Liability insurance (insurance of responsibility)

There is a plethora of liability insurance policy types commonly used in Turkey. We will examine one of them, a relatively more common one: traffic insurance policies. There are essentially two types of “traffic insurance”s in Turkey: “Compulsory Financial Responsibility Insurance” and “Discretionary Financial Responsibility Insurance” (Turkish: Kasko). As the name would suggest, it is a liability (responsibility) insurance.

As the coverage extent of the Compulsory Financial Responsibility Insurance is limited, Traffic Code Art.100  permits Discretionary Financial Responsibility Insurances. The injured party may directly appeal to the insurer or file a suit at the courts.

The insurer is liable to third parties just as the operator of the vehicle. This liability is derived from Traffic Code Art.91.

Do insurance companies pay damages to individuals hurt in car accidents?

Under the terms of a Compulsory Financial Responsibility Insurance (CFRI), the insurer of the faulty operator of the vehicle is responsible for all damages in accidents within the limit set by the policy valid at the time of the accident. In other words, in the event of injury or death caused by the operation of the insured vehicle, the insurer insures and covers the responsibility of the operator within policy limits set by the Traffic Code(n. 2918).

CFRI only covers the material damages. Immaterial (mental anguish) damages are not within the scope of the insurance.

According to the Traffic Code Art.91, all vehicle operators are obliged to insure their vehicles with a CFRI. Failure to comply results in a ban from traffic.

Do employers pay damages to individuals hurt at work (e.g. in an industrial accident)?

Social Insurances Code stipulates in Article 2 that all workers working under a labour contract are insured under said law. Therefore the Institution of Social Security covers all damages of an employee inflicted due to a work accident or work-related illness (Art.11). However this liability is limited (Art.20-24). According to Art.26 of this law, “if the accident or illness is caused by the employer’s willful act, unlawful act, or a criminal act” the payment made by the Institution may be recoursed to the employer, thereby transferring the burden.

However an employer may enter an Employer Financial Responsibility Insurance (EFRI) agreement with an insurer to insure this liability within the limits set by the EFRI policy.

Is there a possibility of the liability insurance (where the insurance company covers the damage made to a third party)?

Yes, third party liability insurances are in order under Turkish law. The official name for them is “Financial Liability Insurance Against Third Parties”.

How does the injured party enforce damages by insurance company (single-handed or through the legal adviser)?

The injured party may choose to enforce damages either through a legal representative or directly as principal in person.

Do the insurance companies cover the legal representation costs?

There are two types of legal representation costs in Turkish law. Firstly, there is the contractual legal advice fee (akdi vekalet ücreti), which is binding between the parties of said contract and is paid to the lawyer (proxy) by the represented (client), regardless of the outcome of the legal undertaking. Secondly, there is the representation fee (vekalet ücreti) decided by the court.

In the event of claiming damages directly from an insurance company, only the first kind of legal advice cost is applicable, the covering of which by the insurance company is irrelevant.

Do the impairers (the injured party) get damages in an extrajudicial agreement (out of court agreement) with the insurance company, or do they have to assert their rights through the lawsuit?

Article 97 of the Traffic Law stipulates that, although they may as well choose to do so, the injured party needn’t necessarily claim damages directly from the insurer – they may choose to file a lawsuit instead. Also it should be borne in mind that, in relation to the liability of the operator under the Traffic Law Art.85; operator, driver and insurer are all jointly and severally liable.

How long does it take until payment of damages in an extrajudicial (out of court) and how long in the judicial proceedings?

According to the Traffic Law Art.99/I, the insurer is obliged to pay the damages that are within the policy limits within eight business days of receiving the damage report or the expert report.

The time frame that takes for a judicial proceeding to be finalized may vary greatly depending on numerous factors like the location of hearing, documents requested by the court and provided by the sides.

Is there a difference between the amounts of extrajudicial and courtly ratified indemnities (damages)?

The insurer is obliged to pay within eight business days of application. At the end of the eighth business day, the insurer will be in default and will have to pay interest. On the other hand, if the injured party files a suit for damage without first resorting to directly contacting the insurer, the insurer will become in default at the time of suit. Other than this difference, extrajudicial and judicial indemnities do not differ greatly in essence as they are both usually appraised by an expert or a team of experts.

What is the compensation (damages) for damage (that descendants can claim) in a case of death in a traffic accident?

In case of death in a traffic accident, as the inheritors are deprived of the deceased’s support, they may demand deprivation of support indemnity, burial and funeral costs, and also mental anguish indemnity due to mental pain and suffering from the deceased’s death.

In the case of traffic accident, to whom is the driver liable for material and immaterial damages (passengers, third parties, the ones involved in car accident)?

Material damages (in case of damage to the vehicle & the driver is faulty/wrongful): The driver is liable to the owner of the vehicle. If the owner has died in the accident, then the driver is liable to the heir of the owner. If the vehicle is insured and the damages are covered by the insurance company, then the driver is responsible to the insurance company.

However, in the event that the vehicle used by the faulty driver is insured with a Compulsory Financial Responsibility Insurance, the damages are covered by the insurance company within the limits of CFRI policy. For damages that exceed the CFRI limit, the damages are covered from the Discretionary Financial Responsibility Insurance (DFRI – Kasko), if any. If there are no DFRI, the faulty driver is responsible with his own personal wealth for the damages that exceed the CFRI limit.

Immaterial damages: The faulty driver is liable to immaterial claims from the relatives of the injured or deceased. As a rule, insurance companies that are party to a DFRI or CFRI are not liable to immaterial claims. Insurance companies may only be liable to immaterial claims if this responsibility is explicitly stated in the policy, which is rarely the case.

If the faulty driver is deceased in the accident: The heirs of the driver are liable to these claims, unless they have refused the inheritance. In this case the insurance warranty is still valid.

If the vehicle driven by the driver is not insured with a CFRI: The Assurance Account of the state covers the treatment costs for all bodily damages. This is a state-run insurance account.

Who covers the recovering of immaterial damage that participants in a traffic accident suffer? Is it the driver who caused the accident or the insurance company?

Usually the insurance company is not liable for immaterial damages, as this term is not included in most policies. But if it is included in the policy as a clause (that the insurance company will be liable for immaterial damages as well as material damages), then both the driver and the insurance company are jointly and severally liable for immaterial damages. If the faulty driver is deceased in the accident, the heirs of the driver are liable to immaterial claims, unless they have refused the inheritance.

Is it usual that the drivers or the vehicle owners close the insurance for covering the claims for immaterial damages?

Insurance policies are private law agreements. The terms are decided by mutual consent. It is therefore possible for the parties of an insurance policy to decide on whether to make the insurance company liable for immaterial damages for not. However in practice, it is not usual for insurance policies to include immaterial liability, therefore insurance companies are usually not liable for immaterial damages.

How and from whom can one claim damages for suffered immaterial damage (such as mental anguish)?

Immaterial damage can be claimed from whomever is alleged to have caused the mental anguish. It can be claimed through a lawsuit, either as a separate immaterial damages suit, or together with a material damages compensation suit. Naturally, the claim has to be proven and oftentimes does not succeed too easily. Also, the amounts decided by the Turkish courts for immaterial damages are usually low, due to two main reasons: the compensation may not be too high to affect the responsible party’s financial stability, and the compensation may not cause unjust enrichment on the part of the mentally damaged. As a result, courts are in most cases reluctant to rule on significant amounts for immaterial damages.

Do the injured parties usually claim the damages alone (by them self) or through the lawyer or a third party?

The injured parties may claim the damages by themselves, or through a lawyer, or a third party. It is not very common for the parties to claim the damages by themselves, so the common practice is to either claim the damages through a lawyer or through a third party, to whom the injured party transfers his right of claim.

How does one enforce the damages? Is it in judicial proceedings, proceedings with insurance company or any other proceeding?

It is not compulsory to file a case (through judicial proceedings) to enforce the damages.   One may seek damages through a written application to the insurance company before filing a case. In the event that the application is denied by the insurance company, one may then file a suit within the legal time frame.

If the application is accepted but there are disputes on the amount of the damage, then the case may be brought before the court.

Alternatively, one may directly seek damages through filing a case at the court without ever applying to the insurance company.

If one claims damages through a lawyer, who covers the legal representation costs (insurance company, person responsible for the accident, the injured party)?

If a person has claimed his damages through judicial proceedings, there may be two types of legal representation costs. Firstly, there is the contractual legal advice cost, which is binding between the parties of said contract and is paid to the lawyer by the represented, regardless of the outcome of the legal undertaking. Secondly, there is the compulsory representation cost decided by the court and this second cost is paid by whichever side loses the case. So, for instance if one succeeds in claiming damages from the insurance company through judicial proceedings, the insurance company pays the compulsory legal representation costs of the lawyer of the other side. Yet, the company would not pay for the contractual legal representation cost of said lawyer.

However, if one has claimed his damages through a written application to the insurance company, only the first kind of legal advice cost (contractual legal advice cost) is applicable, the covering of which by the insurance company is irrelevant. In other words, the insurance company does not cover the contractual legal representation costs of one’s lawyer. There are no compulsory legal representation costs in this situation.

In case of court enforcement of damages (judicial proceedings), how long do the proceedings usually take? In a court dispute, is it necessary to be represented by a lawyer? Who does in this case covers the costs for the legal representation?

Usually the judicial proceedings of a court take 9 to 12 months. The hearings may take around 2 years if the case is complex and requires detailed examination. Although rare, there are some cases that take 4 to 5 years to finalize, including appeals.

In a court dispute, it is not compulsory to be represented by a lawyer, although taking into account the complexities of Turkish law, it is strongly recommended.

In the case of enforcing the compensation claim with the insurance company of the causer, how long does it actually take for the whole process to be closed (from the claim file to the actual payment of damages)?  Who does represent the injured party by the insurance company? If represented by a lawyer, who covers the lawyers fee?

In the event that the damages are claimed directly from the insurance company through a written application, the whole process usually takes about 3 to 4 months for the actual payment.

The injured parties may claim the damages by themselves, or through a lawyer, or a third party.

If represented by a lawyer for direct claims at the insurance company, the insurance company does not cover the lawyer’s representation costs. The lawyer’s fee is paid by the injured party or whoever has entered into a contract of representation with said lawyer.

What is the amount for compensation claim for material and immaterial damages?

The monetary limit for compensation claims for material damages is the actual damage. Therefore one cannot receive compensation higher than the actual damage, otherwise an unjust enrichment would occur. The amount of the actual damage (therefore the material claims) are almost always determined by experts.

There are no limits for immaterial damages but the damages decided by the courts are usually much lower in comparison to other western countries.

What is the compensation for the damages in case of the death of a close relative? In the case of a father’s death, as a result of a traffic accident caused by a third party, does the son recover damages?

In the event of the death of a relative or a close friend, one who suffers from mental grief due to this event may claim immaterial damages. Kinship is not required in order to make such a claim: anyone who was a relative or a friend of the deceased who thinks that she/he has been subject to mental anguish or grief may make this claim.

There is also another type of damage that may be claimed in such an event, namely the damage due to destitution of support. It may be claimed by anyone who had been financially supported by and dependent on the deceased person. However male children over the age of eighteen cannot claim this type of damage due to the death of their parents. Similarly, married daughters may not claim damages due to destitution of support. Employment status of the claimant is irrelevant in both cases.



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