The Determination of the Sum Insured in Compulsory Earthquake Insurance: The Policy Amount or the Current Tariff? An Analysis in Light of a Decision of the Turkish Court of Cassation

Abstract

This article examines the debate that emerged after the earthquakes of 6/2/2023 concerning the determination of the sum insured under compulsory earthquake insurance, in particular the relationship between the sum stipulated in the policy and the higher amounts introduced by subsequent Tariff and Instructions. The starting point is the situation in which, even for neighbouring units within the same building, the maximum amount payable by DASK may be either TRY 320,000 or TRY 640,000 solely depending on the date of conclusion of the contract, raising concerns as to equality and confidence in the compulsory insurance scheme.

The article first addresses the legal nature of compulsory earthquake insurance. Drawing on the Catastrophe Insurance Act, the legal status of DASK and the Compulsory Earthquake Insurance General Conditions, it argues that this insurance is a property damage insurance covering a decrease in the insured’s assets and that, in the absence of an explicit statutory exclusion, the provisions of Book Six of the Turkish Commercial Code on insurance contracts shall apply. The paper then critically analyses the serial decisions of the 4th Civil Chamber of the Court of Cassation, which limit DASK’s liability to the sum stated in the policy, in light of the practice in compulsory insurance tariffs whereby new limits apply directly to existing contracts or are extended to them through transitional clauses. Finally, the scope of the duty to inform and the principle of interpretation in favour of the insured, as reflected in Article 1423 TCC, are addressed and the soundness of the judgment rendered by the 4th Civil Chamber of the Court of Cassation is critically examined.