Insurance is a contract by which the insurer commits to indemnify in case there is a risk of damage for the insured’s interest that has actual cash value or because of the events that happen in the insured’s life in return for the payment of premium. The contracts of insurance are divided into two categories as Life and Non-Life insurance contracts which are regulated in general in the Turkish Commercial Code and particularly in the Insurance Law. The major features of insurance contracts in the Turkish Law are;
- Insurance contract is a bilateral contract which causes mutual obligations to the both parties,
- Insurance contract is a fixed term contract,
- Insurance contract is based on the utmost good faith principle,
- Insurance contract is an aleatory contract,
- Insurance contract brings about permanent relationship and consequences.
There are some Obligations of the Insured which are essential
1. Announcement responsibility:
- At the time of the contract: While the contract is being drawn up, the insured person has to indicate all the terms to the insurer. If the insured keeps silence though he is asked or does not tell the truth, the insurer who does not knowp the truth may renege on the contract with in a month’s time after he/she has learned the truth and if it is realized that the insured person is malicious, the insurer has a right to get the premium.
- During the insurance: The insured cannot change the place or the condition of the insured good without informing the insurer. If not; the insurer may annul the contract in 8 days. If the insurer misses the 8-day-time period, he loses his right of cancellation.
- In case of the happening of the risk: The insured has to inform the insurer in 5 days as from he has learned about the happening of the risk. Otherwise he loses his all rights arising from the insurance.
2. Protections measures
The insured is responsible for taking all the precautions that can be effective for preventing and reducing the damage. The amount that is spent for these precautions is indemnified form the insurer.
3. Payment of premium
The insured has to pay the premium and first premium is supposed to be paid at the time of the contract and in reply to the delivery of the policy. The premium is paid by money. Paying by monthly or yearly installments can be determined; if not, the insured has to make a full payment for the premium. The responsibility of the insurer starts on the date when the premium is paid. After the contract has been conducted, before the responsibility of the insurer has started, the insured can renege on the contract in condition that he pays the half amount of the premium. As a general rule he premium is paid at the insured’s residence address. In case of the termination of the insurance contract because of legal reasons, the premium that belongs to the time after the termination is given back to the insured person.
The Obligations of the Insurer
Only the obligation of compensation of the insurer is regulated. According to the legislation; the obligation of the insurer arises when the insured informs him about the happening of the risk. The amount of compensation is determined according to the current amount of the insured interest at the time the risk happens. If the amount of the interest is not stated when the contract was made, the insured has to prove the amount of the good at the time the risk happens. On the other hand if the insurer claims the amount of the insured good is less than stated has to prove that. If there is a fault of the insured on the occurrence of the risk, the insurer may compensate it; however, the insurer does not compensate the damages arising from the insured’s intention or defect of goods insured. The insurer is only responsible for the real damages, which the insured suffered.
According to subrogation principle, after the insurer pays the insurance amount, he/she replaces with the insured person legally and if the insured has the right to proceed against the third persons because of his damages, this right also replaces to the insurer.
Apart from main legislation, the responsibility of the insurer’s is drawn up in a guideline as well which aims to identify the duties and obligations of the insurer during the conduct of the contract and continuation. This obligation starts before the conducting of the contract and lasts during the time in which the contract valid as well and can be fulfilled by oral or written. According to the following article of this regulation as a requirement of the honesty principles, the insurer has to help the insured with the technical points during the consultation, development and the continuation of the contract, provide oral and written information about the continuing of the insurance and avoid any behavior that might confuse the insured. If the insurer fails to perform his obligations, gives confusing or imperfect information to the other party or not deliver the information form to the insured, the insured might annul the contract and indemnify his loss. The insurer has to answer all kind of written complaints in 15 days at the latest after getting them. During the period in which the contract is valid, the insurer fulfills the obligation of informing by registered letter, fax, telegraph, e-mail or electronic sign.
As a general rule the same person against the same risk cannot insure an interest, which has been insured for its whole value.
If the insurance amount exceeds the amount of the insured interest, this part of the insurance becomes invalid. The amount of insured and the premium is reduced and if the premium has been taken, it is paid back.
If an interest is insured at the same time and against the same risks by more than one insurer, all the insurances remain valid for only the amount of the insured interest; the exceeding part becomes invalid. In this case each one of the insurers is responsible for the amount what they have insured.