A former student at a school in the Misgav Regional Council was injured three times in school activities during his school years. The council had insured its pupils under a group personal accident policy with Ayalon, and in 2024 a claim for insurance benefits was submitted to the insurer. The medical opinion obtained by Ayalon itself assessed his permanent disability at 10% for the first accident, and still the money did not come. As Nitzan Shapir reported in Globes on November 9, 2026, Judge Moti Cohen of the Krayot Magistrate's Court found that the insurer had acted in bad faith toward the insured and toward the court, and ordered it to pay special interest that nearly doubled the debt: benefits of about NIS 47,000 became about NIS 88,000, of which about NIS 41,000 is interest, plus NIS 23,000 in costs and legal fees. Anyone whose insurance company is delaying payment can learn far more from this case than first meets the eye.
Ayalon responded that in its view the judgment contains an error and that it is seeking to have it set aside, so it is too early to treat it as the last word. But the rule the judge relied on is not the invention of a single judgment. It is written into the Insurance Contract Law, 5741-1981, and its purpose is simple: when an insurer holds money over which there is no genuine dispute, holding it should cost the insurer, not pay off. Anyone who grasps that logic approaches every exchange with the insurance company differently, from the day the claim is submitted.
Thirty days: when the insurance company must pay
The Law sets a timetable for both sides. Under section 23, once the insurer has received written notice of the insured event and a written claim, it must immediately do what is needed to determine its liability. The insured, for his part, must provide the insurer within a reasonable time, after being asked, with the information and documents needed for that purpose. The statute speaks of what is needed to determine liability, not of every document the insurer may wish to see, so repeated demands for documents that serve no real purpose should not postpone the date from which the payment period runs.
Section 27 sets the deadline itself. The general rule is that insurance benefits are to be paid within 30 days from the day the insurer had the information and documents needed to determine its liability. Alongside it, the legislature laid down a stricter rule, and that is where the heart of the matter lies:
Insurance benefits not disputed in good faith shall be paid within 30 days
Those 30 days are counted from the day the claim was submitted to the insurer under section 23, and the Law adds that such sums may be claimed separately from the rest of the benefits. Section 39 of the Law lists section 27 among the provisions that cannot be varied except in favor of the insured or the beneficiary, so a policy term extending the deadlines in the insurer's favor does not detract from them.
An undisputed sum: money that is not a bargaining chip
Most disputes with insurance companies are not about whether there is liability but about how much. The insurer's adjuster values the loss at one figure and the insured's adjuster at a higher one; the insurer's physician finds 10% disability and the injured person's physician 19%, as happened in the Misgav case. The Law does not allow the insurer to use that gap to delay what no one is arguing about. The part the insurer itself admits must be paid within the 30 days, and the dispute over the balance continues separately.
Suppose a policyholder with a home and contents policy files a claim for water damage. The company's adjuster values the loss at NIS 30,000, and she claims NIS 50,000. There is no good faith dispute over the first thirty thousand shekels, so there is no justification for holding them until it is decided whether she is also owed the additional twenty thousand. A delay of that kind is precisely the situation in which the Law allows, and in personal lines even requires, an award of special interest.
The words "in good faith" are not ornamental. An insurer that raises a dispute with no footing in the policy or the facts cannot hide behind it to put off payment. In the Misgav case, the judge saw in the medical opinion obtained by the insurer a "clear admission" of the right to payment, as Globes reported, which means the ten percent disability was not in dispute at all.
On the other hand, the rule is not a weapon against every disagreement. An insurer that disputes coverage itself in good faith, for example because it believes the event falls within a policy exclusion, or that is waiting for a document genuinely needed to decide, is not exposed to special interest on the disputed amount. The question is always what the insurer knew, what it admitted and when. That is why the undisputed sum is usually measured by the insurer's own documents: its adjuster's report or the medical opinion obtained on its behalf. An insurer whose own documents acknowledge the debt cannot later argue that the debt was in doubt.
Ordinary interest and special interest
Even without any unusual conduct, insurance benefits are not supposed to erode. Under section 28 of the Law, linkage differentials are added to them from the date of the insured event, together with linked interest from the end of 30 days after the claim was submitted, as those terms are defined in the Adjudication of Interest and Linkage Law, 5721-1961. That is the interest every insurer pays when payment is late, and it is meant to compensate for the time value of money, not to deter.
Section 28A is another matter. Under it, where an insurer in personal lines of insurance failed to pay, by the deadlines in section 27, benefits that were not disputed in good faith, the court must order it to pay special interest at a rate of up to twenty times the linked interest rate. The interest is calculated on the benefits and on the linkage differentials, from the date the insurer should have paid until actual payment, and it is paid in addition to the ordinary interest, not instead of it. In long-term care insurance (bituach siudi), the legislature also set a floor: interest of no less than ten times that rate, unless the court decides, for special reasons to be recorded, on a lower rate. In lines that are not personal, such as liability insurance, special interest is left to the court's discretion.
The definition of "personal lines" (bituchim ishiyim) is broader than one might think: life insurance, personal accident insurance, sickness and hospitalization insurance, compulsory motor insurance under the Motor Vehicle Insurance Ordinance, motor property insurance and home and contents insurance. Most of the policies households commonly hold fall within it. The logic is clear: an insurance company has an economic patience that an injured person waiting for compensation, or a family whose apartment has flooded, does not have. Ordinary interest does not change the calculation of an insurer that decides to wait, and special interest is meant to change it.
Two amendments that tightened the rule
The section was not born in its current form. In Amendment No. 4 to the Law, published on March 3, 2010, the word "may" was replaced with a duty: in personal lines, the court is not merely empowered to award special interest but is required to do so. In Amendment No. 8, published on November 27, 2016, the cap was raised from three times to twenty times, and sickness and hospitalization insurance and compulsory motor insurance were added to the list of personal lines. The 2016 amendment applies to claims filed in court from its commencement.
What the Krayot court held, and why five times and ten times
The judgment reported by Globes shows how a cap of twenty times becomes a concrete rate. The plaintiff filed his lawsuit in April 2025 because the limitation period was running. The medical opinion obtained by the insurer, the one that found 10% disability, was handed to him only together with the statement of defense, and to the court about half a year after the suit was filed. The judge divided the period in two: for the time between the medical opinion and its filing with the court, he awarded interest at five times the linked rate, and for the time from its filing until actual payment, ten times. "It is unclear why the defendant did not bother to pay the insurance benefits," he wrote.
The division reflects a logic of escalation: the longer the insurer keeps holding the money after the fact is already before the court, the harder the delay is to justify. It is also worth remembering what the judgment is not. It is a Magistrate's Court decision that does not bind other courts, and the insurer has announced that it is seeking to have it set aside. The statutory rule, by contrast, stands, and the judgment's force lies in illustration: an insurer that holds an opinion from its own side and does not pay accordingly takes on a real financial risk.
The second clock: limitation that does not stop for correspondence
An insured who waits patiently for the insurer's answer may discover that another clock was running all along. Under section 31 of the Law, the limitation period for a claim for insurance benefits is three years after the insured event occurred. Amendment No. 11, passed by the Knesset on November 25, 2020, extended it to five years for life insurance, sickness and hospitalization insurance and long-term care insurance, for contracts made or renewed on or after that date.
Suppose an apartment floods, and its owner files a claim under the home insurance policy a few weeks later. The adjuster comes, the insurer asks for another quote and another photograph, the correspondence drags on and the answer is slow to arrive. If three years have passed since the flood and no lawsuit has been filed in court, the owner may find that the claim is time-barred, even though a lively exchange with the insurer was going on the whole time.
The same amendment added section 31A, which requires the insurer to tell the insured what the limitation period is, and that it does not stop because the claim was delivered to the insurer. This is a point many people miss: correspondence with the insurance company, even when it goes on for long months, does not stop the limitation period on an insurance claim. In the Misgav case, as noted, the suit was filed in court in April 2025 for exactly that reason. The deadlines by type of policy can be checked with the site's deadline calculator (Hebrew).
What to do when your insurance company is delaying payment
The first step is documentation. The date from which the 30 days are counted depends on the day the claim and documents were submitted, so keep confirmation of every submission and prefer written communication over a phone call. When the insurer asks for another document, you can ask in writing why it is needed to determine liability, and keep a record of the answer. An insured who does not know what the insurer's adjuster or physician found cannot know what the undisputed sum is, so it makes sense to request in writing the opinion on which the insurer's position rests. Under a group policy, like the one in the Misgav case, the insured sometimes does not even hold the text of the policy, and that too should be requested.
The second step is a focused demand. A letter that separates the part the insurer itself recognizes from the disputed part, and demands payment of the former under section 27, confronts the insurer with the question a court will ask later: what prevented it from paying what it does not deny. When a document accompanying a payment describes it as a final settlement of the entire claim, read it carefully before signing, because signing a waiver may close the door on a claim for the balance.
The third step, if the delay continues, is to turn outward. You can file a complaint with the Public Inquiries Unit of the Capital Market, Insurance and Savings Authority, but a complaint is not a lawsuit and does not replace one, and anyone waiting for the Authority's answer must keep tracking the limitation period. When the deadline approaches or the insurer holds its position, the path is a lawsuit against the insurance company in court, in which the undisputed sum can be claimed separately and special interest under section 28A can be requested expressly. When the insurer is not delaying but rejecting the claim outright, the questions are different, and they are discussed on the page The insurance company rejected the claim. A broader picture of the field appears on the Torts and Insurance page.
Every policy is examined on its own terms, and the timetable in each case depends on when the claim and documents were submitted and on what exactly is in dispute. Anyone whose insurance company is delaying payment may contact the firm for a review of the policy, the correspondence and the deadlines, and receive a sober assessment of the options available.
Questions and answers
How long does an insurance company in Israel have to pay a claim?
Under section 27 of the Insurance Contract Law, insurance benefits must be paid within 30 days from the day the insurer had the information and documents needed to determine its liability. Sums not disputed in good faith must be paid within 30 days from the day the claim was submitted to the insurer, even while another part of the claim is still being argued. Under section 39 of the Law, these deadlines cannot be varied to the insured's detriment.
What is special interest, sometimes called penalty interest, on insurance benefits?
It is interest under section 28A of the Law, imposed on an insurer that failed to pay on time benefits that were not disputed in good faith. In personal lines such as life, personal accident, sickness and hospitalization, motor and home insurance, the court must award it, at a rate of up to twenty times the linked interest rate, and in long-term care insurance the rate will generally be no less than ten times. It is paid in addition to the ordinary interest, from the date the insurer should have paid until actual payment.
The insurer recognizes only part of the loss. May it hold back the entire payment?
No. The part the insurer itself recognizes, for example under its own adjuster's or physician's findings, is an undisputed sum, and it must be paid within 30 days of the claim. The Law provides that such sums may be claimed separately from the rest of the benefits. Before signing any document that accompanies a payment, check that it does not waive the balance.
Does filing a claim with the insurance company stop the statute of limitations?
No. Section 31A of the Law requires the insurer to inform the insured that the limitation period does not stop when the claim is delivered to the insurer. The limitation period is generally three years from the insured event, and in life, sickness and hospitalization and long-term care insurance, for contracts made or renewed on or after November 25, 2020, five years. Anyone approaching the end of the period should consider filing suit in court.
Does a complaint to the Capital Market Authority replace a lawsuit against an insurance company?
No. The Public Inquiries Unit of the Capital Market, Insurance and Savings Authority handles insurance complaints, and turning to it may move a claim forward, but a complaint is not a lawsuit and does not replace one. Anyone who takes that route must keep track of the limitation period on their own and should not assume the complaint preserves their rights.
Is the ruling against Ayalon binding on all insurance companies?
The judgment was given by the Krayot Magistrate's Court and is not binding precedent. Ayalon said it believes the judgment contains an error and that it is seeking to have it set aside. What binds every insurer is the statute itself, chiefly section 27 on the payment deadline and section 28A on special interest. The ruling illustrates how a court applies them when an insurer holds an opinion from its own side and does not pay accordingly.
Sources
- Globes, Nitzan Shapir: Ayalon delayed payment to an insured and paid for it: the court doubled the compensation (Hebrew), 9.11.2026
- Insurance Contract Law, 5741-1981 (text as passed by the Knesset, Knesset website) (Hebrew), 2.2.1981
- Insurance Contract Law (Amendment No. 4), 5770-2010, Sefer HaChukim 2232 (Knesset website) (Hebrew), 3.3.2010
- Insurance Contract Law (Amendment No. 8), 5777-2016, Sefer HaChukim 2585 (Knesset website) (Hebrew), 27.11.2016
- Insurance Contract Law (Amendment No. 11), 5781-2020, Sefer HaChukim 2872 (Knesset website) (Hebrew), 26.11.2020
- Insurance Contract Law, 5741-1981, full updated text (kalir.co.il) (Hebrew), 25.10.2026
This article provides general information and is not a substitute for legal advice on your specific matter. More on Torts and Insurance · Contact the firm
First published in Hebrew. Read the Hebrew original