Adv. Nitzan Shmueli, liquidator of Shem Tov Ltd. (in liquidation) (hereinafter: the Company) v. Menorah Insurance Co. Ltd (hereinafter: Menorah).

In July 2018, the District Court of Jerusalem dismissed a Liquidator Claim against Menorah, based on a Claims Made Policy that was issued 20 years ago and expired 16 years ago.


The Liquidator of the company requested the Court to allow a claim against directors of the Company and against Menorah, their alleging the negligence of directors in the Company, inter alia, by approving loans to the controlling shareholders contrary to the Company’s interests and without implementing the provisions of the law and the recommendations of the Audit Committee.

In the framework of the request, the liquidator petitioned to impose on Menorah payment in the amount of NIS 17 million under Professional Liability policies issued by it to the Company and its D&Os, during the years 1996-2001.

Insurance issues discussed in the decision –

  1. Menorah denied the claim against it based on several arguments. The main argument was that the insurance policy purchased by the Company is a Claims Made Policy that ended 16 years prior to the submission of the claim.


  1. The liquidator raised arguments regarding the disadvantages of a claims made policy.


  1. The Court discussed the question of whether the liquidator, who was appointed seven years ago, can now, after many years, raise arguments regarding the terms of the policy and whether it is even possible to consider such arguments as between the Company and Menorah.


  1. An additional argument of the Liquidator was Menorah should have searched and approached directors and officers who served in the Company over the years, and warn them of the consequences of non-renewal of the policy by Menorah.


  1. In addition, the Liquidator argued that the policy contradicts the object of the Insurance Contract Law, and its conditions prejudice the Insured.


The Court’s decision:

 In its decision, the Court thoroughly analyzed the various insurance issues, rejected the arguments of the Liquidator, and accepted Menorah’s position.

The court ruled that the company, through its directorate and with the approval of the board of directors, who knew, weighed and agreed to the terms of the policy, chose to purchase a Claims Made basis policy.

In addition, the court ruled that the criticism of the insurance concept of such coverage cannot justify any claim under any circumstances, i.e. even if there is a problem in the policy, it does not mean that any claim can be approved and that the policy applies and covers. For example, the alleged damages cannot be covered only due to the policy’s problematic terms. In our case, the Company and the Insureds – the directors, were aware of the terms of the policy and agreed to it.

It was further determined that Menorah did not breach its duty of disclosure, the duty to emphasize exclusions and obligation to verify the policy’s understanding, as claimed by the Liquidator.

In addition, the Court ruled that the insurance company is not obliged to inform the directors that the Company does not pay premiums and that the Company did not renew the policy in Menorah.

The Court also discussed the issue of limitation period.  The claim to Court was filed about 20 years after the policy was issued and about 16 years after the company stopped paying its premium. Due to these circumstances the claim was dismissed.

The Court commented that it is unacceptable that a claim filed 16 years after the company stops paying the premium that a claims made basis policy would cover. Accepting such claim may create a situation that in practice this policy leaves for eternity, a situation which is unreasonable.

 The outcome of the judgment –

The request against Menorah was declined. Due to the overall picture of the debts of the company to its creditors, the Court did not order costs.