Damage to construction sites during war due to rocket attacks: rights of contractors and developers and recommendations for proper conduct
Jun 16, 2025
By: Itzick Simon
First and foremost: Recommendation to Itzik Simon Insurance Agency clients and to our colleagues - members of the Israel Builders Association: Contact us immediately. Act immediately with our assistance in appointing a private adjuster, who can provide immediate help in making correct decisions, professional guidance, and mediation of the incident and damage with the authorities. We are at your service – with guidance, advice, and field support, and we wish for all of us to quickly overcome our enemies and return to routine.
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Background
In Israel's security reality, the difficult question occasionally arises – how should one act when a construction site is damaged as a result of a war event. This question has become more relevant given the state's official declaration that events involving Iran, for example, constitute clear war events. The implications for contractor and developer liability, project insurance, residents' rights, and relations with authorities – are complex and require measured, responsible, and humane conduct.
Missile strike on construction site: What do we do now? A missile strike on a construction site during a wartime event – such as in direct confrontation with Iran – creates a difficult reality: damage to property in various construction stages, cessation of activity, high repair and restoration costs, and sometimes inability to complete construction and the need for demolition and reconstruction. It's important to understand: this is not a regular insurance case, but an event that requires meticulous conduct with the Property Tax Authority and legal and professional understanding of the rights.
By Itzick Simon – Construction Insurance Agency
FIRST AND FOREMOST:
A recommendation to the clients of Itzick Simon Insurance Agency and our friends - Israel Builders Association members
IN THE EVENT OF A LOSS, PLEASE CONTACT US IMMEDIATELY
We can help you take immediate steps, including appointing your own loss assessor, to ensure you take the right decisions and obtain professional advice and guidance in making a claim with the government authorities for the damage.
Assuring you of our best and personal service, and hoping we will be victorious and return to normality as soon as possible.
Does my Contractors All Risks policy cover war damage?
In a nutshell: No.
Most insurance companies in Israel use the BIT Contractors All Risks policy wording, which, like most regular insurance policies, contains an express exclusion of loss or damage arising from war, hostilities, invasion or acts of terrorism.
Therefore, if a construction site is damaged by rockets during war, regardless of the scope of the loss, your Contractors All Risks insurance policy does not provide any cover for direct damage to property, or indirect damage such as delays or loss of profits.
The significance of this is that you will have to claim compensation from a special government fund and not from your insurance company.
In one word: No.
Most of the contractor insurance market in Israel operates according to "Bit" terms, which explicitly exclude damages caused as a result of war, enemy action, invasion, or terrorism during wartime. Therefore, when a construction site is damaged by a missile during war – even if it's significant damage – there is no coverage under the contractor's policy. Not for direct damage and not for indirect damage such as delays.
The implication: Compensation does not come from the insurance company, but from the state.
Any claim for war damage must be made with the Property Tax and Compensation Fund, which operates in accordance with the Property Tax and Compensation Fund Act – 1961.
In such a case – our unequivocal recommendations to contractors or developers are as follows:
1. To appoint a specialist loss assessor, immediately after the event – A loss assessor who you appoint (to differentiate from a loss adjuster appointed by the insurance company) should ideally be involved from the moment the damage is discovered. A loss assessor can provide professional advice in connection with the repairs and can help you make a claim with the Property Tax and Compensation Fund. In National Outline Plan 38 projects involving reinforcement, renovation or extension works to existing buildings, it is especially important for the loss assessor to act transparently and protect the interests not only of the developer / contractor, but also of the existing residents of the building.
2. To report the loss without delay – by completing a designated on-line claims form. The loss assessor can assist with this and guide you through this process.
3. To obtain a professional evaluation from an external engineer of the feasibility of repairing the damage and if so, to prepare a restoration plan and bill of quantities, in conjunction with the project engineer.
4. To formulate a claim for compensation with the assistance of the loss assessor and the project engineer, attaching all documents to prove the loss, including photos, aerial images, project management report reports, blueprints and plans.
The government entity responsible for paying compensation due to war damage called is the Property Tax and Compensation Fund.
Anyone owing or having an economic right or interest in the property is entitled to make a claim for compensation:
· The developer or contractor – In the case that the damage occurs to the frame or structure of the project, or to buildings which have not yet been handed-over.
· Purchasers of apartments – If the purchasers have not yet taken actual possession of the property, the developer will usually receive compensation from the government fund.
· Owners of existing apartments (in the case of projects involving existing buildings) – A separate and independent claim should be made by the residents with the Property Tax and Compensation Fund for damage to the structure of the apartment, furniture and personal effects.
Who is entitled to compensation?
Even though the contractor or the developer is not usually liable to the residents under tort or insurance law for war damage, especially in the case of National Outline Plan 38 projects on existing buildings, there is a public expectation that they will be proactive, helpful and attentive to the needs of the residents.
We therefore recommend contractors and developers:
· To assist the residents in making a claim with the Property Tax and Compensation Fund and give them any possible assistance.
· To ask your loss assessor to handle the claim for sections of the building which have not yet been handed-over, and also liaise between the residents and the loss adjuster from the Property Tax and Compensation Fund.
· In National Outline Plan 38 projects involving reinforcement works to existing buildings: To appoint a single professional loss assessor to represent both the developer and the residents and who can act as a professional and objective mediator between the residents and the Property Tax and Compensation Fund and thereby minimise disputes.
Coping with the residents – even when there is no insurable liability
A unique situation: Rocket damage to a National Outline Plan 38 project involving reinforcement works
In such projects, where part of the building is inhabited and part is under construction, a distinction needs to be made between:
· The “old” (inhabited) sections: The residents need to claims with the Property Tax and Compensation Fund for any damage to these sections. It is important to bear in mind that the contractor is not considered to be an “interested party” in connection with such claims (even though your loss assessor may assist the residents with their claims).
· The new sections under construction: The contractor or developer needs to claim compensation from the Property Tax and Compensation Fund for any physical damage to these sections.
· Common areas(such as lobbies, lifts, staircases, car parks and the like): If they have not yet been handed-over – the claim should be made by the developer, and if they have been handed-over – by the residents (in accordance with the project agreement and/or hand-over protocol).
A unique situation: Rocket damage to a National Outline Plan 38 project involving reinforcement works
Conclusion
In the current security situation in Israel, contractors and developers might well face a predicament if a construction site is damaged by an act of war. This is especially relevant since the government has now declared a state of emergency and so damage by rocket attacks from Iran is automatically considered to be war damage. The ramifications of this on contractors and developers, the project insurance, the rights of residents in National Outline Plan 38 projects and the relations with the authorities are complicated and need to be addressed wisely, responsibly and with compassion.
שימו לב! ישנו מועד מוגדר הקבוע בחוק, רק במסגרתו ניתן להגיש את התביעה לפיצוי בגין הנזקים. לא להתמהמה!
את התביעה מגישים באמצעות טופס מקוון באתר הממשלתי.
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המלצה ללקוחות איציק סימון – סוכנות לביטוח ולחברי התאחדות הקבלנים בוני הארץ:
פנו אלינו מיד.
התנהלו מיידית בסיוענו במינוי שמאי פרטי, שיוכל לסייע מיידית בקבלת החלטות נכונה, ליווי מקצועי ותיווך האירוע והנזק לרשויות.
אנו עומדים לרשותכם – בליווי, בעצה ובשטח ומאחלים לכולנו שנתגבר במהירות על אויבינו ונחזור לשגרה.
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War events place construction sites in the eye of the storm. The developer and contractor cannot rely on the contractor's policy as an insurance solution for war damages. They must act with awareness of the Property Tax Authority's compensation mechanisms, incorporate independent adjuster guidance, and maintain an empathetic response policy, particularly in occupied projects. Early planning and proper conduct during crisis – will reduce damages and preserve reputation over time.
Pay attention! There is a defined deadline set by law, only within which it is possible to submit the claim for compensation for damages. Do not delay! The claim is submitted through an online form on the government website.
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Recommendation to Itzik Simon Insurance Agency clients and to members of the Israel Builders Association: Contact us immediately. Act immediately with our assistance in appointing a private adjuster, who can provide immediate help in making correct decisions, professional guidance, and mediation of the incident and damage to the authorities. We are at your service – with guidance, advice, and field support, and we wish for all of us to quickly overcome our enemies and return to routine.
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Link to simulator for handling missile damage at construction site
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