Was your property damaged by a missile or a terrorist? Who is the compensation from?

May 18, 2021

By: Adv. Shlomi Hadar – John Geva, Hadar & Co., Attorneys

Introduction

Over the past week, Hamas and other terrorist organizations launched an unprecedented attack, firing barrages of rockets from the Gaza Strip into Israel. Millions of civilians took shelter in bomb shelters and protected areas, prompting Israel to launch Operation Guardian of the Walls. In the wake of the rocket fire and IDF operations in Gaza, riots escalated across the country. Hundreds—and in some cases thousands—of individuals rioted, threw stones, hurled Molotov cocktails, and caused damage to property and infrastructure.

Legal Framework

The State of Israel has legislatively committed to compensating its residents for direct and indirect damage caused by acts of hostility, such as stone-throwing, small-arms fire, Molotov cocktails, or other acts of war. Compensation is provided under the Property Tax and Compensation Fund Law, 1961. Additional regulations include the Property Tax and Compensation Fund Regulations (Compensation for Damage Resulting from Violence Related to the Israeli-Arab Conflict), 2014, and the Property Tax and Compensation Fund Regulations (Payment of Compensation – Household Items), 1973, which address further details that will be discussed later in this article.

The Compensation Fund at the Tax Authority is responsible for providing compensation for damage resulting from acts of hostility, including attacks motivated by racial or nationalistic reasons, as well as acts of war.

Those whose property is damaged as a result of an attack motivated by racial or nationalistic reasons—classified as an act of hostility—may be entitled to receive compensation for their loss.

By: Shlomi Hadar, Attorney – John Geva, Hadar Attorney

introduction

Over the past week, Hamas and the terrorist organizations launched an unprecedented attack, launching rocket barrages from the Gaza Strip into Israel. Millions of civilians entered shelters and protected areas, which led to the State of Israel launching Operation Guardian of the Wall. Following the rocket barrages and IDF activity in the Gaza Strip, riots intensified across the country. Hundreds and even thousands of people rioted, throwing stones, throwing Molotov cocktails, and causing damage to property and infrastructure.

The normative framework

The State of Israel has undertaken by legislation to compensate its residents for direct and indirect damages caused as a result of acts of hostility, such as throwing stones, shooting from small arms, Molotov cocktails, etc., or various acts of war. The compensation is provided by virtue of the Property Tax and Compensation Fund Law, 5721 - 1961. In addition, the Property Tax and Compensation Fund Regulations (Compensation for Injury from an Act of Violence Deriving from the Israeli-Arab Conflict), 5775-2014, and the Property Tax and Compensation Fund (Payment of Compensation) (Household Items) Regulations, 5773-1973 regulate additional layers, which will be discussed in detail later in this article.

The Tax Authority's Compensation Fund is responsible for compensation for damages caused as a result of acts of hostility, including attacks on racial or nationalistic grounds, and acts of war.

A person whose property is damaged as a result of a racist or nationalist attack that constitutes a hostile act may be entitled to receive compensation for the damage.

Conditions for receiving compensation

In order to receive compensation, the property owner is required to meet four cumulative conditions:

A. The applicant is the owner of property that was damaged, or is the one who bears the cost of repairing or restoring damage caused to the property of others (such as an insurance company that paid the insured for the damage).

B. The property damaged is not cash, jewelry, art, or antiques. There is no entitlement to compensation for the above items.

C. The damage caused to property occurred following an attack on racial or nationalistic grounds, which is defined as a hostile act.

D. The property or property that was damaged is located in the territory of the State of Israel.

As a general rule, in the event of a hostile act, representatives of the Compensation Fund at the Tax Authority will contact the victims on their own initiative, instructing them on how to fill out the forms and to whom to submit them. If no contact was made on the initiative of the Compensation Fund, the Compensation Fund must be contacted and notified of the damage within two weeks of the date the damage was caused. A claim must be filed with the Compensation Fund within 3 months of the date the damage was caused. The claim is filed online. The Compensation Fund at the Tax Authority will contact the approving authority at the Ministry of Defense under the Compensation for Victims of Hostile Acts Law, which will confirm that the action is a hostile act for the purpose of providing compensation. If the approving authority at the Ministry of Defense has determined that the damage is not a hostile act, its decision can be appealed.

To be eligible for compensation, the property owner must meet four cumulative conditions:

A. The claimant is the owner of the property that was damaged, or bears the costs of repair or restoration of damage caused to someone else’s property (e.g., an insurance company that compensated the insured for the damage).

B. The damaged property does not include cash, jewelry, art objects, or antiques. Compensation is not available for these items.

C. The damage to the property resulted from an attack motivated by racial or nationalistic reasons, classified as an act of hostility.

D. The property or asset that was damaged is located within the territory of the State of Israel.

As a general rule, in cases of acts of hostility, representatives of the Compensation Fund at the Tax Authority will proactively contact victims and guide them on how to complete the forms and where to submit them. If no proactive contact was made by the Compensation Fund, the victim must contact the Fund and report the damage within two weeks of the incident. A claim must be submitted to the Compensation Fund within three months of the date of the damage.

The claim is submitted online. The Compensation Fund at the Tax Authority will then refer the claim to the approving authority at the Ministry of Defense, according to the Compensation Law for Victims of Hostile Acts, which will determine whether the incident qualifies as an act of hostility for compensation purposes. If the approving authority at the Ministry of Defense determines that the damage does not constitute an act of hostility, its decision may be appealed.

When it comes to structural damage, employees of the Compensation Fund, together with professionals, will visit the damaged structure and conduct appraisals – calculating the value or worth of the structure. The appraisal will help determine the financial compensation, in order to restore and repair the damage with the help of professionals. The injured parties can choose between "self-rehabilitation" and rehabilitation by "rehabilitation companies" that operate on behalf of the Compensation Fund.

Structural damage

When damage is caused to buildings, vehicles, or businesses, compensation will be paid for expenses paid to mitigate the damage (i.e., actions taken by the property owners to reduce the damage to their property, for example, repairs), plus the lower of the following two:

The difference between the value of the property before it was damaged and the value of the property immediately after it was damaged.
The expenses for returning the property to its condition prior to the damage, or purchasing a similar property in its place, if the property cannot be restored.

Prior approval must be obtained from property tax officials before repairing damaged property.

Compensation for damaged household items (such as furniture and clothing) that are for the personal use of the injured parties is paid in accordance with regulations, according to a price list of types of "household items" and family size.

The value of compensation for damaged household items will be determined according to the repair value. In the event that, in the opinion of the Compensation Fund Manager, the item cannot be repaired, the value of compensation will be according to the value of a similar, new household item in its place.

Attached is a table summarizing the maximum compensation ceiling set by law for household items, as of January 1, 2021:

The Compensation Fund allows you to purchase insurance that provides more extensive coverage than the existing ceiling in law. The insurance involves paying an annual premium of 0.3% of the additional value of the items you wish to insure. An additional value of NIS 919,306 can be insured at most (as of January 2021).

Important emphasis

Equipment, inventory, waste, or any other object found in a business or residence may not be removed without prior coordination with the Tax Authority's compensation fund assessor.