A precedential ruling in the case involving “Hadar Insurance Company V. Ahad Ha’Am Food and Beverages and others”, written by Supreme Court Judges Rivlin, Danziger and Solberg, determined that in a case a company is bankrupt following a delay of insurance compensation payments by the insurance company, the insurance company will pay additional compensation to the bankrupt insurant.
According to advocate Yair Mesalem, a specialist in bankruptcies and company receivership from the law office of Doron, Tikotzky, Cederboum, Amir, and Mizrahi, “This is a precedential ruling by the Supreme Court, which delivers a message to the insurant community: from now on, insurance companies will be careful, many times over, in delaying insurance compensation”.

The court ruling is based on the liability of the insuring company to pay the insurant the insurance amount within thirty days from the occurrence of the damage, and if a dispute exists regarding the amount of the compensation, the law requires the payment of at least that part of the damage which is not in dispute. Under the circumstances of the court ruling, not only did the insurance company refrain from paying the insurant the insurance amount as it is obligated from the agreement entered between them, but following the delay in payment, the insurant, the restaurant “Ahad Ha’Am Food and Beverages” collapsed. The restaurant became insolvent and its shareholders went bankrupt because they could not rebuild the burnt building. It was impossible to insure the building with another insurance company, and it was impossible to return to work in the burnt structure among other difficulties.
The story begins with an unsuccessful arson attempt on the restaurant. The restaurant advised the insurance company in order to repair it, and the insurance company sent an assessor in return to estimate the damage, even determining that it was necessary to post a guard at the place. The following day a guard was posted at the restaurant. When the guard abandoned his post for twenty minutes in order to eat, the restaurant was set on fire for the second time; however, this time severe damage was caused to it.

The restaurant filed with the insurance company a damage claim of about 1,330,000 shekels; however, it did not meet the payment terms set by the law and did not meet the terms of the agreement signed between it and the restaurant. At the end the insurance company transferred only a sum of about 316,000 shekels, arguing that this was the amount not in dispute and that it covered the damages caused to the contents of the restaurant.
Not transferring the funds to the restaurant brought about a painful chain of events which included, among others, the non-agreement of other insurance companies to insure the burnt structure, inability to operate the restaurant, breach of the rental contract due to the lack of insurance, and finally, all of this caused the insolvency of the insured restaurant.

The Supreme Court ruled that the non-payment of the insurance compensation as set by the law constitutes a breach of the insurance contract. Moreover, advocate Mesalem from the law office of Doron, Tikotzky, Cederboum, Amir, and Mizrahi emphasized that for the first time there was recognition here of the possibility to rule compensation for consequential damages, such as bankruptcy, caused to the insured due to the delay of the insurance payments. In addition to this compensation, Judge Danziger recognized the fact that the insurance company was obligated to pay the insured restaurant in accordance with the agreement, under which the sum of the compensation would be according to the average of the gross profit of the restaurant over its years of operation. In summary, the Judge ruled in favor of the restaurant compensation in the sum of 1.2 million shekels and clarified that the bankruptcy was not damage included under insurance coverage but was caused under the circumstances of the case due to a breach of contract and an exaggerated delay in providing the compensation.


Feel free to reach out to us with any questions: Center Branch 03-6109100, Haifa Branch 04-8147500, Mobile 054-4251054

For personal meeting,
call 972-3-6109100

or complete the following information

Print this article

Article rating


5 by 1 visitours

Read more about

Legal Guidance for American Businesses and Returning Israelis

By: Eli Doron, Adv; Yaron Tikotzky, Adv, (C.P.A); Dr.Slomo Nass, Adv, (C.P.A); jonathan Friedland, Adv

For the Israeli citizen thinking of returning to Israel, or the American businessman or businesswoman contemplating expanding their scope to include doing business in Israel, the process is both rewarding - and very challenging.

Suing in the United States as a Non - U.S. Resident

By: Eli Doron, Adv; Yaron Tikotzky, Adv, (C.P.A); Dr.Slomo Nass, Adv, (C.P.A)

Filing a lawsuit is not something that should be undertaken lightly. Sometimes, however, it is the only way to vindicate legal rights. While the U.S. legal system is among the most developed in the world, enforcing those rights are not necessarily a simple matter.

Represent Israelis in sue cases in the U.S

By: Eli Doron, Adv; Yaron Tikotzky, Adv, (C.P.A); Dr.Slomo Nass, Adv, (C.P.A)

Being named in a lawsuit can be an unexpected and unsettling experience. Regardless of the type of litigation, the merits of the lawsuit, or prospects of prompt resolution, once a lawsuit has been filed certain procedural obligations must be met.

Add Comment

Need a lawyer?

Call: 03-6109100 or fill in the details
אני מאשר/ת בזאת לדורון, טיקוצקי, קנטור, גוטמן, נס, עמית גרוס ושות' לשלוח לי ניוזלטרים/דיוור של מאמרים, מידע, חידושים, עדכונים מקצועיים והודעות, במייל ו/או בהודעה לנייד. הרשמה לקבלת הדיוור כאמור תאפשר קבלת דיוור שבועי ללא תשלום. ניתן בכל עת לבטל את ההרשמה לקבלת הדיוור ע"י לחיצה על מקש "הסרה" בכל דיוור שיישלח.