Official Gazette Date: Friday, 13 May 2011

Official Gazette Number: 27933

GENERAL CONDITIONS OF COMPULSORY EARTHQUAKE INSURANCE

A. INSURANCE COVERAGE

A.1- Insurance Coverage

In accordance with the Catastrophe Insurances Law No. 6305, the independent sections that are within the scope of Law 634 on Property Ownership, buildings which were constructed as dwellings on immovable property, which are registered in the title deeds and which are subject to private ownership, independent sections within these buildings used for commercial purposes, office space and similar purposes, and dwellings constructed by the state or with the loans given due to natural disasters are subject to Compulsory Earthquake Insurance.

With this insurance, material losses directly caused by an earthquake and damages caused by fire, explosions, giant waves (tsunami) or landslides which are a result of an earthquake in the insured buildings (foundations, main walls, common walls separating independent sections, garden walls, retaining walls, ceilings and floors, stairs, elevators, landings, corridors, roofing and chimneys, including damages which occur in similar complementary parts of the building) are guaranteed by the Turkish Catastrophe Insurance Pool  (the TCIP) up to the insurance amount.

A.2- Buildings Excluded from the Insurance Coverage

The buildings listed below are not covered by this insurance.

2.1- Buildings and independent sections subject to Law 2946 on Public Housing dated 9 November 1983, or which are used as public service buildings,

2.2- Buildings built in and around village settlement areas and in hamlets by those who are registered to the village population and who are permanent residents of the village,

2.3- Buildings which are used for commercial or industrial purposes in their entirety,

2.4- Buildings which were not designed or did not receive engineering services,

2.5- Buildings which are found to have been modified or weakened in a manner which would adversely affect their structural integrity,

2.6- Buildings constructed in violation of the relevant legislation and designed in a manner which would adversely affect their structural integrity,

2.7- Buildings which have been condemned for demolition by authorized public institutions and buildings which are not suitable for residential use, neglected, derelict or abandoned.

A.3- Cases Excluded from the Coverage

The following cases are excluded from the insurance coverage.

3.1- Debris removal costs, loss of profit, interruption to business, deprivation of rent, alternative housing and workplace expenses, financial responsibilities and similar indirect losses,

3.2- All kinds of movable goods, articles and the like,

3.3- All bodily harm, including death,

3.4- Non-pecuniary (immaterial losses, of an emotional, moral nature or similar) compensation claims,

3.5- Damages other than those caused by an earthquake, or from the fire, explosion, giant wave (tsunami) or landslides caused by an earthquake,

3.6- Damages which have occurred over time due to the building's own defects and features, regardless of a specific earthquake event.

A.4- Determination of the Insurance Amount

The amount found by multiplying the square meter price determined in the "Compulsory Earthquake Insurance Tariff and Instruction", which is published by the Undersecretariat of Treasury, for the construction style of the insured dwelling by the gross area (or approximate area) of the same dwelling is taken as a basis in determining the insurance amount. In any event, the insurance amount of a dwelling with Compulsory Earthquake Insurance may not exceed the maximum guarantee amount specified in the "Compulsory Earthquake Insurance Tariff and Instruction".

A.5- Excess Insurance Amount

Where the insurance amount exceeds the reconstruction cost of the insured dwelling, the portion of the insurance exceeding this cost is invalid. If the Institution becomes aware of the situation during the insurance period, it reduces this insurance amount and refunds the excess premium received for the current year to the policyholder on a daily basis.

A.6- Exemption

A “deductible exemption” at a rate of 2% of the insurance amount is applied for each claim. The TCIP is responsible for the portion of the claim exceeding the exemption amount found accordingly. For the purposes of exemption, any damages which occur in one 72-hour period are considered one (1) damage item.

A.7- The Beginning and End of the Insurance policy

The term of this insurance contract is one year. Unless otherwise agreed, the insurance policy shall enter effect at 12:00 noon Turkish time on the starting date specified in the policy and end at 12:00 noon Turkish time on the date specified as the end date in the policy.

B- CLAIMS AND COMPENSATION

B.1- Obligations of the Insurant or Insured in the Event of Realization of the Risk

The insurant or the insured is obliged to fulfil the following in the event that the risk is realized.

1.1- To notify the TCIP or the insurance company which concluded the contract on behalf and on account of the Institution, within at most fifteen working days of learning that the risk was realized,

1.2- To allow the TCIP officials or authorized persons to enter the damaged buildings for reasonable purposes and in an appropriate manner and to take initiatives to reduce the damage,

1.3- Upon the request of the TCIP, to provide the TCIP with the necessary information and any documentation which may be useful for assessing the amount of damage and would serve as evidence, for exercising the right of recourse and which the insurant is able to provide,

1.4- To issue a written notice to the TCIP or the persons authorized by it stating the estimated amount of the damage, within a reasonable and appropriate time frame,

1.5- Where there are other insurance contracts with earthquake coverage other than the Compulsory Earthquake Insurance on the insured building/place, to notify the TCIP about them.

B.2- Damage Assessment

The cause, nature and amount of damage to the buildings insured with this contract are determined by agreement between the parties according to the assessments of the TCIP or persons authorized by it.

In the event of substantial damages, the TCIP may develop simplified damage assessment applications by making use of technological opportunities in order to ensure that damage assessments can be carried out quickly.

B.3- Calculation of Compensation

3.1- In the calculation of insurance compensation, the reconstruction cost of the building, which is calculated according to the market rates, is considered by taking into account the similar building characteristics at the place and date of the risk occurrence, regardless of whether there has been a full or partial damage. However, the insurance compensation may not, in any case, exceed the insurance amount.

3.2- The provision of article C.2 is reserved in the calculation of the compensation.

3.3- The TCIP is required to complete the necessary examinations as soon as possible after it receives the documents regarding the amount of damage, by assessing the amount of damage and compensation. It is then required to notify the insured party.

B.4- Payment of Compensation

4.1 - After the compensation amount is determined in accordance with the law and the provisions of this policy, the TCIP is required to pay the finalized compensation amount to the beneficiary within the following one month at the latest, provided that it does not exceed the insurance amount.

4.2 - It is possible to carry out advance payments to the insured persons after the earthquake, the principles of which are determined by the Undersecretariat of Treasury. Whether or not the advance is paid, the advance amount and scope of the advance are decided by the Undersecretariat of Treasury upon the TCIP’s recommendation.

B.5- Results of Claim and Compensation 

5.1- The TCIP legally replaces the insured party with the amount of the compensation payment it has made. If the insured has the right to file a lawsuit against third parties due to the claim, this right is transferred to the TCIP in proportion to the compensation it has paid.

5.2- In case of complete damage occurs as a result of the earthquake, the insurance guarantee ends with the payment of the compensation. In case of partial damage, the insurance amount is reduced by the amount of compensation paid from the date of the risk occurrence.

Regarding the damages affecting the structural system of the building, the house must be repaired within a reasonable time specified in the expert report in order for the guarantee to be functional again. Otherwise, subsequent damages that may occur during the policy term will not be paid. In cases where the insurance amount is reduced, the insurance amount is increased by taking the premium on a daily basis, starting from the date the damaged building is restored to its original state the day before the damage.

C- MISCELLANEOUS PROVISIONS

C.1- Payment of Insurance Amount, Beginning and Ending of the Liability of the Turkish Catastrophe Insurance Pool

The insurance premium is exempt from all kinds of taxes, duties and fees.

The insurance premium is paid in advance in return for the delivery of the policy as soon as the contract is concluded. However, the premium amount may be paid in instalments by credit card or otherwise by financial institutions, provided that the instalments are not reflected to the Institution. In any case, in the event that neither entire insurance premium nor the first instalment is paid, despite the delivery of the policy, the TCIP’s liability does not begin. This condition is stipulated on the front of the policy. Insurance premium receivables are collected in accordance with the provisions of the Law on the Collection Procedure of Public Receivables No. 6183.

Owners or beneficiaries, if any, are required to renew their insurance contracts every year. In the event that the insurance contract is not renewed by the policy expiry date, the TCIP's liability for the guarantee shall end on the expiry date specified in the policy.

C.2- Declaration Obligation of the Insurant, Termination and Cancellations

The TCIP has prepared this insurance contract based on the declaration of the insurant informing the real situation of the risk. During the issuance of the contract, the following provisions shall apply in the event of a false declaration from the insured or the insurant regarding the information such as the gross area of the housing, its building type, address and damage status in past earthquakes.

In the event that the declaration of the insured or the insurant is false or incomplete and in cases which require the TCIP to conclude the contract with more stringent conditions, the TCIP or the relevant insurance company, which is appointed as an intermediary, shall demand payment of the premium difference from the insurant within a period of 15 days of the time that they became aware of the situation.

If the false declaration is found following the earthquake, the compensation is paid according to the ratio between the premium received and the premium to be received.

If it is understood that the insured or the insurant had intentionally withheld details of moderate or more severe damage sustained in past earthquakes, the TCIP may withdraw from the contract and be entitled to the premium, even if the risk has been realized.

The TCIP may terminate the contract if the insured party carries out illegal changes in the insured housing within the insurance period.

In the event that the insured party documents that more than one Compulsory Earthquake Insurance policy has been issued for the same place or that a Compulsory Earthquake Insurance policy has been drawn up mistakenly in a place which is outside the coverage of the insurance pursuant to Article A.2, the Compulsory Earthquake Insurance contract shall be cancelled from the starting date of the policy and the entire premium is refunded to the insured party.

On the other hand, in the event that the insured place disappears for a reason other than the conditions covered by Article A.1, or the insured place is no longer within the coverage of the policy during the period the insurance contract is in effect, the insurance policy is cancelled with effect from the date of the notification, provided that this situation is documented by the insured party. In this case, the premium amount corresponding to the period between the cancellation date of the contract and the end date is refunded to the insured party on a daily basis.

C.3- Multiple Insurance Policies

No more than one Compulsory Earthquake Insurance policy may be purchased for the same building or independent section. However, where the value of the independent section or building for which the Compulsory Earthquake Insurance has been purchased exceeds the insurance amount determined by the Compulsory Earthquake Insurance policy, optional earthquake insurance may be purchased by the insurance companies for the portion which exceeds this amount, provided that the Compulsory Earthquake Insurance has been purchased.

C.4- Change of Beneficiary

If the beneficiary changes during the contract period, the provision of the insurance continues under the new beneficiary. In this case, the new beneficiary is obliged to have a transfer addendum for the insurance and to submit the addendum to the relevant land registry directorate in order to complete the sale transaction. In other cases, the insurant and new beneficiary who learns of the existence of the insurance are obliged to notify the insurance company, which mediated the contract, within a period of 15 days.

C.5- Notifications and Notices

Notifications from the insured party are carried out in writing to the insurance company which mediates in the contract on behalf of the TCIP.

In addition, notifications from the TCIP or the insurance company authorized on behalf of it are carried out through a letter given by signed delivery to the parties or in writing to the address of the insurant listed on the policy or, if this address has changed, to the last notified address, by signed delivery.

Notifications from the TCIP enter effect on the date they are sent to the post or public notary.

C.6- Arbitration and Authorized Court

In regard to disputes arising from the insurance contract, the matter may be referred to the Insurance Arbitration Commission if the event in dispute took place after the date of membership. Decisions for amounts up to that specified in the twelfth paragraph of Article 30 of the Insurance Law No. 5684 are final for both parties. Detailed information concerning applications to the Insurance Arbitration Commission may be obtained from www.sigortatahkim.org.

The authorized court for legal action filed against the TCIP due to disputes arising from this insurance contract is the court in charge of dealing with commercial cases where the TCIP is located or where the risk occurs. In the lawsuits to be filed by the TCIP, it is the court in charge of dealing with commercial cases in the residential address of the defendant.

C.7- Time Out

All claims arising from the insurance contract are timed out in two years following the expiry of the contract.

C.8- Entry into Force

The General Conditions of Compulsory Earthquake Insurance published in Issue 24164 of the Official Gazette and dated 8 September 2000 were repealed.

C.9- Entry into Force