Failure to activate the app due to a technical fault does not void insurance coverage.
Jan 6, 2026
By: Shlomi Hadar, Adv.
Factual Background In an important ruling recently issued by the Tel Aviv-Jaffa Magistrate's Court, the court addressed a complex question relevant to the digital era: What happens when an insurance company's digital application, designed to activate insurance coverage, does not function due to a technical malfunction? Does the insured remain without coverage, or does the insurance company bear responsibility for the proper functioning of the system it operates?
On April 8, 2024, a traffic accident occurred on Road 412 involving three vehicles. One vehicle was owned by Gonen Vardi, and was being driven by his son, Adi Vardi, age 19. Gonen Vardi had a comprehensive insurance policy with "Bituach Yashir" (Direct Insurance), which allows driving for drivers aged 24 and above with 12 months of driving experience. The policy included an option to extend coverage to younger drivers (from age 18) through activation of a digital application called "Yashir Tza'ir" (Young Direct).
The legal dispute centered on the question: Was there insurance coverage for Adi Vardi at the time of the accident? Bituach Yashir claimed that the application was not activated before the accident, and therefore there was no coverage. In contrast, Vardi argued that he attempted to activate the application before the trip, but the application did not work due to a technical malfunction that was not his responsibility.
The technical data that emerged from the evidence: The ignition switch in Vardi's vehicle was turned on at 7:55; the accident itself occurred at 8:04; and the application was actually activated (after the accident) at 8:08. The central legal question was: Does Bituach Yashir's conclusion that the application was not activated before the accident automatically lead to denial of insurance coverage?
The parties' claims
Claims of the insured (Gonen and Adi Vardi):
The insurance coverage was activated before the start of driving, but due to local reception problems or malfunctions in the app (which the insured and the young driver testified to as existing), the insurance did not take effect.
The young driver, Adi Vardi, testified that he routinely activates the app, and that activating it is a "permanent habit" for him. Gonen Vardi himself will remind his son to activate the app.
Failure to activate the application, at most, constitutes an aggravation of risk, and not a condition for maintaining the policy. Therefore, there is room for activating Section 29 of the Insurance Contract Law, 5741-1981.
The defendant's claim regarding the provision of false information about the time of the accident (which was reported at 8:10 while the defendant claimed 8:04) is theoretical and does not correspond to reality, as drivers are not accurate about the exact minute of an accident.
Lack of insurance coverage because the app was not activated before the accident. A condition for coverage for a young driver is that the app be activated before the accident.
The switch in the insured vehicle was turned on at 7:55, the accident at 8:04, and the app was only activated at 8:08, after the accident.
The insured provided false information regarding the time of the accident, in order to retroactively adjust the date of the accident to the date the app was activated.
The event is not a case of "risk aggravation" (sections 17-18 of the Insurance Contract Law), but rather a fundamental condition of the policy, and in accordance with the "Pikali rule", coverage should be denied.
Defendant's claims (IDA Insurance Company):
The court ruled that it was proven by the balance of burdens required in civil law that the young driver attempted to activate the app before the trip and the accident.
The court ruled that the defendant is the operator of the application and is responsible for its proper functioning. Since an attempt was made to activate the application before the accident, but it did not actually work for a reason beyond the control of the insured, the defendant must be seen as having prevented the insured from having the insurance take effect.
Therefore, the court accepted the insured's claim and rejected the defendant's claim of lack of insurance coverage.
The verdict
Summary
This ruling constitutes an important precedent for the digital era in the insurance field. It clearly establishes that insurance companies operating digital systems as a condition for activating insurance coverage bear full responsibility for the proper functioning of these systems. When an application does not work properly, and this is not the fault or responsibility of the insured - it is neither just nor fair to deny them insurance coverage.
The use of Section 28(a) of the Contracts Law - which stipulates that a party who prevented the fulfillment of a condition precedent cannot rely on its non-fulfillment - provides an effective legal tool for protecting insureds in such situations. The guiding principle is that an insurance company cannot benefit from a situation it itself created.
For insurance companies, the ruling mandates investment in reliable and proper technological infrastructure. When a company offers digital solutions for activating insurance coverage, it must ensure these solutions function properly and maintain a documentation and control system that allows retrospective examination of whether malfunctions occurred. Failure to do so may result in the insurance company bearing the burden of proof and the consequences of failing to prove its claims.
For insureds, the ruling provides important protection. It establishes that a good faith attempt to activate an application, even if unsuccessful due to a technical malfunction, does not negate insurance coverage. However, it is recommended that insureds document their attempts to activate the application (for example, through screenshots) and maintain written communication with the insurance company regarding any technical issues.
In conclusion, this ruling reflects the new legal challenges raised by the digitalization of the insurance field and offers a balanced approach that protects the rights of insureds without denying insurance companies the ability to offer innovative technological solutions - provided these solutions are reliable and properly functioning.
מסמכים
