Guide to Mandatory Insurance vs. Comprehensive Insurance After an Accident

What is Mandatory Insurance and Comprehensive Insurance?

Every vehicle owner in Israel is required to maintain mandatory insurance (compulsory liability insurance), which regulates the driver's obligation to pay compensation to a third party injured in an accident caused by the driver. This is a legally mandated coverage designed to protect victims, not the vehicle owner themselves. In contrast, comprehensive insurance is optional property insurance that covers damage to your vehicle, regardless of fault in the accident.

This distinction is critical: mandatory insurance protects the third party (the victim in an accident you caused), while comprehensive insurance protects your vehicle. If you are injured in an accident caused by another driver, your claim will be against that driver's mandatory insurance. If you are injured in an accident you caused, you may file a claim under your own mandatory insurance for property damage — but only if you have comprehensive coverage.

On this page, we review the significant differences between the two insurance types, their coverage, limitations, procedures, and legal implications — so you can understand your rights and file a well-informed and prepared claim.

Mandatory Insurance: Definition, Coverage, and Limitations

What is Mandatory Insurance?

Compulsory liability insurance is insurance required by law as a condition for operating a vehicle on public roads in Israel. It covers the driver's obligation to pay compensation to third parties injured as a result of an accident caused by the driver — whether for bodily injury or property damage. This insurance does not protect the vehicle owner or driver themselves, but rather the victims of the accident.

What Does Mandatory Insurance Cover?

• Bodily injury to third parties: Compensation for physical injury, pain, suffering, loss of earning capacity, medical expenses, and treatment costs of victims in an accident you caused.
• Property damage to third parties: Repair or replacement of vehicles and other property damaged in an accident you caused.
• Legal expenses: In some cases, mandatory insurance can cover legal expenses in a lawsuit filed against you.

What Does Mandatory Insurance Not Cover?

• Property damage to your vehicle: If you caused an accident, mandatory insurance will not cover damage to your vehicle — only to the third party's vehicle.
• Your bodily injury: If you are injured in an accident you caused, your mandatory insurance will not cover your injury (unless you have additional coverage such as passenger insurance).
• Damage from an accident you are not liable for: If you are injured in an accident caused by another driver, you will file a claim against that driver's mandatory insurance, not your own.
• Damage from lack of insurance: If you did not have valid mandatory insurance at the time of the accident, the insurance will cover nothing.

Coverage Limits in Mandatory Insurance

Each mandatory insurance policy has a maximum coverage limit — the maximum amount the insurance will pay for a single accident. In Israel, the minimum limit set by law varies and is updated annually. The current typical limit is in the range of millions of shekels, but in serious accidents with extensive damage, the final compensation may exceed the limit. In such cases, the state compensation fund (the Motor Victims Compensation Fund) may become involved.

Comprehensive Insurance: Definition, Coverage and Benefits

What is Comprehensive Insurance?

Comprehensive insurance (or all-risk insurance) is optional property insurance that covers damage to your vehicle from a variety of risks — including traffic accidents, theft, fire, and natural disasters. Unlike mandatory insurance, comprehensive insurance protects the vehicle itself, regardless of who is at fault in an accident.

What Does Comprehensive Insurance Cover?

• Damage from Traffic Accidents: Repair or replacement of your vehicle, regardless of who caused the accident (you or a third party).
• Theft: If your vehicle is stolen, the insurance will cover the value of the vehicle (minus the deductible).
• Fire or Explosions: Damage from fire or explosions.
• Natural Disaster Damage: Floods, storms, hail, falling trees, subject to policy conditions.
• Damage from Foreign Objects: Damage caused by objects falling from another vehicle or from the road.
• Repair Work Damage: Original parts, towing services, rental car services (subject to conditions).

What Does Comprehensive Insurance Not Cover?

• Normal Wear and Tear: Comprehensive insurance does not cover ordinary wear or obsolescence of parts.
• Damage from Lack of Maintenance: If the vehicle was not properly maintained, the insurance may deny a claim.
• Unlawful Use: If the vehicle was being used at the time of the accident for a criminal offense or unauthorized use, the insurance may not provide coverage.
• Your Personal Injury: Comprehensive insurance covers only property (the vehicle), not personal bodily injury (unless you have additional coverage such as passenger insurance).
• Deductible: Typically, there is a deductible amount that you must pay out of pocket for each claim.

Benefits of Comprehensive Insurance

Comprehensive insurance provides broad protection for your vehicle in many situations. If you are injured in an accident caused by another person, you will not have to wait for a claim against the third party's mandatory insurance — your comprehensive insurance will cover the damage immediately (minus the deductible). Additionally, if you caused an accident, your comprehensive insurance will cover damage to your vehicle, so you won't have to pay out of pocket. This provides peace of mind and financial stability.

Detailed Comparison: Third-Party Liability Insurance vs. Comprehensive Insurance

To understand the differences clearly, let us examine both types of insurance in a comparative table:

The table clearly shows that third-party liability insurance and comprehensive insurance serve different purposes. Third-party liability insurance is a legal requirement that protects the public, while comprehensive insurance is a personal choice that protects your vehicle. Most vehicle owners in Israel maintain both to ensure complete protection.

Practical Scenarios: How Third-Party Liability and Comprehensive Insurance Work in Practice

Scenario 1: You Caused an Accident

Suppose you drove negligently and caused an accident with another vehicle. The other driver was injured and their vehicle was damaged. In this case:

• Your Third-Party Liability Insurance: Will cover the damage to the other vehicle and the bodily injury of the other driver (up to the coverage limit).
• Your Comprehensive Insurance: Will cover the damage to your vehicle (minus your deductible). If you do not have comprehensive insurance, you will have to pay out of pocket for repairs to your vehicle.

Scenario 2: You Were Injured in an Accident Caused by Another Driver

Suppose another driver caused an accident and is at fault. You were injured and your vehicle was damaged. In this case:

• The Other Driver's Third-Party Liability Insurance: Will cover your bodily injury and your property damage (your vehicle). You will file a claim against them.
• Your Comprehensive Insurance: Will cover the damage to your vehicle immediately, without waiting for a claim against the third party. You will not need to wait or prove liability — your insurance will repair your vehicle.
• National Insurance: If you suffer serious bodily injury, you may also file a claim with the National Insurance (in addition to a claim against the third party's insurance).

Scenario 3: Single-Vehicle Accident (No Third Party)

Suppose you were driving in severe weather conditions and your vehicle overturned. There is no other third party involved. In this case:

• Your Third-Party Liability Insurance: Will not cover anything, because there is no injured third party.
• Your Comprehensive Insurance: Will cover the damage to your vehicle (provided the damage is included in the policy terms, such as damage from natural causes).

Process of Filing a Claim in Compulsory Insurance and Comprehensive Insurance

Filing a Claim in Compulsory Insurance (as an Injured Party)

If you are injured in an accident caused by another person, you can file a claim against the other driver's compulsory insurance. The process typically includes:

1. Notice to Insurance: You must notify the other driver's insurance company of the accident, usually within a limited timeframe (sometimes within 30 days).
2. Evidence Collection: You will need to collect evidence: police report, photographs, witness statements, medical bills, property repair invoices.
3. Claim Submission: You can submit a claim to the insurance company in writing, with all supporting documents.
4. Assessment and Compensation Determination: The insurance company will examine the claim, determine your liability (if any), and offer compensation.
5. Negotiation or Litigation: If you disagree with the offer, you can object, negotiate, or file a lawsuit in court.

Filing a Claim in Comprehensive Insurance

If you have comprehensive insurance and your vehicle is damaged, the process is typically simpler:

1. Notice to Insurance: You must notify your insurance company of the damage immediately or within the timeframe specified in your policy.
2. Inspection: Your insurance company (or its contractor) will inspect the damage.
3. Damage Assessment: The amount for repair or replacement will be determined.
4. Payment or Repair: The insurance company will pay directly for repairs or pay you (minus your deductible).

With comprehensive insurance, you do not need to prove liability — the insurance covers the damage regardless of who is at fault. This makes the process faster and more straightforward.

Combining Compulsory Insurance and Comprehensive Insurance in a Claim

In certain cases, you may use both. For example, if you are injured in an accident caused by another person, your comprehensive insurance will cover the damage to your vehicle immediately, while your claim against the third party's compulsory insurance will address your personal injury damages and recovery of property damages. This process can be complex, and in such cases, legal counsel is essential.

Limitations, Exclusions, and Important Things to Know

Limitations in Compulsory Insurance

Maximum Coverage Limit: Every compulsory insurance policy in Israel has a maximum coverage limit set by law. If the damages exceed the limit, the injured party may not receive full compensation (unless the state compensation fund is involved). Therefore, it is important to ensure that your insurance meets the legal minimum requirements.

Rejection Due to Legal Violation: If the driver was under the influence of alcohol, did not have a valid license, or violated a significant law at the time of the accident, the insurance company may reject the claim or reduce the compensation.

Policy Cancellation: If the policy was canceled or not renewed at the time of the accident, the insurance will not cover anything.

Limitations in Comprehensive Insurance

Deductible: Typically, for each claim under comprehensive insurance, you must pay your own deductible amount. This can range from 500 to several thousand shekels, depending on your policy.

Wear and Depreciation: If the vehicle is several years old, the insurance company may reduce compensation due to natural wear or depreciation.

Certain Exclusions: Some damages may not be covered, such as damages from lack of maintenance, unlawful use, or certain components (such as worn tires).

Important Things to Know

• Check the Terms: Carefully read the terms of your policy — both compulsory and comprehensive insurance. They may contain limitations or exclusions of which you are unaware.
• Update Your Insurance: Ensure that your insurance is current and valid at the time of the accident. Expired insurance will not cover anything.
• Immediate Documentation: In case of an accident, document everything: photographs of the damage, details of the other driver, witness statements, and a police report. This will help you later.
• Report Immediately: Notify your insurance company of the accident as soon as possible. Delay in reporting may affect the claim.
• Keep All Documents: Keep all invoices, medical records, repair bills, and any relevant documents. They will be essential in your claim.