Insurance companies will not bear the cost of Tuesday's train fire, since no one was killed or suffered physical harm. Israel Railways will bear the full cost of the property damage to the train carriages because it opted not to insure its rolling stock for damage of this kind.
Israel Railways insures its rolling stock with Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), but only for fire and earthquakes, and not for incidents caused during travel. The cost of insuring rolling stock during travel is €2.5 million per year. Tuesday's fire caused an estimated €10 million in damage to the affected carriages. Since Israel Railway's deductible is also €10 million, buying insurance is not worthwhile.
Israel Railways also preferred not to insure the rolling stock because the statistical probability of an incident of this kind is low relative to the size of its rolling stock, so the cost of insurance is higher than repairing damage from a possible accident.
Israel Railways buys compulsory insurance from Israel Phoenix Assurance Ltd. (TASE: PHOE1;PHOE5).
Published by Globes [online], Israel business news - www.globes-online.com - on December 30, 2010
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