Earthquake Risk in Israel: Insurance and Reinsurance Readiness

ByNatali Yechieli Berkovitz

Co-founder & Partner · Oz Berkovitz Law Office

A major earthquake would test far more than the strength of individual buildings. It would test whether insurance arrangements can finance recovery when many policyholders need assistance simultaneously. For Israel, the legal work begins before a claim: identifying the property insured, the financial exposure retained and the conditions connecting primary insurance to reinsurance.

Assess exposure without predicting the event

The Geological Survey of Israel maps active faults and hazards including liquefaction, landslides and unusual ground amplification. These are tools for understanding exposure and planning resilience. They are not a timetable for the next disaster. [1]

Statements that a destructive earthquake occurs once every hundred years should not be treated as a countdown. A recurrence estimate describes a statistical pattern within a defined model and region; it does not mean an event must occur on schedule. Science cannot reliably predict the precise time, location and magnitude of the next major earthquake. The US Geological Survey distinguishes such prediction from estimating probabilities over a period. Preparation is justified by the potential consequences, without asserting that a particular earthquake is imminent. [2]

Review the home insurance policy

Within Israel’s standard home-insurance framework, earthquake cover is included for the building or contents sections purchased unless the insured waives it. Building cover does not itself insure household contents. A review should therefore identify the sections purchased, any waiver and the property described in the schedule. [4]

The Capital Market, Insurance and Savings Authority explains that building insurance is based on rebuilding cost, distinct from the property’s market price and land component. It describes a default earthquake deductible of 10% of the building sum insured, with lower percentages available for additional premium. The policyholder should check the percentage actually agreed. [3]

The arithmetic matters. On a hypothetical building sum insured of NIS 1 million, a 10% deductible represents NIS 100,000. It is not simply 10% of the repair invoice. Reviewing affordability requires considering both the premium and the amount the household would need to fund after a loss.

The condominium recovery gap

An apartment owner’s recovery may depend on rebuilding the wider structure. If other owners lack insurance or funds, an individual payment for reconstruction may leave a practical obstacle to restoring the home. Optional additional-sum cover for an apartment in a condominium can address part of this exposure, subject to its trigger, limit and terms. [4]

Owners should establish whether the extension was purchased, what triggers cover and what evidence is required to support a claim. They should also review the treatment of common property and temporary accommodation. A label suggesting protection for land value should never replace analysis of the operative wording or an assessment of whether the available payment could finance a replacement home.

From individual claims to reinsurance accumulation

For insurers, a geographically concentrated portfolio creates a different problem: many separate policies can respond to the same catastrophe. Munich Re identifies concentrations of insured values in seismic areas as a central accumulation challenge. [5]

An effective review should connect location and building data with the insurer’s exposure under its policies. It should test whether replacement values remain realistic, how different deductibles affect the retained loss and whether residential, commercial and infrastructure exposures could accumulate across the same affected area.

Reinsurance must then be examined on its own terms. If a treaty contains an hours clause, its duration, commencement mechanism, geographical scope and treatment of successive shocks require separate attention. The questions include which losses may be grouped, how retentions and limits apply, and whether reinstatement provisions restore exhausted capacity. Neither a common cause nor proximity in time supplies a universal contractual answer.

A published Israeli home-policy wording, for example, groups earthquakes within 72 consecutive hours after the first earthquake for deductible purposes. That provision does not determine aggregation under a separate reinsurance treaty. A mismatch between the two contracts can leave an insurer with a greater retained exposure than anticipated. [6]

Prepare the claim before the event

Practical preparation should include accessible copies of policies, schedules, valuations, inventories and records of the building’s condition. Claims teams should establish how they will receive notices, preserve engineering evidence and distinguish initial damage from subsequent deterioration. Reinsurance notices and supporting loss schedules deserve their own process.

A recovery plan should identify who can make urgent decisions, how necessary expenditure will be recorded and how evidence will be preserved without entering unsafe structures. Clear allocation of these responsibilities can reduce avoidable disputes when communications and access are disrupted.

The review should confirm that sums insured are adequate, deductibles are understood, extensions meet the policyholder’s needs and reinsurance responds as intended. That work complements structural resilience and emergency planning. It should be completed before a loss limits the available options.

Law and sources reviewed as at 24 October 2026. General commentary only; the applicable law, facts and policy wording must be considered in each matter.