What is the status of apartment owners with regard to insurance, when the developer/contractor abandons the project? Do they have to bear a deductible for third-party damage?

answer: 

 The answer is no and even more so. Here is the explanation.

 Contractors and entrepreneurs in the field of urban renewal in Israel sometimes encounter financial and professional difficulties, and in some cases are forced to "abandon the project."

 Therefore, in urban renewal projects, our recommendation is unequivocal - tenants should ensure that there is a clause in the contract that allows them to step into the shoes of the developer/contractor (the primary insured) in the insurance policy. Also remember that the departure of contractors and developers does not have to be due to financial circumstances alone, and sometimes it stems from disputes between the parties (regarding project management, schedules, turnover, etc.). 

 This is no small matter from the point of view of the tenants ( see more on this subject here ).
In such cases, when it comes to insurance, the interest of the apartment owners is that the insurance for the project will continue uninterrupted. However, as the contractor exits the project and the tenants "step into his shoes," this means receiving full rights (the very existence of the insurance) and also the obligations arising from the policy, including also bearing the burden of deductibles in the event of damage, in all sections of the policy, including in the event of third-party damage. 

 The transfer of ownership clause of the policy does expose tenants to co-payments and liabilities arising from the policy, but without it, their situation would be much worse. In its absence, apartment owners could find themselves not only with a project without insurance, but also with a project for which it is very difficult, if not impossible, to obtain new insurance. 

 In light of the changes that have occurred in the world of construction insurance in recent years, insurance companies are making it very difficult to provide insurance for an abandoned project. There are quite a few projects scattered throughout the country that have stalled due to a lack of insurance. In an urban renewal project, which concerns residential buildings in a dense and populated environment, this is doubly important due to the increased dangers in projects of this type, to passersby, to the built environment, and to the residents themselves in populated TAMA projects.