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In this case, the Third Party Notice was filed against the insured, a cleaning contractor, for bodily injuries sustained by plaintiff who slipped on a wet floor in a hospital.

Only eight years after the Third Party Notice was filed against the insured, he filed a claim against his insurers for indemnification under the policy. The insurers alleged that the claim had been time-barred.

The dispute revolved around the proper interpretation of Section 70 of the Insurance Contract Law - 1981 which provides as follows:

The Court referred to the definition of Liability Insurance in Section 65 of the Insurance Contract Law and determined that an insured event in Liability Insurance crystallized on the date at which the third party's cause of action against the insured was created.

The latest date from which the limitation period of a claim for insurance benefits should be counted, is the date in which the insured was aware of the third party's claim/allegations against him. In this case, the insured was definitely aware of the third party's claim against him on the date on which the Third Party Notice was filed and served to him.

The insured filed the claim against his insurers eight years after the Third Party Notice was filed against him, i.e. more than seven years. Therefore, the insurance claim was time-barred, and as such was dismissed.

It should be noted that the regular limitation period for an insurance claim in Israel was set by the Insurance Contract Law as three years form the date of the insured event. This period is shorter than the general limitation period applicable in Israel pursuant to the Law of Limitation 1958, which is seven years, both in torts and in contracts.

Section 70 of the Insurance Contract Law was aimed at staying the running of the limitation period of the insured's claim, so that as long as the third party had not yet filed his claim against the insured, nor had he demanded indemnification from the insured, the running of the insured's claim against his insurer would not commence. This is the extension of the limitation period envisaged by the Law.

However, the Court in this case granted an additional extension, i.e. that the insured has seven years (instead of three years) for filing his insurance claim in Court from the date in which the insured was sued by the third party.

Therefore, the outcome of this judgement is that the time from which the limitation period starts to run, in third party liability claims - is not the date of the occurrence or the breach of duty, but rather the date in which the insured was first aware of the claim - and here - from the date in which the insured was sued for that breach. From this date on, the insured will have a seven year period for filing the claim against his insurers under the policy.