Question and Answer: 2023 Israel – Hamas War: Operation Swords of Iron
Question: Now that a state of war has been declared and most construction sites have been shut down, what is the status of my Contractors All Risks insurance policy? What happens if the authorities permit resumption of works during the war? Do the insurance companies or the government provide any extension, compensation, contribution or any other concession?
Answer: Declaration of a state of war, that has led to the shutdown of construction sites creates various challenges. From the perspective of the insurance companies, it’s purely a question of goodwill. As long as the war continues, the only option is to wait and see whether the insurance companies will be willing to make any concessions to policyholders at the end of the period.
During a state of war, at which time the directives of the local authorities are very clear, it is not possible to “freeze” Contractors All Risks insurance, because even a “static” construction site still carries inherent risks, even if no actual works are taking place.
As far as the government is concerned, the Property Tax and Compensation Fund is responsible for paying compensation in the event of rocket damage to construction sites. Compensation is paid for damage to property, equipment and stock (subject to their condition and value at the time of the loss). According to the Property Tax and Compensation Fund regulations, compensation is also paid for indirect damage in “border towns” due to interruption or interference, even though in certain cases the government may well extend the entitlement to other locations.
Operation Swords of Iron War is a nationwide war which has far reaching ramifications on the entire economy. We are hopeful that the government will also agree to pay compensation for indirect damages outside of the border town areas due to prolongation, interruption or interference, lack of manpower and the like.