Fire Insurance and Compensation

Fire insurance covers direct material damages to insured property caused by fire, lightning, explosion, or smoke, steam, and heat resulting from fire and explosion, up to the insured amount. Fire insurance is not a mandatory type of insurance, but it may be required depending on the type of loan used. In practice, one of the most common lawsuits regarding fire insurance contracts is subrogation claims filed by insurers who have paid compensation against the owners of the insured property, depending on the cause of the fire.

The insured's liabilities in case of damage

From the moment the risk occurs, the insured has the following obligations to follow in order to receive compensation payments in the damage assessment process:

• The insurer must be notified within five business days of learning that the risk has materialized
• Upon the insurer's request, the insured must promptly provide the insurer with all necessary information and documents that are feasible for the insured to provide, in detail, to determine the causes of the risk occurring, to ascertain the amount of damage and the evidence, and to facilitate the exercise of the right of recourse
• The insured party must allow the insurer or its authorized representatives to conduct investigations and examinations of the insured property or assets and related documents in order to determine the liability and amount of compensation and the rights of recourse.

Criteria for an insurer's liability to pay compensation

According to Article 1427 of the Turkish Commercial Code, the insurer's obligation to pay compensation under the contract is the insurer's responsibility as a counterpart to the insured's premium payment obligation. The insurer's fulfillment of this obligation only occurs upon the realization of the risk. Accordingly, the conditions under which the insurer's obligation to pay compensation arises can be summarized as follows:

• The risk occurs within the term of the insurance contract,
• The risk that occurs must be one that falls within the scope of the insurance coverage
• There must be an appropriate causal link between the risk and the harm.

Conflict between parties in determining insurance damages

Following the occurrence of a risk, the parties may disagree on the amount of damage determined during the damage assessment. In this case, they may decide to refer the matter to arbitrators/experts to determine the amount of damage, and this decision will be documented in a report. The amount of damage will then be determined according to certain principles, and if compensation is claimed or sued against the insurer, the arbitrator/expert's decision will serve as the basis for determining the compensation.

Time limit for notification of the expert/arbitrator report in determining the amount of damages

When an arbitrator or expert is consulted to determine the amount of damages;

• From the date the arbitrator or expert is appointed,
• Within a maximum of 3 months from the selection of the third arbitrator or expert
• Probably within 6 months from the date the risk occurred

If the report detailing the amount of damages is not delivered, the parties may prove the amount of damages using any available evidence.

Statute of limitations

All claims arising from fire insurance contracts expire after 2 years.

For more information and support on this matter, you can consult with our firm's experienced lawyers.

Sources used:

¹Aral Eldeleklioğlu, İ . (2016). Recourse Against the Building Owner in Fire Insurance. Marmara University Faculty of Law Law Research Journal, Marmara University Faculty of Law – Law Research Journal, 985-1023 .