Standard commercial general liability policiesBodily injury
What constitutes bodily injury under a standard CGL policy?
In the Turkish insurance framework, such a standard CGL insurance does not exist. Instead, the Insurance and Private Pension Regulation and Supervision Agency (who recently assumed the tasks and responsibilities of the former Undersecretariat of the Treasury) provides alternative general conditions for the different needs of business organisations.
As per the General Conditions of Professional Liability Insurance, for example, third-party liability insurance covers both bodily injury and property damage claims of third parties. According to the general rules of the law of obligations, bodily injury covers death, loss of limb and other harm to the human body, including sickness or disease as well as associated damage and costs such as deprivation of income. According to the General Conditions, however, non-pecuniary damages are excluded unless the parties expressly agreed to the contrary.
Apart from the above, there are different kinds of financial liability policies, including professional liability insurance, independent auditors’ professional liability insurance, motor vehicles liability insurance, financial liability insurance, employers’ liability insurance and medical injury liability insurance.Property damage
What constitutes property damage under a standard CGL policy?
Property damage covers all kinds of physical and visible injury to the tangible property, such as total or partial loss of the property, including all injury resulting in the loss of use of that property. As widely accepted by practice, consequential damage is not covered by the CGL policy.Occurrences
What constitutes an occurrence under a standard CGL policy?
Scholars, in principle, describe an occurrence as the triggering factor of the insurance coverage. For general liability insurance, the law adopts the ‘event occurrence’ principle, which means, with reference to the insured event, the negligent act that forms the reason for the damage requiring the insured's liability.
If the policy is for the liability of a commercial enterprise, the policy is understood to be covering also the third parties' loss caused by the insured's employees and representatives or executives who are in charge of the management and supervision of the enterprise.
Insurance coverage, principally, becomes payable if the event occurs within the term of the insurance (or between the accepted retroactive date and the signing date of the insurance contract, if agreed so, provided that the insured was not aware the event had already occurred).
How is the number of covered occurrences determined?
The number of covered occurrences is not explicitly determined in Turkish legislation.
Likewise, neither the TCC nor the General Conditions of Liability Insurance specifically stipulate how serial damages must be evaluated.
However, contracts tend to include a serial damages clause that considers continuous or continual occurrences as one and stipulates that the insurer shall indemnify the insured once, up to the value of the insurance coverage. In the absence of this agreement, the court may evaluate whether there is unity in cause or unity in time to consider the occurrences as a single insured event.Coverage
What event or events trigger insurance coverage?
In Turkish insurance practice, a CGL policy is generally based on occurrence of the covered risk, third party claims or suffered loss. In principle, the CGL policy is occurrence-based as per article 1473 of the TCC. That means, provided that the harming event occurs in the policy period, the materialisation of the loss and the timing of the third party's claim are not relevant for the assessment of the coverage (except for statute of limitation considerations).
The parties may agree otherwise and make the CGL policy claim-based or loss-based. In the claim-based CGL policy, the third party's claim must be in the policy terms and the occurrence of the harming event and the materialisation of the loss are not relevant. Likewise, in the loss-based CGL policy, the materialisation of the loss should be in the policy term and the occurrence of the harming event and the timing of the claim are not relevant.
On the other hand, a CGL policy may be on more than one basis. For instance, if a CGL policy is based on both occurrence and claims, the harming event and the third party's claim must be in the policy term to trigger the insurer's compensation obligation.
In Turkey, obligatory insurances are generally occurrence-based.
How is insurance coverage allocated across multiple insurance policies?
In principle, if the same interest is insured against the same risk for the same term by more than one insurer at the same date or at different dates, the policyholder shall not be paid in excess of the insurance value. There are two different kinds of multiple insurance policies stipulated under the TCC.Double insurance
In respect of an interest covered for its full value, the same person or other persons can only subsequently take out insurance against the same risks for the same periods, provided that:
- the double insurance is approved by the subsequent and previous insurers;
- the policyholder transferred its rights arising out of the previous insurance contract to the subsequent insurer or waived its rights under the previous insurance contract. In this case, the transfer or the waiver must be written on the insurance policy, failing which the subsequent insurance will be deemed to be invalid; and
- the liability of the subsequent insurer is restricted to the part of the loss that is not paid by the previous insurer. In this case, the previous insurance must be annotated on the subsequent insurance policy, failing which the subsequent insurance will be deemed invalid.
If the same interest is insured with more than one insurer at the same date, against the same risk and for the same period, all of the co-insurance contracts will be deemed valid only up to the value of the insured interest. In other words, in joint insurance, there are different insurance policies for a part of the value of the property.
In such a case, each insurer shall be liable for the proportion that its insured sum bears to the total of the insurance sums. If the insurers are jointly liable according to their contracts, the insured will not have the right to claim more than its loss. Moreover, each of the insurers shall be liable up to the sum it must pay according to its contract. In that case, the insurer who has made the payment will have recourse to the remaining insurers for the proportion of the insurance sums that the insurers must pay to the insured under their contracts.
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21 January 2020