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Back to Tips Index | Motor Insurance - What is "Erech Kinun" - Reinstatement Value

I General Knowledge

Have you ever received an insurance claims check where an amount seems to be deducted from the payment, with the mysterious words “Kinun” printed next to the deduction. Translated, this means “re-instatement value”.

An example: Let’s say you pay NIS 3,000 annual premium to insure your car that is worth NIS 80,000. You have an accident, which costs NIS 10,000. The cost of the repair is covered by the insurance but now you have “used up” NIS 10,000 of the cover and therefore need to “top up” the policy. The amount that you actually pay is dependent on a) the cost of the damage and, b) how much longer the policy has to run. In other words, the two extremes are having an accident on the first or last day of the policy. On the first day you would pay maximum “kinun” because you have to ‘top up” the policy for a full year and on the last day there, there is no “kinun” at all. When the new insurance year begins, everything starts afresh.

When do you not have to pay the Kinun?

  • When there is a total loss – in this case you use all your premium to pay the total cover or, when the accident happens on the last day of the policy.
  • Bituach Hova - In claims of personal injury there is no re-instatement value.
  • Any case where the client decides not to replace or repair the damage. For example, if you decide not to repair your old Subaru, you will be paid out minus the ma’am but without the reinstatement clause kicking in.

II Citizen vs Insurance Company

Mrs. E insured her Citroen with the Shirbit Insurance Company. On 5.11.02, the car was stolen. To Mrs. E’s dismay, the insurance company refused to pay on the grounds that she had had a previous car stolen in 1998. The insurance company claimed that one of the questions asked on the proposal form was whether there had been precious claims or thefts. Mrs. E. stated that she had answered fully and clearly that on the Citroen there had been no previous claims. She even produced a letter from her previous insurer. Shirbit claimed that the question related to all cars previously insured by Mrs. E and that this was important and relevant information which Mrs. E had hidden from the company.

The verdict!

The court held that if on the insurance company form itself, the question did not appear directly, they did obviously not regard it as being important and relevant information. Mrs. E was not, therefore, expected to volunteer such information.

Shirbit paid up the NIS 69,000 for the claim, and Mrs. E went home smiling!