Turkey: Insurance Contracts Under The New Turkish Commercial Code

Last Updated: 3 July 2013
Article by Neşe Taşdemir Önder


Turkey's new Commercial Code ("the TCC") entered into force in 30 June 20121. The insurance section of the TCC is much wider in scope and attempts to provide clarity in terms of both law and terminology controversial under the old Code of 1956 which was highly insufficient to meet the dynamic needs of today's insurance industry. For the first time in Turkish insurance law, a specific section on third party liability insurances has been introduced by a Code.

The German Versicherungsvertragsgesetz2 of 30 May 1908 as amended and German and English insurance general conditions were taken as primary and secondary sources of reference in the drafting. Developments in the insurance laws of Germany, France, England, and Switzerland were also considered.

This Article provides an overview of some of the major new provisions related to property and third party liability insurances.

Insurable Interest

The TCC provides clarity that the lack of insurable interest, not only at the time of the loss but at any stage, will result in invalidity of contract. Provisions to the contrary will render the contract invalid.

The TCC with respect to property insurances also provides that, unless otherwise agreed, the contract shall terminate where the holder of the insured interest changes.

As in the old Code, overinsurance is prohibited and the excessive part shall be invalid. A new rule in that regard is with respect to overinsurance which renders the entire contract invalid if the policyholder concluded it in bad faith to obtain any financial benefit.

Extent of Insurer's Liability

The TCC provides that insurance contracts shall in principle be considered as "named perils" and not "all risks" clarifying controversy in that regard.

The TCC as in the old system prohibits cover for losses arising from risks occurred as a result of willful acts of the insured, the policyholder or third parties for whose acts they bear legal liability. In the later case clarity has been provided that the relevant third parties must have acted with an intention to trigger policy indemnification as a further condition to willful causation of the loss.

Unless otherwise agreed, employees, representatives, auditors and directors shall automatically be considered as additional insureds, where insurance is obtained for liability related to the business enterprise of the insurance holder.

The TCC clearly provides that a liability policy shall be considered "occurrence based" unless otherwise indicated in the policy. Provided the loss triggering event occurred within the policy period, a claim can be filed within the ultimate insurance time limitation period of ten years, unless otherwise provided by contract.

A new provision of the TCC requires the insurer to pay reasonable expenses made by the insured or the policyholder for the purpose of determination of the extent of the risk or the insurance indemnity, even if these expenses have not proven useful.

The TCC also imposes on the insured in addition to the duty of mitigation measures upon occurrence of the risk, a duty of prevention and mitigation measures in case of high likelihood of occurrence and thereby extends liability of the insurer to pay for reasonable costs in that regard in addition to insurance indemnity. The TCC with respect to third party liability policies however requires a specific policy condition for payment of reasonable expenses with respect to third party claims exceeding the insurance limit.

The TCC also explicitly provides for the duty of protection of the insurer's right of subrogation to third parties and the insurers right to continue any legal procedures against third parties liable for loss.

Duties of Disclosure and Notification

Detailed and mostly new rules with respect to many unsettled issues in that regard have been introduced by the TCC, in particular with respect to sanctions for non – compliance e.g. requirements for a link between non – compliance and the occurrence of the risk and its effect on insurance indemnity; effect of the degree of fault on the application of sanctions. The TCC also introduces new periods for the use of respective rights in that regard. A clear distinction between the rights of the insurer in case of discovery of the failure to notify before and after the occurrence of the risk has also been brought which was not properly provided in the old Code.

Before Policy Inception, the duty of disclosure is in principle confined to the questions by the insurer as in the old system. The TCC also provides for consequences where although not directly asked, material facts were concealed in bad faith, putting an end to controversy in that regard.

Alternative rights of termination (with retrospective effect) or collection of premium difference is given to the insurer in case of discovery before the occurrence of the risk, irrespective of the degree of fault in the non - disclosure. Where the non – disclosure was in bad faith, the insurer is entitled to premium for the period in which the risk was carried.

The TCC foresees a reduction in the indemnity according to the degree of negligence in the failure to disclose, provided the negligence has the potential to affect the occurrence of the risk or the amount of the indemnity. In case of willful failure, the insurer's liability is lifted provided that there is connection between the non – disclosure and the occurrence of the risk. In case of lack of such connection, the proportion of the paid premium to the premium which should have been paid shall be taken into consideration.

During the term of the Contract, the policyholder is under the duty to immediately notify increases in the risk (irrespective of whether the increase was caused by the policyholder) and where the increase has occurred without his knowledge within ten days of learning at the latest. The insurer has the right to terminate the policy or request premium difference within one month of becoming aware of the increase. The right to terminate shall be ineffective if the status ante quo is re-established. Where the non – disclosure was willful, the insurer will keep the premium for the period he carried the risk. Where the increase has been learned after the occurrence of the risk, the same sanctions and conditions are applicable as in the case of failure in the duty of disclosure before the inception of the policy.

Upon Occurrence of the Risk, the TCC introduces a duty for immediate notification upon learning in liability insurances and without delay in property insurances. The TCC with respect to third party liability policies introduces a new duty on the insured to also notify events which may give rise to his liability within ten days of learning. Lack of notification or late notification shall lead to a reduction on the indemnity according to the gravity of negligence in the failure to disclose, provided that the failure led to an increase in the insurance indemnity.

The TCC recognizes claims control and imposes a duty on the liability insurer to inform the insured within five days of notification whether it will assume control over legal proceedings against the third party. Where the insurer has not chosen to do so, the insurer must pay any indemnity determined by finalized judicial decision. In any case settlement agreements cannot be made without the consent of the insurer unless otherwise agreed.

Where the policyholder and the insured are different persons, the TCC explicitly provides that where the TCC attaches any legal consequence to the policyholder's behavior or knowledge, the same consequence shall attach also to the behavior of the representative or of the insured provided the insured was aware of the insurance contract.

Non – Compliance with Conditions & Warranties

Sanctions attached to certain warranties or conditions precedent to cover (as usually transferred from English policy wordings) do not necessarily give the terms the intended effect and may be caught by semi – mandatory or mandatory provisions of the TCC. The TCC introduces a new and specific provision in that regard and provides that where the insurance contract provides for partial or entire avoidance of the contract by the insurer for non – compliance with the duties by the insured (where the sanction of non – compliance with such duty has not already been specifically provided for in the TCC), avoidance shall not take effect unless the non – compliance is based on fault. Where non – compliance is based on fault; the right to avoid the policy will drop where it has not been used within one month of learning of the circumstances. Also the insurer will have no right to avoid the policy unless the non – compliance had any effect on the occurrence of the risk and the extent of the obligations of the insurer.

Rights of the Holder of Restrictive Rights on Insured Property

Lack of provisions have been completed by the TCC with respect to indemnity payment for insured property subject to "limited rights in rem" (including pledges) for the benefit of a third party. Where the insurer is notified of the relevant right on the property, or the right has been subject to a registration, the insurer can in principle not be released of liability by payment to the insured, unless consent is given by the holder of the relevant right. The holder of such restriction has been given the option to continue the insurance contract in case of default of payment by the policy holder or the termination of the contract by either of the contract parties.

Creditors of the owner of an insured property who have applied a seizure on the relevant property for securing their credits are also protected by way of a provision obligating the execution office to inform the insurer of such seizure and the insurer to pay the insurance indemnity to the execution office until further notice.

The explicit Recognition of Third Party Right for Direct Claim against Liability Insurers already recognized in practice and the obligation of the insurer for direct payment to the third party is an important provision introduced by the TCC. The insurer has been prohibited from setting off its receivables arising from the contract against its liability to the third party.

Right of the insurer to obtain information from the suffering third party for the purpose of identification of the loss triggering event and the amount of the loss has been explicitly recognized. Where the third party does not make available required information, liability of the insurer shall be limited to the amount that it would have to pay had the information been made available, provided that the third party has been warned in writing.

Maturity of and Time Limitation for Insurance Indemnity Claims

The TCC in addition to the existing two years time limitation period starting from maturity introduces an ultimate time limitation of six years in property insurances and ten years in liability insurances from the occurrence of the insured event.

Numbers of problems with maturity dates have been removed by the TCC. Insurance indemnity shall in principle become payable upon finalization of the insurer's investigation following the occurrence of the risk and the receipt of relevant risk related documents and in any case within 45 days upon notification of the occurrence of the risk. If the investigation was delayed due to a fault not attributable to the insurer, this period shall not begin to run. If the investigation was not finalized within three months upon notification, the insurer shall pay at least fifty percent of the loss as mutually agreed by the parties or, in the absence of such agreement, as determined promptly by a preliminary court expert examination. Any provision in the contract relieving the insurer from payment of default interest shall be invalid.


1 Under Articles 39 and 40 of the Code on Implementation of the Turkish Commercial Code (dated 14.01.2011 and numbered 6103) it is provided that the insurance contracts issued and became effective at the time when the old TCC was in force will continue to be subject to the provisions of the old TCC for a period of one (1) year starting from the effective date of the TCC; except for the provisions of the TCC (excluding article 1517) protecting the policyholder, insured and the beneficiary. In the event of renewal or extension of the insurance contracts which expired within the referred one year period, the provisions of the TCC are applied. It is further provided that the insurance contracts concluded while the old TCC was in force and which are contrary to the semi-mandatory and mandatory provisions of the TCC as well as article 1488 regarding tontine are subject to the provisions of the TCC.

2 German Insurance Contracts Act

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Neşe Taşdemir Önder
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions