In Israel, the Insurance Contract Law 1981 (ICL) received standards of customer assurance. The Control of Financial Services (Insurance) Law gives administrative arrangements to the market. The ICL applies to a wide range of insurance other than marine, reinsurance, aeronautics and insurance of precious metals.
The ICL doesn’t determine an extraordinary arrangement for execution of the contract of insurance. In any case, it indicates rules pointed toward supporting purchaser rights and forcing constraints on remedies and insurers. These principles expect to moderating the typical variation between an insurer and an insured.
The ICL forces an unequivocal obligation on the insured to respond to the insurer’s inquiries in full and honestly, when recorded as a hard copy in regard of a material matter. A material matter is characterized by the Law as one that could influence an insurer’s readiness of accepting the risk by and large or to accept it under the terms indicated by the policy.
The Law further specifies that deceitful disguise of a matter that the insured knew that a material matter is an untruthful or an inadequate answer. Israeli courts have deciphered this in relation to the inquiries presented by the insurer of the form of proposal: a subject not given in a proposal form has been considered to be immaterial and consequently there can be no approval for not disclosing material facts..
An insurance contract is deciphered by the (updated) Article 25 of the Law of Contracts and case law, which explained rules of interpretation of policies of insurance, like MS Aluminum Products v. Arie Insurance Co. and Cohen v. Migdal Insurance Co.
The phases of insurance policy interpretation are as per the following:
- The subjective intention of parties shall be learned in a real sense from the language of the contract of insurance, if conceivable. Otherwise the Court shall consider the external circumstances, for example, correspondences between the parties.
- With the assumption that the subjective intention of the parties can’t be found out, the court will look for the objective intention of the parties. An example of objective intention can be: from regular practice among other insurers in the applicable kind of insurance.
- Policy construction that gives it power and impact is ideal more than one that voids the provisions of policy.
- If the court is not able to discover the subjective intent or objective intent of the parties, then it will decipher ambiguities in the insurance policy against the drafter (typically the insurance agency).
- The court can also make reference to the principle of the reasonable expectations of the insured. This is by and large utilized along with other different rules of understanding.