Israeli Court Approves $1.8 Million Refund in Class Action Against Hachshara Insurance

The Tel Aviv District Court approved a class action settlement against Hachshara Insurance, requiring the company to refund approximately 1.8 million shekels to eligible policyholders. The lawsuit alleged that the insurer unlawfully charged additional fees for policy changes in elementary car insurance, violating legal and regulatory provisions. The case was initiated in December 2024 by a policyholder who challenged a 20-shekel surcharge imposed for modifications such as extending coverage to additional drivers.

The court found that Hachshara Insurance charged these fees without contractual or legal basis, contrary to the guidelines of the Israeli Insurance Supervisor. The plaintiff, insured since 2020, requested in 2021 to expand his car insurance coverage to include all authorized drivers, for which the insurer charged 36 shekels, 16 shekels for insurance and 20 shekels as an additional fee. The plaintiff contested only the 20-shekel surcharge, arguing it was not authorized by the policy or law.

Hachshara Insurance ceased collecting these additional fees from July 2022 and committed to refraining from such charges unless legally permitted. Under the settlement, approved by Judge Idit Berkovich, the insurer will refund 85% of the unlawfully collected fees either by crediting active policyholders’ accounts or by bank transfers to former customers. Unclaimed funds will be donated to a public fund supporting reservists and their families.

The settlement followed extended mediation led by retired Judge Rahamim Cohen. Attorney Yitzhak Aharonov, representing the plaintiff, emphasized the ruling’s significance in rejecting the legality of unauthorized insurance surcharges and ensuring direct restitution to affected customers, even for fees collected years ago. Hachshara Insurance did not provide a comment on the settlement.