Business Weekly: Windfall, Part II

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A Project of the Business Halacha Institute
Under the auspices of HaRav Chaim Kohn Shlita

by Rabbi Meir Orlian, Yerushalayim

CONTINUED FROM VOL 1 NO 6

Mr. Bernstein hung up the phone and turned to his wife. “I just verified that the neighbor’s tree that fell down in the storm last week and damaged our car and fence was declared dangerous by the municipality. They instructed him to cut it down months ago.”

“It’s a shame he didn’t listen,” said Mrs. Bernstein. “He could have prevented all this. Now what?”

“He should be responsible for the damage,” said Mr. Bernstein. “If a person ignores authorities’ warnings that his tree is unstable, he is liable for damage it causes (C.M. 416:1). I don’t know if our neighbor’s homeowner’s insurance will pay for this third-party damage, since the tree was blown down by the storm. If they don’t, he’s going to have to pay us out-of-pocket.”

“But we have comprehensive coverage on the car,” said Mrs. Bernstein, “and our homeowner’s insurance should cover the damage to the fence. So what should he pay? He didn’t cause any loss!”

“First of all, there’s a deductible on both policies,” replied her husband. “Also, when we file a claim, our premium goes up. So he certainly caused us some damage. To be honest, I don’t see why he shouldn’t have to pay everything. His carelessness caused the damage. Why should our insurance have to pay for his negligence?”

“Well, isn’t that what you have insurance for?”

“Not necessarily,” countered Mr. Bernstein. “It’s primarily for circumstances where no one else is liable.”

“But it covers this also,” replied his wife.

“We should speak with Rabbi Dayan,” said Mr. Bernstein. “I asked him last time if we could meet after talking with the insurance company.”

He called Rabbi Dayan and arranged to come over the next evening.

When they arrived, Mr. Bernstein summarized the case for Rabbi Dayan.

“This is a good question,” said Rabbi Dayan. “The issue of insurance has been debated by the poskim during the last hundred years, beginning with such Torah giants as the Ohr Sameach (Hil. Sechirus 7:1) and Maharsham (Responsa IV:7). Both authorities viewed insurance coverage as an independent risk-payment contract between the insurer and the client unrelated to the personal liability of the one who caused the damage.”

“Does that mean that we could possibly collect double, from both the insurance company and the neighbor?” asked Mr. Bernstein.

“According to them, yes,” answered Rabbi Dayan. “Chelkas Yoav (Responsa II:91) indicates that it was even possible to collect from multiple insurers for the same loss.”

“Why should this be so?” asked Mrs. Bernstein.

“They considered insurance simply a ‘business deal’ in which the insurer promises payment in return for the premiums if the item is lost,” explained Rabbi Dayan. “For this reason, the fact that the insurer pays coverage is no reason to exempt the one who caused the damage.”

“But if the damage is covered,” said Mr. Bernstein, “then the neighbor didn’t cause any loss.”

“Some argue this way,” answered Rabbi Dayan. “Similarly, R’ Elchanan Wasserman maintains that you can collect from either the insurer or the one who damaged, but not from both (Kovetz Shiurim Kesubos 217-8). However, most authorities maintain that since damage occurred, an external payment does not negate the damage liability. Imagine, for example, if a rich uncle decided to buy you a new car in place of the damaged one. Would that exempt your neighbor?”

“Clearly not,” acknowledged Mrs. Bernstein.

“Nonetheless,” continued the rabbi, “the halacha is somewhat different nowadays. Most insurance contracts stipulate that if the damage is caused by a third party and your insurance company covers the loss, the rights to sue the responsible party are transferred to the insurer. When you accept payment from your insurance company, it’s with this understanding, so that subsequent payments by him or his insurance company will go to them. They typically limit their liability in the case of overlapping coverage.”

“What about the deductible and increases in premium?” asked Mr. Bernstein.

“You are entitled to ask for that,” answered Rabbi Dayan, “since the insurance policy usually states that the right to collect is transferred to the insurer in accordance with the amount they paid. The remainder of the damage remains yours.”

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(YWN Desk – NYC)