Despite the recent economic difficulties – and perhaps because of these difficulties – the theme of the song "Diamonds are Forever" is as true today as it was in the past.
The diamonds and precious stones industry is located in a few centers in the world and Israel is a very important one.
Although cutting and processing of the stones have long moved to Asia, Israel is still an important center from which dealing and selling is done.
This particular industry depends heavily on insurance. Specific policies cover the risk such as Jeweler's Block (All Risk policy), shipping, On Tours and exhibition risk.
Q. What is so special about diamonds and precious stones insurance?
A. This specific area relates to four different and sometimes unrelated risks:
- Covering jewelery either in stores or at home.
- Covering loose diamonds (not set in jewelery) and other precious stones while located at a specific indentified place (offices, factories, processing factories, etc.).
- Covering diamonds during shipping, i.e. while being transferred from one location to another, either by diamond dealers or by special courier.
- During exhibitions. There are several major exhibitions each year which are held around the world where dealers show their precious merchandise.
An insurance policy must answer all the different needs arising from each situation. Sometimes it is a combined policy, but in many cases, each risk has a different policy.
Q. How does the uniqueness of the industry reflect on the legal side?
A. Because of the mobility of the insured goods, in many cases the insurance policy is issued in Israel and is subject to the Israeli law, while the events in question occur in a different country and sometimes in more than one location.
The handling of such claims necessitates the use of international conventions dealing with evidence, cooperation with non-Israeli law firms, loss adjusters and law enforcement authorities.
In certain cases, motions which are intended to freeze assets in various countries have to be issued simultaneously in several countries. The "international" side of this insurance necessitates an understanding of not just the Israeli law. The complexity of these cases requires an in-depth review of how to approach the problem, whether to use foreign courts, etc.
Q. What are the main challenges in jewelery Block claims?
A. Many claims allegedly covered by this insurance are fidelity claims. Because of the international scope of the business, an act of infidelity can take place outside of Israel (for instance a staged robbery).
The most important element for me, as the lawyer who can foresee how the claim will be handled in the Israeli court, is to gather evidence as soon as practical in a manner that will be admissible in court. Therefore, in many cases I would like to be involved from day one. However many cases which look "innocent" in the beginning become suspicious later on. This creates a challenge to gather the required evidence in the desired format.
Q. How does the law treat Jeweler's Block claims?
A. Jeweler's Block policies are All Risk policies. Israeli precedents rule that in All Risk policies, it is the duty of the insured to prove that the insured event occurred. Once the insured claims that the merchandise is no longer in his possession and he did not voluntarily give the goods to another party, the burden shifts to the insurer to prove that the policy does not apply. This is where conclusive evidence needs to be presented in a way that it will be accepted as admissible.
Q. Are there any special issues which the Israeli law presents?
A. Most insurance claims are governed by the Insurance Contract Law, which is a pro-consumer law. The said law applies to jewelery, but not to loose diamonds and precious stones.
Notwithstanding the above, the spirit of the law prevails in the courtroom and there is a very heavy burden of proof for the insurer to lift in the event it wants to decline a claim.
Q. Can you sum up your advice to your clients (insurers) in one or two sentences?
A. Call on day one after the insured event occurred. The solution is not necessarily litigation, but a speedy reaction is crucial.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.