District - In the absence of an explicit definition of the term "sinkhole" in the policy, the exception must be interpreted restrictively according to an objective geological criterion, and the insurer must bear the insurance benefits.
Sep 10, 2026
From: Attorney John Geva
Proceedings and Nature of the Claim
In Civil Case No. 31842-09-22, pending before the Central District Court in Lod, the Honorable Judge Tzvia Gardstein-Papkin adjudicated the insurance coverage dispute that remained between Media Maven Ltd. (the “Insured”) and Ayalon Insurance Company Ltd. (the “Insurer”). The judgment was rendered on August 25, 2026. The names of counsel for the parties were not stated in the body of the judgment.
The dispute arose in the context of extensive tort proceedings, but was ultimately narrowed to a single issue of contractual interpretation: whether the cavity that opened in the floor of a private swimming pool, resulting in the death of an individual, constituted a “sinkhole” within the meaning of the exclusion contained in the insurance policy.
The practical significance of this question was decisive. If the exclusion applied, the Insured would have no coverage under the policy in respect of the incident. If, on the other hand, the exclusion did not apply, the Insurer would be required to provide coverage and indemnify the Insured in accordance with the terms of the policy.
The factual background and circumstances of the case
On July 21, 2022, a “fun and team-building day” was held at a private swimming pool located at a villa in the community of Karmi Yosef, Israel. The decedent, Mr. Kalil Kimhi, of blessed memory, had been invited to the event by the Insured, with whom he had maintained business and professional relationships.
At approximately 2:30 p.m., while some of the attendees were swimming and playing ball, the floor of the swimming pool suddenly collapsed, causing a large and deep cavity to open beneath the pool.
As a result of the collapse, the pool water was drawn with great force into the cavity, carrying the decedent and another individual beneath the surface of the ground. The other individual sustained injuries and abrasions from fragments of concrete and metal but managed to extricate himself. The decedent, however, was swept deep into the cavity.
Emergency response personnel, including rescue services, firefighters, and search-and-rescue dogs, were dispatched to the scene. It was only several hours later that the decedent’s body was located with the assistance of a search-and-rescue dog. His body was found several meters below ground level, inside an underground cavity forming part of an ancient cave located within chalk soil.
The decedent’s estate and his parents commenced legal proceedings against a number of defendants, including the owners of the property and swimming pool; the Gezer Regional Council; the Insured and N.C. Marketing and Advertising Ltd., in their capacity as the parties who had invited the decedent and organized the team-building event; as well as various entities and individuals who, over the years, had performed construction, renovation, maintenance, and leakage-detection work at the swimming pool.
The defendants, in turn, served third-party notices upon one another. Among these was the third-party notice relevant to the present matter, which was filed by the Insured against the Insurer.
Following several court hearings and the submission of examination-in-chief affidavits, the plaintiffs and the defendants reached a settlement, in the spirit of a settlement proposal put forward by the Court. Pursuant to the settlement, the Insured’s allocated share of the liability was determined to be 7.5%, and the corresponding amount was paid by the Insurer. It was expressly agreed that the proceedings between the Insured and the Insurer would continue to be litigated separately.
At the center of the third-party proceedings was a modular business insurance policy entitled “Hakol Ba La’Asakim” (“Everything for Businesses”), 2021 Edition, Policy No. 21/7-39-150025, providing coverage for the period from February 7, 2022 through July 31, 2022. The policy had been purchased by the Insured’s Chief Executive Officer through an insurance agency.
The Insurer denied the Insured’s request for legal representation and insurance coverage, relying upon the exclusions and conditions applicable to all sections of the policy, and, in particular, Exclusion 13. That exclusion purports to exclude liability, loss, or damage caused, directly or indirectly, by the occurrence or formation of holes or ground subsidence commonly referred to as “sinkholes.”
The insured claimed that the incident was caused by a design failure and the collapse of the pool bottom into an existing cave, and not by a "sinkhole" which is a natural phenomenon. She relied on the opinion and testimony of geologist Dr. Moshe Yarkoni, who determined that the geological and geo-engineering conditions at the site do not allow for the development of natural sinkholes in the bedrock, and that this was a piping process caused by a prolonged water leak from the pool, which washed thin filler materials into an existing cave until the concrete floor collapsed. In his view, this was not a natural subsidence of the ground, and the void was not created by the water leakage but existed previously. The insured also claimed that the exception was added when the policy was renewed without due notice.
The insurer relied on the sweeping wording of the exception, on media publications that called the event the "sinkhole disaster," and on the opinion and testimony of engineer Prof. Sam Friedman, according to which the case classically fits the definition of a sinkhole, since the pool was built over an ancient cave that opened and was blocked with fill without engineering control, and subsidence is a process that may give rise to sinkholes. According to him, sinkholes are not unique to the Dead Sea region, and professional literature documents many cases of sinkholes that developed under leaking swimming pools. It also relied on the testimony of the Director of the Property and Liabilities Department, Attorney Efrat Lichter Anzenberg, and claimed that the claim of lack of notification constitutes an expansion of a prohibited front.
The parties' claims
The District Court accepted the insured's position and ruled that the exception in the policy did not apply. The starting point it outlined was that the insurance policy is first and foremost a contract, interpreted according to the rules of interpretation in contract law, and that in view of the consumer and uniform nature of insurance contracts, the interpretative answer will usually not be found in the subjective assessment of opinion, but in the objective purpose of the contract, while giving special weight to the legitimate interests of the insured and his reasonable expectations. It was further emphasized that if an insurer claims the application of an exception, the burden of proving it falls on it, and that it is not enough to present any reasonable interpretation, but must show that the existence of the exception is the only reasonable interpretation.
The court ruled that both the name of the policy and its content indicate that its objective purpose was to insure the insured against any insured event, including against third parties and including bodily injury, subject to limitations and exceptions. Since the policy does not contain an express definition of the term "sinkhole", the insurer's position was rejected for four reasons.
First, the insurer's own panel, responsible for approving insurance claims, testified that the examination of the existence of the exception is done on the basis of a geological opinion - contrary to the position of its attorney, who sought to rely on the dictionary definition and common public usage. Since the only geologist who testified was the expert on behalf of the insured, while the expert on behalf of the insurer was a civil engineer, for this reason alone the insured's position must be adopted. In this context, it was determined that no special significance should be attributed to the failure to bring the policy drafter or underwriter to testify, since since there is no definition of the term, one must resort to an objective standard in any case.
Second, the policy must be interpreted as a whole. In the structure insurance chapter, the term appears in the context of "the geological phenomenon known as 'sinkhole' or 'swallowhole,'" and hence the insurer itself believed that the term should be examined according to a geological definition. The exclusions chapter, which uses the word "sinkholes," actually refers to the previous definition.
Third, the exception does not apply to all "pits or sinkholes," but only to those known as sinkholes. When at least two reasonable interpretations exist, the rule of interpretation against the drafter applies, which is used primarily where exceptions to insurance coverage are involved.
Fourth, and from the point of view of interpretive logic, adopting the broad dictionary definition would have given rise to an illogical result: coverage for any sudden collapse, collapse or subsidence of buildings, unless they were caused by the collapse of the top layer of soil into a space that opened up beneath it – that is, the exclusion of almost all insurance cases under the structure insurance section. It is unacceptable that any subsidence of a road, sidewalk or land in which the fill material has been washed away would be considered a sinkhole, otherwise the entire insurance coverage would be swallowed up in the exception. In view of this conclusion, it was found that there was no need to address the arguments regarding the addition of the exception and the argument regarding the expansion of the frontage opposite it.
The District Court's decision and the essential reasons
Summary and conclusion
The District Court ruled that the exception to the policy did not apply, and that the insurer must bear the insurance benefits. In addition, the insurer was ordered to pay legal expenses in the amount of NIS 60,000, which include the cost of the opinion, and attorney's fees in the amount of NIS 60,000 plus VAT, as well as the balance of the fee. The insured's request to charge the insurer with penalty interest was denied under the circumstances.
As of the date of this writing, it is not yet known whether an appeal has been filed with the Supreme Court.
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