Israeli Insurance Law: Policy Cancellation Rules and Consumer Rights
An 80-year-old man was awarded 3,000 shekels after a court found his insurance agent had used his details without consent to issue a policy, resulting in 106 shekels being debited from his account monthly for 45 months, totaling 4,770 shekels. This ruling, made in May 2026 by the Jerusalem District Court, highlighted issues surrounding policy cancellations and consumer rights.
Israeli law stipulates that when a policyholder initiates cancellation, it takes effect three days after notifying the insurer, as per Section 10 of the Insurance Contract Law, amended in 2012. Conversely, insurers must provide 15 days' notice before canceling a policy. Policyholders are entitled to a refund for the period after cancellation, according to Section 9(d). For instance, canceling an annual policy with 200 days remaining could yield a refund of approximately 2,000 shekels, though some car insurance policies calculate refunds based on a less favorable "short-term" rate.
Life insurance policies allow cancellation at any time with written notice, under Section 45. Canceling a bank's direct debit mandate does not cancel the policy; notification must be sent directly to the insurer. It is advised to cancel the direct debit authorization only after receiving confirmation of policy cancellation to prevent the insurer from claiming unpaid premiums. The Capital Markets Authority, since mid-2017, mandates insurers offer multiple cancellation methods, including email, online portals, phone, fax, and SMS. Insurers must provide an automatic acknowledgment of receipt and notify of any missing details within three business days, followed by a final cancellation notice.
In cases of car insurance cancellation due to sale or theft, a prorated refund is typically granted, often requiring the original mandatory insurance certificate or proof of sale. The article also touches on issues like duplicate insurance policies, which are a common reason for cancellation, and the potential loss of coverage benefits or the need to restart waiting periods when switching providers, especially for health insurance. A customer of the insurer IDI received 10,000 shekels plus 1,500 shekels in expenses for persistent unwanted calls after requesting to cancel a policy, a case that falls under the Privacy Protection Law.
Delayed refunds or continued billing after cancellation are common complaints, which should first be addressed with the insurer in writing, then escalated to the Capital Markets Authority's public inquiries unit. Disputes up to 39,900 shekels can be brought to small claims court. A draft regulation from August 2026 proposes that discounts on life insurance policies be maintained for the entire policy duration, rather than for a limited term, addressing a frequent cause for policy cancellation and replacement, which often involves restarting waiting periods.
