Property Damage Guide — Claims and Compensation

What is Property Damage and How to File a Claim?

Property damage is harm to an item or asset belonging to a person — whether it is an apartment, vehicle, equipment, furniture, or any other property. When such damage occurs as a result of an accident, an insured event, or the act of a third party, you have the right to file a property damage claim and receive compensation to restore the value of the property or repair it.

A property damage claim is a legal process in which you, as the claimant (the injured party), request that the defendant (the responsible party or insurance company) pay you a sum of money that reflects the expenses required to repair or replace the damaged property. Unlike personal injury claims, property damage claims focus solely on direct economic loss — without compensation for pain, suffering, or loss of earning capacity.

In Israel, property damage claims may be covered by damage insurance (vehicle insurance, home insurance, liability insurance, etc.), or be a direct civil claim against the responsible party. In many cases, both approaches are used simultaneously: the injured party files a claim with their own insurance (damage insurance), and that insurer can approach the other party's insurance to recover its expenses.

Who Can File a Property Damage Claim?

Any person who has suffered damage to their property as a result of an insured event or the act of a third party can file a claim. This includes:

• Private property owners — residents who have suffered damage to their apartment, equipment, or furniture;
• Vehicle owners — a person whose vehicle was damaged in a traffic accident;
• Businesses and contractors — business owners who have suffered damage to equipment, inventory, or structures;
• Tenants — a person renting an apartment or vehicle who has suffered damage to the rented property (in accordance with the lease agreement);
• Institutions and organizations — hospitals, schools, and organizations that have suffered damage to their property.

It is important to note: To file a claim, you must prove that the damage is quantifiable, that it resulted from the specific event, and that you are the lawful owner of the property (or have legal responsibility for it).

Types of Property Damage and Typical Compensation Ranges

Property damage is divided into several main categories, each with a different calculation method and compensation range. Understanding the type and range will help you assess your claim and prepare proper documentation.

Vehicle Damage — Traffic Accidents

This is one of the most common sources of property damage claims. When your vehicle is damaged in a traffic accident, compensation includes:

• Direct damage to the vehicle — the cost of repair or replacement of damaged parts, according to an assessment by an authorized garage or expert;
• Loss of vehicle value — if the damage is so severe that the vehicle is not worth repairing, you are entitled to the vehicle's value before the accident;
• Salvage and towing expenses — the cost of removing the vehicle from the accident scene and towing it to a garage;
• Rental car fees — during the period when the vehicle is under repair, you can claim for a temporary rental car;
• Insurance and related expenses — in some cases, you can claim for additional insurance expenses incurred as a result of the accident.

The compensation range in traffic accidents varies depending on the severity of the damage, from several hundred shekels for minor repairs to tens of thousands of shekels for severe damage or total loss of the vehicle.

Apartment Damage and Housing Insurance

Apartment damage can occur as a result of flooding, fire, burglary, falling trees, water damage from a neighboring apartment, and more. Housing insurance (damage insurance) typically covers:

• Damage to the structure — walls, ceilings, floors, windows;
• Damage to contents — furniture, electrical equipment, clothing, books, and other items in the apartment;
• Cost of damage removal — cleaning, waste removal, mold treatment, or contamination;
• Emergency expenses — the cost of emergency measures to rescue the apartment from further damage.

Compensation for apartment damage varies greatly depending on the extent of the damage, from hundreds of shekels for partial damage to tens of thousands of shekels for extensive damage. It is important to note that housing insurance typically covers damage up to the insured amount specified in the policy.

Equipment and Work Equipment Damage

Employees, contractors, and companies that suffer damage to work equipment or machinery can file a property damage claim. This includes:

• Direct damage to equipment — the cost of repair or replacement;
• Loss of production — income lost as a result of equipment downtime;
• Secondary arrangement expenses — costs incurred to continue work during repairs.

Other Property Damage

Property damage claims may also relate to:

• Burglaries and theft — if covered by insurance;
• Damage to common property — in apartments in a shared building;
• Damage to rented or deposited assets;
• Damage to items during transportation or storage.

How is Compensation for Property Damage Calculated?

Calculating compensation for property damage is based on a general principle: restoring the economic value you have lost. In other words, the compensation should return you to the position you were in before the damage, without any additional profit or loss.

Methods of Calculating Compensation

1. Cost of Repair/Replacement — This is the most common method. The compensation equals the cost of repairing the property or replacing it with a similar property in a similar condition. For example, if your vehicle is damaged in an accident and requires repairs costing 15,000 NIS, this is the amount you will receive (provided the damage is covered by insurance).

2. Market Value Before and After the Damage — When the damage is so severe that repair is not economically viable, the compensation is calculated as the difference between the property's value before the damage and its value after the damage. For example, if a vehicle worth 100,000 NIS is damaged and its value drops to 40,000 NIS, the compensation would be 60,000 NIS.

3. Depreciation Allowance — For older properties or those in use, the insurance company may apply a depreciation allowance. This means the compensation will be slightly less than the full replacement cost, since the property is not new. This allowance typically reflects the age and condition of the property.

4. Ancillary Expenses — In addition to repair or replacement costs, compensation typically includes:

• Salvage and towing costs;
• Rental car or alternative expenses during repairs;
• Assessment and inspection costs;
• Legal fees and consultation (in certain cases).

Factors Affecting the Amount of Compensation

Condition of the Property Before the Damage — A property in good condition will receive higher compensation than a property already undergoing repairs.

Amount Insured in the Policy — Insurance pays up to the maximum amount specified in the policy. If the damage exceeds the insured amount, you will receive only up to that amount.

Liability of the Third Party — If the damage was caused by negligence of a third party (for example, a driver who caused an accident), you can file a direct claim against them, and the compensation may be higher.

Terms of the Policy — Insurance companies may apply discounts or limitations according to policy terms (for example, deductible, depreciation allowance, or limitations on types of covered damages).

Example of Compensation Calculation

Suppose your vehicle is damaged in a traffic accident. The garage estimate is 12,000 NIS for repairs. Your insurance company applies a deductible of 500 NIS and a 10% depreciation allowance. The calculation would be:

• Repair cost: 12,000 NIS
• Depreciation allowance (10%): -1,200 NIS
• Deductible: -500 NIS
• Final compensation: 10,300 NIS

This is the amount the insurance company will pay to you (or directly to the garage, depending on the arrangement).

Rights of the Insured in a Property Damage Claim

As an insured person in a property damage claim, you have important legal rights that protect you:

Right to File a Claim Within the Statute of Limitations

Generally, you have three years from the date of the damage to file a claim for property damage. This period is called the "statute of limitations". If you pass this period without filing a claim, you may lose the right to file it in the future. Therefore, it is important to act quickly and contact a law firm to ensure you file the claim on time.

Right to Receive Full Information from the Insurance Company

The insurance company must provide you with complete information about your rights, the terms of the policy, and the reasons for claim rejection or reduction. If the insurance company fails to provide this information, it may be grounds for an appeal or lawsuit against the company.

Right to Object to Claim Rejection

If the insurance company rejects your claim, you have the right to request a written explanation for the rejection. If you disagree with the decision, you can file an appeal or lawsuit in court. In some cases, you can also contact the insurance ombudsman for assistance.

Right to Legal Consultation

By law, you are entitled to consult with an attorney regarding your claim. Mandelboim, Gor, Witzman-Gor and Co. offers a first consultation without charge to help you understand your rights and options.

Right to Payment of Interest for Delay

If the insurance company delays payment of compensation without good reason, you may be entitled to payment of interest on the amount owed. This interest is calculated from the date of claim submission to the date of actual payment.

Right to File a Lawsuit in Court

If you fail to reach a settlement with the insurance company or with the other party, you can file a civil lawsuit in court. The court will examine all evidence and render a final decision regarding the amount of compensation you are entitled to.

Important Tips for Filing a Property Damage Claim — Documentation and Preparation

To ensure that your property damage claim succeeds and you receive full compensation, it is important to document properly and prepare your case carefully.

Immediate Documentation of the Damage

Immediately after the damage occurs, take detailed photographs from different angles. Include general photos of the entire property, as well as close-up photos of the specific damage. If possible, also take photos of the surroundings or of the cause of the damage (for example, another vehicle in an accident). Store all photos securely and clearly mark the date they were taken.

Collection of Receipts and Invoices

If you purchased the property, keep the original receipt and invoices. If you had repairs or maintenance performed previously, keep those records as well. These documents evidence the original value of the property and its condition before the damage.

Obtaining Professional Assessments

Do not rely solely on the insurance company's assessment. Obtain additional assessments from independent sources (another authorized repair shop, a construction engineer, a professional property appraiser). These assessments will help you prove the extent of the damage and object if the insurance company offers an amount that is too low.

Preservation of All Communications

Keep all letters, emails, messages, and communications with the insurance company. This communication may be important if the claim reaches court. Ensure that you keep copies of everything you send to the insurance company, as well as everything they send to you.

Contacting an Attorney in a Timely Manner

To ensure that you file your claim on time and in the correct manner, contact an experienced attorney. Mendelboim, Gor, Witzman-Gor and Partners offers a free initial consultation meeting, where you can discuss your claim and receive clear guidance on the next steps.

Avoiding Incorrect Notifications

Do not notify the insurance company of damage unless you are certain it is covered, as this may harm future claims. Also, do not sign documents that you do not fully understand, or that you have not consulted with an attorney about.