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Can a relative of a person killed by fire from the army or police during a demonstration get compensation from the state?

This depends on the particular circumstances. It is likely that compensation can be obtained as the State of Israel bears responsibility for civil damage unless one of the exceptions applies .The 1952 Responsibility of the State For Civil Damage Act exempts the state of Israel for compensating individuals (or their families) for civil damage caused by its security forces when there is war, security is threatened, or their lives are in danger.