Car insurance: what is mandatory, what is worthwhile and what you actually bought

Car insuranceA contract under which an insurance company undertakes to compensate the insured in the event of damage in exchange for a periodic payment. is one of the most common types of insurance in Israel, and for good reason. Part of it is required by law, and part is intended to protect you from a heavy financial loss in case of an accident, theft or damage to someone else's property. In this chapter, we will distinguish between the three types of insurance and understand how to balance a low price with quality coverage.

Compulsory insurance

Compulsory insurance, Bituach Hova (ביטוח חובה), covers only bodily injury caused to the driver, passengers or pedestrians in an accident.

Third-party insurance

Third-party insuranceProtects the property owner against claims for bodily injury or property damage caused to others on the premises., Bituach Tzad Gimmel (ביטוח צד ג׳), covers damage you cause to someone else's property, such as another car, a fence or a shop. It does not cover damage to your own car.

Who is it for? Mainly older, low-value cars for which paying a high premiumThe periodic payment made to the insurance company. for comprehensive insurance is not worthwhile.

Comprehensive insurance

Comprehensive insurance includes third-party insurance and adds protection for your own vehicle in cases of accident, theft, fire, vandalism or natural hazards.

Who is it for? New vehicles or vehicles with substantial value that you cannot afford to lose.

The insurance company assesses your risk. The higher the risk, the higher the price, or premium.

• The drivers: Age, because a young or new driver substantially increases the cost, and insurance history, including claims in the past three years.
• The vehicle: Model, year of manufacture, engine size and the cost of replacement parts at the garage.
• The deductibleThe initial amount the insured pays out of pocket when making a claim.: The more you agree to pay in case of damage, the lower the monthly price.

Car insurance can be expanded through additional coverage:

Broken windshields and mirrors

Repair at no cost if a stone hits the windshield or damage is caused by vandalism.

Tip: Check whether the coverage also includes side mirrors and whether the repair must be performed by a particular provider.

Roadside assistance and towing

Towing and rescue in case of a breakdown or accident, help replacing a battery or tire, and in some cases a replacement vehicle.

Tip: Check how many days of a replacement vehicle you receive and the towing limitations.

Coverage for a young or occasional driver

If a young driver or another driver uses the vehicle, make sure this is defined in the policy.

Tip: You can buy temporary coverage by the day or hour instead of adding a permanent young driver.

Not every scratch justifies a claim. Using the insurance leaves a "mark" on your insurance history for three years, which raises the price at the next renewal.

Before making a claim, check:

• Amount of damage: If the repair costs ₪2,000 and your deductible is ₪1,500, it may be better to pay out of pocket.
• Loss of the no-claims discount: One claim can raise the insurance cost by hundreds or thousands of shekels in the following years.

• Choosing insurance only by price: An overly cheap policy may prove incomplete precisely when you need it.
• Buying coverage blindly: Make sure you understand what you are paying for. For example, does roadside assistance also cover a flat tire?
• Surprises after an accident: Do not wait for an accident to discover that your coverage excludes natural hazards or specific securityA general term for a tradable financial asset (such as a share, bond, or unit in a fund) that represents a right to an asset or to profits. systems.
• Making a claim for every scratch: Remember that keeping a clean claims history is your best tool for reducing the price in future years.

Before renewing or buying compulsory insurance, it is highly advisable to use the compulsory insurance calculator provided by Israel's Capital Market, Insurance and Savings Authority. The calculator lets you compare compulsory insurance offers from different insurers based on the drivers' and vehicle's characteristics and obtain a clear picture of market prices. Because compulsory insurance is a uniform product whose insurance coverageThe list of events and damages for which the insured is entitled to compensation. is set by law, the main differences between companies are price and service.