Insurance is an important tool that provides financial assurance against risks that may be encountered in many areas of our lives. Many different types of insurance, from traffic insurance to housing insurance, from health insurance to motor insurance, aim to compensate for financial losses in the face of unexpected events. However, when a damage occurs, insurance companies’ failure to pay the damage or underpayment of the damage can lead to serious grievances for the insured. In such cases, it is of great importance for the insured to know their rights and take legal remedies in order to eliminate any grievances.
Legal Framework: Insurance Contract and Liability
Insurance relations are regulated by the Turkish Commercial Code No. 6102 (TCC) and the relevant insurance legislation. An insurance contract is a contract in which the insurer undertakes, in return for a premium, to indemnify the insured for the loss or pay a sum of money in the event that a certain risk (hazard) occurs. The insurance company’s obligation to pay the damage is subject to the conditions set out in the insurance policy and legal regulations.
Turkish Commercial Code – Article 1401: Liability of the Insurer
The insurer is obliged to indemnify the interest of the policyholder, the insured or the beneficiary at the date of the risk.
Reasons for Non-Payment or Underpayment of Damage by the Insurance Company
Insurance companies may refuse to pay damages or make incomplete payments for various reasons:
- The risk is outside the scope of the policy: The damage incurred is not among the risks covered by the insurance policy.
- Breach of Contract: Failure of the insured to fulfil the obligations specified in the insurance contract (e.g. premium payment, notification of damage, incomplete or false declaration).
- Fault Ratio: Especially in traffic accidents, the insured’s fault rate is high or the accident is caused by the insured’s gross negligence.
- Incomplete or False Information: Incomplete or incorrect information provided by the insured during the conclusion of the insurance contract.
- Statute of Limitations: The statute of limitations for reporting a claim or filing a lawsuit.
- Value Loss Dispute: Especially in vehicle damages, the insurance company underestimates the loss of value of the vehicle or does not pay it at all.
Steps to Follow When the Insurance Company Does Not Pay the Damage
In the event that the insurance company refuses to pay the damage or makes an incomplete payment, the legal remedies that the insured can follow are as follows:
- Sending a Written Notice: Firstly, a written notice must be sent to the insurance company through a notary public or by registered mail with return receipt requested. In the notice, the details of the damage, the amount claimed, and the legal remedies to be taken in case of non-payment should be clearly stated. This notice shall serve as evidence in a future lawsuit.
- Application to the Insurance Arbitration Commission: In the event that a favourable response cannot be obtained from the insurance company or the response is deemed inadequate, an application can be made to the Insurance Arbitration Commission. The Insurance Arbitration Commission is an independent organisation that aims to resolve insurance disputes faster and less costly than courts. In order to apply to the Commission, a written application must have been made to the insurance company and a response must not have been received within 15 business days or the response received must not be deemed sufficient. The decisions of the Commission are final within certain monetary limits.
- Litigation A lawsuit may be filed before the Insurance Arbitration Commission or in the event of an unfavourable decision of the Commission, before the competent courts. The competent court for insurance disputes is generally the Commercial Court of First Instance. The action is brought against the insurance company.
- Material Compensation Case: It is the lawsuit in which the material losses (repair costs, loss of value, loss of earnings, treatment expenses, etc.) incurred due to the damage are claimed.
- Moral Compensation Case: It is a lawsuit filed for the compensation of moral suffering in the event of bodily harm or death, especially in traffic accidents.
Statute of Limitations
The statute of limitations for insurance claims may vary according to the type of insurance and the nature of the event:
- General Limitation: The general limitation period for receivables arising from the insurance contract is 2 years. This period starts to run from the date the risk is realised.
- Traffic Accidents: The statute of limitations for compensation claims arising from the Highway Traffic Law is 2 years from the date of learning about the damage and the indemnity obligor, and in any case 10 years from the date of the accident. If the accident also constitutes a criminal offence, the longer limitation period stipulated in the criminal law shall apply.
It is annoying for the insured if the insurance company refuses to pay or underpays the claim. However, insurance contracts and the relevant legislation provide insured persons with important legal remedies to claim their rights. Firstly, sending a written notice to the insurance company, then applying to the Insurance Arbitration Commission or filing a lawsuit directly at the Commercial Court of First Instance are the basic steps that can be followed. Careful observation of the statute of limitations and proper management of the legal process are critical to prevent loss of rights. Therefore, obtaining professional legal support from an insurance law attorney in insurance disputes will ensure that the process is carried out in the most effective manner.