On 15th October 2018, the Israeli Supreme Court dismissed the appeal of the Hachshara Insurance Company (hereinafter: “Hachshara” and/or “the Insurer”) and declined its allegation that it should be exempt from liability towards a third party when the Insured drove the vehicle under the influence of alcohol (Leave to Appeal 2843/18, Hachshara v. Israel Polikov and Others, given by Justice Y. Vilner).
The Supreme Court determined that the Standard policy for Motor Vehicle Insurance (hereinafter: “the Standard Policy”), was aimed at protecting the Insured vis a vis the Insurer, and that the Insurer’s liability should not be narrowed and the damage caused by a driver who drove under the influence of alcohol should not be excluded from coverage.
On 19th January 2015 a chain accident occurred, in the framework of which the vehicle driven by Israel Polikov (hereinafter: “Polikov”) hit the vehicle driven by Orly Anteby (hereinafter: “Anteby”) and as a result, two other cars were also hit. Polikov’s vehicle was insured by Hachshara and the other vehicles by other Israeli Insurers.
In the criminal trial, Polikov was convicted upon his admission of traffic offenses such as the failure to keep to a safe distance while driving, causing a road accident in which a person was injured, and driving under the influence of alcohol, i.e. driving while in a drunken state.
Anteby, the other driver and their Insurers submitted a claim to the Magistrates Court against Polikov and Hachshara, which was accepted by the Court. This case was handled to its merits and the Court heard the parties’ testimonies and evidence. In its well-based and thorough judgement, the Magistrates Court declined Hachshara’s allegation for discharge from coverage due to the fact that Polikov was driving under the influence of alcohol when the accident occurred. The Magistrates Court determined that driving in a drunken state is not one of the Standard Policy’s exclusions. The occurrence was accidental which brings it within the definition of an “Insured Event” in the Standard Policy. In addition, the Magistrates Court also declined Hachshara’s allegation for reduced insurance benefits due to Polikov’s contributory negligence.
Hachshara filed an appeal which was dismissed by the District Court, and then requested leave to appeal to the Israeli Supreme Court. The Supreme Court granted the leave and discussed the appeal to its merits.
The Insurer’s allegations which were discussed (and declined) by the Supreme Court:
The Supreme Court dealt with 3 of Hachshara’s allegations for full or partial exemption from liability under the Policy, due to driving under the influence of alcohol thus causing an accident.
As will be detailed hereunder, all Hachshara’s allegations were declined by the Supreme Court.
- How should the Court Interpret the Absence of an Exclusion re Driving under the Influence of Alcohol?
According to the exclusions in the Standard Policy, the Insurer is exempt from liability when the Insured drove the vehicle under the influence of dangerous drugs.
Hachshara alleged that this exclusion should be interpreted as to including cases when the Insured drove under the influence of alcohol, since there is no substantive difference between the two situations.
The Supreme Court examined other laws in this respect and came to the conclusion that when the legislator wanted to relate to the influence of dangerous drugs as well as to the influence of alcohol, it was done specifically and clearly.
The fact that in the framework of the Standard Policy, the legislator chose specifically not to include the driving under the influence of alcohol as an exclusion, was made deliberately.
Such an exemption cannot be added to the Policy by way of interpretations.
This determination is in line with the Standard Policy’s purpose – the legislators wish to protect the Insured from the Insurer’s preferred power.
- Does driving under the influence of alcohol constitute the intentional causing of an insured event?
Hachshara alleged alternately that it is exempt from its liability under the Policy, due to Clause 26 of the Israeli Insurance Contract Law which states as follows:
“Where the Insured event was caused by the Insured or by the beneficiary intentionally, the Insurer is exempt from liability…”
Hachshara alleged that an Insured who drives a motor vehicle under the influence of alcohol can expect at the highest certainty that an accident will occur.
The Supreme Court determined that the question as to whether an Insured intended to cause an insurance event is a factual question which has to be decided in each and every case according to its merits.
The Magistrates Court heard the testimonies and inspected the evidence filed, based on which it came to the conclusion that Polikov did not intend to cause the accident. The Appellate Court does not intervene in factual and reasoned conclusions of the lower instance.
- Does the Insured’s Negligence justify Full or Partial Exemption of Insurer’s Liability?
Hachshara alleged that Contributory Blame should be attributed to Polikov, thus diminishing Hachshara’s liability accordingly.
The Supreme Court declined this allegation as well. The Court reviewed previous lower instances judgements which discussed the Contributory Blame rule. (Not yet decided by the Supreme Court).
Accordingly, the Court determined that the principal object of the insurance policy is also to protect the Insured from its/his own negligence when an insured event occurs. In any case, in respect of this risk, the Insured signed an insurance agreement with the Insurer and this risk is included in the premium that is paid by the Insured.
In view of the above, the Supreme Courts states that discharge or reduction of insurance benefits due to the Insured’s negligence (standard negligence or greater negligence) empties the aim of the Insurance Contract Law.
The Supreme Court also commented that the Insurer failed to include in the Policy a condition imposing a duty of care on Polikov and therefore, there is no room to impose contributory negligence.
In its final remark, the Supreme Court pointed out that one must not undervalue the felony of driving under the influence of alcohol. However, the tools required to deal with these felonies are in the field of education and in the legal field, in the framework of criminal law, but not in the insurance law.