took place in the cities involved fall under the definition of terrorism and are therefore excluded from coverage. However, it is possible to purchase an extension for terrorist damage as part of the property insurance of the business. This coverage serves as a supplementary layer to the compensation due to property tax. It is important that this be the case since the law states that amounts received by an insurance company will be offset from the compensations received by virtue of the law.
By virtue of the policies, the amount that can be claimed is higher than the amount received by virtue of the law. For example, in case of damage to property, the indemnification to the insured is based on establishment, that is, repairing or replacing the property with a new one. When filing a lawsuit under property tax law, it works efficiently. However, it is still recommended to consult a risk manager before filing the claim, examining your full rights, and challenging the insurance policies.
Our office specializes in risk management for businesses accompanied by filing claims both under the law and under various insurance policies.