The Doe Family made Aliyah ten years ago from Mexico, leaving behind not only remembrances, but also more than a few debts. There is no way they could ever return to Mexico.
Soon after arriving in Israel, Mr. and Mrs. Doe were already working and very happy with their jobs. Finances were tight for the first years as children are expensive, but in spite of their struggles they were able to save a substantial sum in order to purchase a property.
They finally found a property that they liked and could afford to buy, but they needed a mortgage because the money that they had to invest was only enough to pay for half the price of the property. They also needed some extra resources for refurbishing.
The Does bought a four-room apartment on the second floor of a good building, in a good neighborhood. They were very happy with their choice.
At the bank where they applied for a mortgage, they were asked to complete so many papers that they almost gave up. Among these papers were some “insurance” forms. The Does inquired at the bank about the insurance and were told that they must have life insurance as well as insurance for the structure of the apartment (“Bituah Mivne”) – which would cover the building, but not their personal belongings.
They decided to first ask for friends’ advice about this insurance. Ultimately, they decided to buy the insurance directly from an insurance company rather than from the bank, who acts as a broker for the insurer. For the purpose of finding the best deal, they asked the bank for a thirty-day grace period to procure and produce an insurance policy, which the bank granted – as they must do by law. A few days after they asked for the grace period, however, the Does forgot about the insurance.
A few more days passed and the Does were having a great time enjoying their new apartment when they heard a heavy crash, followed by people screaming, then followed by sirens.
From the window they couldn’t see much or understand what was going on outside, but they were sure it was something serious and, indeed, it was very serious.
Sarah took her dog for a walk as she did every day. She was walking on the pavement near the Does’ building when a tile that served as coating to the external wall came loose from the third floor. The tile fell directly onto Sarah’s head and shoulder.
After two months in the hospital with a small skull fracture and a severe fracture in her shoulder, Sarah was released. The doctors told her it would be at least one year before she could go back to her work as a dance teacher.
Sarah had an excellent job teaching classical dance in her own studio, with a considerable income. However, now she would be out of work with no income for at least the next year- and who knows if she would ever be able to teach again?
The Legal Problems the Does are Confronting
Sarah’s lawyer sued every one of the property owners of the building – a total of twelve apartments. A total of four insurance companies were involved. Every one of the apartments had insurance, except for the Does’, as we know.
The building itself was not insured. As often happens, the builder of the building (a small corporation) had also been bankrupt for two years, so the company had no value whatsoever and thus no way to pay its share of the damages.
The Does are responsible for only 1/12 of the losses (their share in the common area of the building). When you buy insurance for an apartment you are also covered for your share of the common areas such as the “trash room”, the garden, etc.
They are facing a total of $40,000 to $60,000 in losses because Sarah’s compensation will certainly be very high due to her young age and the extended damage caused by the accident, in addition to lawyers’ and experts’ fees.
At some point, Sarah may be granted some compensation from National Insurance (“Bituah Leumi”). If the NII pays her, they will sue the Does for every cent paid (called the “right of subrogation”).
Every one of those covered by an insurance policy received a lawyer from their insurer to represent them, but the Does had to hire their own lawyer, which cost them more than $3,000.
The Solution
There is no magical solution. The Does will need to pay their share in the end.
As you can imagine, they have already purchased insurance, but they will need to refinance their mortgage and take an extra loan in order to cover the future losses that they will have to pay.
What else could happen?
Imagine the Does invite the Browns for lunch. Mr. Brown is climbing the steps to the third floor because he prefers the steps instead of the elevator. In the process of climbing the stairs, he suddenly falls because Mr. Cleaner left the stairs completely wet just few moments ago.
In this case, the Does would not be covered even if they had insurance. The only insurance that would cover this kind of accident would be insurance for the building itself, which includes workers such as Mr. Cleaner.
Are you sure you want to postpone buying that insurance?
If you are not sure what kind of insurance you need, please contact us and we will try to guide you through the “insurance jungle”.
