No Fault System – How Does It Work: The Israeli Compensation System Of Bodily Injuries Caused As A Result Of Road Accidents

Author:Mr Dror Zamir and Rotem Weiss
Profession:Levitan, Sharon & Co
 
FREE EXCERPT

General:

Israel has established a "No Fault System" in road accidents compensation following the enactment of Israel Road Accident Victims Compensation Law 1975 (hereinafter: The Law). According to the Law, a person injured in a motor vehicle road accident is entitled to compensation regardless the question of fault i.e. there is no need to prove liability of the person who caused the accident.

Compulsory Insurance Policy:

According to the Law, a driver of a motor vehicle is not allowed to drive unless he has a valid insurance policy, covering all bodily injuries including that of the driver.

Violation of the Law amounts to a criminal offence.

This mandatory insurance system ensures that not only does the person who drives the motor vehicle receive compensation when injured in a road accident, but also the passengers in the vehicle who were injured, as well as any other 3rd party who was involved in the accident.

This mandatory insurance also provides compensation to pedestrians who may have been hit and injured by the insured motor vehicle.

The compulsory insurance does not apply in cases, when the accident was caused deliberately, when the injured driver stole the vehicle, when the vehicle was used for perpetrating a criminal offence or when no valid insurance policy was in force.

The remedy to the "Innocent Injured" in such cases is answered by way of a special fund, Karnit.

Limited Compensation under the Law:

The law limits the amount of compensation due to an injured in a road accident as follows:

Capping the compensation at triple the average wage in Israel when calculating the loss of earnings caused as a result of the accident. Limits the compensation in respect of non-monetary compensation (such as pain and suffering). The said limitation represents the other side of the coin of the "No Fault System". On the one hand every injured person is entitled to compensation, on the other hand the compensation is limited. Exclusive Cause of Action:

The law has a unique stipulation whereby it limits claims for compensation as a result of road accidents only to claims under the Law, and prohibits the injured person from filing a claim under the General Tort Law.

Policy Wording - dictated by the Regulator:

In order to ensure that the entire exposure created by the Law is fully covered by an insurance policy, the Regulator dictates the wording of this policy. Subject to stringent limitations provided by the Law the injureds are entitled to...

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