ARTICLE
24 January 2025

Compensation For Loss Of Value Of Vehicles As A Result Of Traffic Accidents

KC
Kilinc Law & Consulting

Contributor

Kilinç Law & Consulting established by Levent Lezgin Kilinç currently operates in Istanbul, Izmir and London. Our firm, provides services to clients in a wide range of complex matters including Project Finance, Corporate Law, M&A, Energy Law, Dispute Resolution, Maritime Law, IP Law, International Transactions as well as Litigation of the disputes.
It is a known fact that the number of vehicles in traffic is increasing day by day. In parallel with this situation, traffic accidents are also increasing.
Turkey Litigation, Mediation & Arbitration

INTRODUCTION

It is a known fact that the number of vehicles in traffic is increasing day by day. In parallel with this situation, traffic accidents are also increasing. It is also possible to repair the damages to the vehicles with the compulsory financial liability insurance, as well as to compensate for the financial loss that occurs between the market value of the vehicle before the accident and the parts changed and repaired after the accident.

A. THE CONCEPT OF LOSS OF VALUE

Vehicle depreciation refers to the depreciation that occurs in the second-hand market as a result of the repair of vehicles involved in a traffic accident. In other words, vehicle depreciation is the loss arising from the difference between the undamaged value of the vehicle at the date of the accident and the value after repair.

As it is known, the damages resulting from the accident are repaired. However, even though repairs are made, the replacement of parts on the vehicle, painting, and even the correction of the vehicle by dismantling and reassembly reduces the value of the vehicle in the second-hand market. For example, while the original one of two vehicles of the same model and with the same features in the second hand market is 1.000.000-TL; the market value of a vehicle with 2 doors changed as a result of a traffic accident may decrease to 950.000,00-TL. The difference in between reveals the amount of loss of value. 

Article 1409 of the Turkish Commercial Code (‘TCC') regulates the loss of vehicle value and the related responsibilities arising from traffic accidents. According to this provision, in the event that a vehicle suffers a loss in value as a result of a traffic accident, the traffic insurance of the party at fault in the accident is obliged to cover not only the direct physical damage caused by the accident, but also the economic damage resulting from this damage. The loss of value is included in the scope of direct damage as the decrease in the market value of the vehicle due to the accident.

Article 85 of the Highway Traffic Law (“KTK”) regulates the joint and several liability of the operator and the owner of the undertaking to which the operator is affiliated for damages arising from traffic accidents. Article 85 of the TCC “In the event that a motor vehicle causes death or injury to a person or damage to something, the operator of the motor vehicle and the owner of the undertaking to which the vehicle is affiliated shall be jointly and severally liable for the damage caused.” It contains the provision. According to this article, it clearly states that the driver and the license holder shall be held jointly liable for damages caused to third parties during the operation of motor vehicles.

Article 49 of the Turkish Code of Obligations (“TCO”) states: “Whoever causes damage to another by a defective and unlawful act is obliged to compensate for this damage.” It includes the provision. Therefore, it is clearly regulated in the law that the vehicles involved in the accident should compensate for the loss of value of the vehicle they damaged in proportion to their defects. 

The 4th Civil Chamber of the Court of Cassation, on the other hand, in its decision dated 25.03.2022, numbered 2021/21252 E. and 2022/5913 K. dated 25.03.2022:

According to the practice of the Court of Cassation, the loss of value is related to the difference between the value of the vehicle after it is damaged and repaired as a result of a traffic accident and the value of the vehicle when it is not damaged at all, and when determining the loss of value of the vehicle, the difference between the determination of the second-hand sales value of the vehicle before the accident date and the determination of the second-hand sales value of the vehicle after the vehicle is repaired and the difference between them is taken into consideration, taking into account the brand, age, model and damaged parts of the vehicle. Therefore, in the decision dated 6.10.2020, which was given by the court after the cancellation decision of the Constitutional Court, it is not correct to take the option that calculates according to the general conditions as the basis of the judgment instead of the option that calculates according to the Supreme Court practice in the expert report, and it was necessary to decide to accept the request for reversal in favour of the law in accordance with Article 363 of the Civil Procedure Law No. 6100.”

It is expressed as follows. According to the case law of the Court of Cassation, the loss of value is the difference between the determination of the second-hand sale value of the vehicle before the date of the accident and the determination of the second-hand sale value of the vehicle after the vehicle is repaired.

B. CALCULATION OF LOSS OF VALUE

In the calculation of loss in value, many factors such as the year of manufacture, damage history, mileage and current second-hand market value of the vehicle are taken into account. The evaluation made in the light of these factors ensures that the material damage caused by the accident is accurately determined. However, in order to claim loss of value, certain conditions must be met. 

First of all, the statutory limitation period for the compensation of the loss of value is 2 (two) years from the date of the damage and in any case 10 (ten) years pursuant to TCO 79/2. Since this period is prescriptive, it is not possible to claim compensation for the loss of value if the period has expired. In terms of the rate of fault, the party who will claim loss of value must not be 100% defective. Since the damage will be compensated in proportion to everyone's fault, it is not possible for the party found to be 100% at fault to be entitled to compensation for loss of value.

Another point to be considered is that the vehicle is less than 36 years old. At the same time, the parts that will cause loss of value must not have been repaired before the accident. Finally, if the pert total process applied in terms of vehicles that are damaged too badly to be repaired, loss of value cannot be claimed.

To give an example over the amounts, vehicles A and B involved in the accident were found to be 75%-25% at fault as a result of the investigation. The value of vehicle A is accepted as 800.000,00-TL and the value of vehicle B is accepted as 1.000.000,00-TL. As a result of the accident, it is accepted that the second-hand values of both vehicles, whose certain parts have been repaired because of the accident, have decreased by 100.000,00-TL between their previous and repaired states. Since vehicle A is 75% at fault, it will pay 75.000-TL compensation for the loss of value of vehicle B, and since vehicle B is 25% at fault, it will pay 25.000.-TL for the loss of value of vehicle A. This example is valid for accidents where both parties are attributed fault, and the party who is 100% at fault in another accident is obliged to pay the entire loss of value of the party who is not at fault. 

C. PROCEDURE FOR FILING THE APPLICATION AND THE COMPETENT COURT

Article 30 of the Insurance Law No. 5684 (“Insurance Law”) and Article 97 of the Highway Traffic Law: “The injured party is required to make a written application to the relevant insurance institution before filing a lawsuit within the limits stipulated in the compulsory financial liability insurance. In the event that the insurance institution does not respond to the application in writing within 15 days at the latest from the date of application, or if there is a dispute that the response does not meet the request, the injured party may file a lawsuit or apply to arbitration within the framework of Law No. 5684.”

In order to claim compensation for loss of value, an application must first be made to the compulsory financial liability insurance of the defective vehicle. As a result of the application, the relevant insurance company is expected to pay the maximum amount of compulsory financial liability policy limits. This amount is 300.000-TL for the year 2025. Compulsory financial liability insurance is responsible for repair and loss of value up to the maximum specified amount. Insurance companies must finalize the file within 15 days and pay or respond. In cases where no answer is given or payment is not made, this issue is accepted as a tacit refusal with the expiration of the 15-day period. Even if payment has been made, the right to arbitration and litigation is reserved for victims who think that the payment made does not cover the loss of value. 

In the event that the insurance company does not respond, does not pay or makes little payment, there are 2 ways that can be followed. This situation should be divided into two as whether the limit of the compulsory financial liability policy is exceeded or not.

If the compulsory financial liability limit of 300.000-TL for 2025 is fully paid to the victim in terms of repair and loss of value;  the insurance company is no longer responsible. In this case, if the damage is still not compensated, a lawsuit can be filed against the driver and the license holder of the vehicle at the time of the accident before the Civil Courts of First Instance in the place where the tortious act occurred or in the place of residence of the victim.

In cases where the insurance company does not fill its limit and cannot fully compensate the victim for the loss of value;  an application can be made to the Insurance Arbitration Commission. The relevant commission decides on the file and decides to pay the loss of value compensation to the victim. Another option is to file a lawsuit before the Commercial Courts of First Instance where the defendant resides, since the insurance company is a merchant.

However, as stated, in order to apply for all the aforementioned remedies, it is mandatory to first apply to the compulsory liability insurance of the defective vehicle. Otherwise, since this issue will be accepted as a procedural deficiency, there is a risk that the case will be deemed not filed.

D. CONCLUSION

As a result, compensation for the loss in value of vehicles as a result of traffic accidents is regulated under the provisions of the Turkish Commercial Code, Highway Traffic Law, Turkish Code of Obligations and other relevant legislation, and compensation claims are shaped according to the fault ratios and insurance limits of the parties involved in the accident. The calculation of loss of value is based on factors such as the year of manufacture, mileage, damage history and market value of the vehicle, and claimants must first apply to the compulsory financial liability insurance of the defective vehicle. In the event that the insurance company does not meet the claim or makes insufficient payment, there is the possibility to apply before arbitration or judicial authorities. It is essential to follow the time and procedural requirements meticulously in order to prevent loss of rights.

REFERENCES

www.kazanci.com.tr

www.lexpera.com.tr

DURSUN, Deniz Günay, 2019, “Trafik Kazalarına Karışan Araçların Onarım Sonrası Piyasa Rayicindeki Değer Kaybı ve Kaza Analizi” Marmara Journal of Social Research, Issue 15 

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.

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