Construction site damage from a security incident
Oct 18, 2023
By: Itzik Simon
Rocket fire continues relentlessly, reaching many points across the map. Unfortunately, we are also seeing a significant number of direct hits on buildings. In the event of a rocket strike at a construction site, the contractor’s or developer’s recourse is not through their insurance policy, but rather through the Property Tax – the national Compensation Fund established for such cases.
First, it is important to know that the government quickly launched a dedicated section on the Tax Authority’s website, which specifically addresses compensation under Property Tax for victims of “Iron Swords.” The site provides various guides, the option to submit claims online, and details on a wide range of related topics.
By: Itzick Simon
The rocket barrages are relentless and reach many points on the map. Unfortunately, we also count quite a few direct hits on buildings. In the event of a rocket hit at a construction site, the response for the contractor/developer is not found in the insurance policy but in dealing with the "property tax" - the national compensation fund established for these cases.
First, it is worth knowing that the state quickly launched a dedicated area on the Tax Authority website that includes specific reference to property tax compensation for victims of "Iron Swords." On the site you will find various guides, the option to submit online claims, and details on many diverse topics.
Property and construction site tax
A construction site owner who was hit by a rocket may file a property tax claim. Compensation Fund employees will arrive at the site, conduct an assessment and valuation, and based on the conclusions, determine the scope of compensation.
Inventory and equipment will be compensated according to the market value of the equipment at the time of the injury, after proof of ownership. The plaintiff is required to present a list of inventory and equipment, relevant documents, financial statements, income tax certificates, account management certificates, and more. Please note that according to the Tax Authority website, " Equipment, inventory, waste, or any other object found in the business may not be removed without prior coordination with an appraiser from the Compensation Fund."
Important: The owner of the construction site may present an appraiser's opinion on his behalf, and it is advisable to do so. Experience shows that a private appraisal on behalf of the injured party may well represent his interests faithfully before the property tax appraiser, and be reflected in the final result.
Some numbers: As of October 15th and according to data from the Property Tax Compensation Fund, approximately 6,400 buildings in Israel have been damaged since the beginning of the war. Approximately 80 assessment teams are deployed in the field. Approximately 20 of them are in the center and the rest in the southern region. In the Tel Aviv metropolitan areas, approximately 2,100 buildings have been damaged so far.
Is the contractor/developer entitled to indirect damages?
According to Israeli law, there may be entitlement to compensation for indirect damages when the injured party can prove a causal connection between the damage caused and the war activities. Property tax regulations allow this only for small towns, but experience shows that sometimes the state specifically extends the entitlement to towns in additional areas. It seems that this time there is a high probability that the state will reach into its pocket and compensate businesses in the economy for the paralysis of activity and the loss of income from the situation.
A construction site owner who suffers damage from a rocket strike is entitled to file a claim with the Property Tax Compensation Fund. Employees of the Compensation Fund will visit the site, perform an assessment and appraisal, and based on their findings, determine the scope of the compensation.
Inventory and equipment will be compensated according to their market value at the time of the damage, after proof of ownership. The claimant is required to present a list of inventory and equipment, relevant documents, financial statements, tax certificates, bank account authorizations, and more. Note that according to the Tax Authority website, “equipment, inventory, waste, or any other items located on the business premises may not be removed without prior coordination with an appraiser appointed by the Compensation Fund.”
Important: The construction site owner is allowed to present an independent appraisal and is indeed encouraged to do so. Experience shows that a private appraisal commissioned by the damaged party can faithfully represent their interests to the Property Tax appraiser and may influence the final outcome.
Some numbers: As of October 15, according to the Property Tax Compensation Fund, approximately 6,400 buildings in Israel have been damaged since the start of the war. Around 80 appraisal teams are deployed in the field, about 20 of them in the central region, with the remainder in the south. In the Tel Aviv metropolitan area alone, around 2,100 buildings have been damaged so far.
Is the contractor/developer entitled to indirect damages?
Under Israeli law, it is possible to be entitled to compensation for indirect damages if the claimant can prove a causal link between the damage suffered and the acts of war. While the Property Tax Regulations allow this only for outlying communities, experience shows that the state sometimes extends eligibility specifically to other areas. In this case, it seems highly likely that the state will step in and compensate businesses for operational disruptions and lost income caused by the situation.
