14.03.2024
Authors: Görkem Çetin, Oğuzhan Onur, Cüneyt Baş
Insurance business is a sector that holds importance in both economic and legal dimensions in today's world. Both individuals and legal entities seek to minimize the risks in their fields of operation and secure themselves against potential adverse situations by insuring all kinds of their activities, transactions, and operations through individuals or legal entities operating in the insurance business, or through their agents. In this context, the rights and obligations of the insurer and the insured shall be summerized for your information.
1. Insurance and Insurance Business
“Insurance” have been present since ancient times, when people engaged in relationships with each other and undertook activities or actions involving "risk" and "danger." In fact, even in the earliest written laws known as the Code of Hammurabi, there were regulations related to "insurance."
Over time, as the activities conducted among people increased and diversified, the importance given to "insurance" also increased. Dominant countries have introduced special laws and regulations regarding "insurance" and "insurance business" in response to this growing importance.
In Turkish law, provisions regarding "insurance" are extensively regulated in the Turkish Commercial Code numbered 6102 ("TCC") and the Insurance Law numbered 5684. In this regard, the Turkish Grand National Assembly, as the legislative body, has attributed special importance to matters related to "insurance" and "insurance industry."
2. Types of Insurance
In our legal system, private insurances are primarily divided into two types: "personal (life) insurances" and "property insurances."
In personal (life) insurance, the individual exposed to risk and suffering damage is directly the people themselves, whereas in property insurance, the individuals exposed to risk and damage are not people, but rather the assets owned by them or a business[1].
Property insurances are further divided into subtypes such as fire insurance, theft insurance, earthquake insurance, electronic device insurance, and transportation (cargo) insurance.
Depending on the type and content of the issued insurance policy, certain rights and obligations are granted to both the insurer and the insured. These rights and obligations may vary depending on the type, content, and nature of the insurance policy. However, various regulations regarding the rights and obligations of the insurer and the insured under "insurance contracts (policies)" are found in articles 1401 and following of TCC.
3. Rights and Obligations of the Insurant and/or the Insured
According to TCC, the primary obligation of the insured is to pay the "premium" to the insurer under the insurance contract (policy). Additionally, under TCC and the insurance contract (policy), the insured has obligations such as providing accurate information to the insurer, not aggravating the risk, notifying the occurrence of the risk, and finally, taking measures to reduce and mitigate the damage after the occurrence of the risk.
3.1. Premium Payment Obligation
Under the insurance contract (policy), the insured has an obligation to pay a "fee" to the insurer, which is specified as "premium" in TCC.
While the payment of insurance premium is primarily expected to be made "in advance," it can also be agreed to be paid through installments. However, if the payment of the insurance premium through installments is agreed upon, the first installment - with exceptions for land and marine transportation - must be paid at the time of delivery of the insurance contract (policy). In other words, the obligation to pay the "premium" under the insurance contract (policy) will not arise before the delivery of the insurance contract (policy); any demands from the insurer to the contrary would be unlawful.
The obligation to pay the insurance premium typically lies with the insurant. In this context, even if a third party, whether an individual or a legal entity, is designated as the "beneficiary" in the issued insurance contract (policy), the insurer is required to demand the insurance premiums from the insurant.
3.2. Notification Obligation
1 (one) of the other obligation of the insured is the "notification" obligation. The insured's obligation in this regard can be divided into 3 (three) parts:
· Notification obligation during the preparation stage of the insurance contract (policy),
· Notification obligation during the continuation of the insurance contract (policy),
· Notification obligation in the event of the occurrence of the risk.
The beginning of the insured's "notification" obligation starts during the preparation of the insurance contract (policy). In this context, the insured is obligated to inform the insurer of all matters known to them or that they should know during the preparation of the insurance contract (policy).
In ordinary life, it is possible for the insurer to provide the insured with a "questionnaire." In this case, each question included in the "questionnaire" provided by the insurer and/or asked verbally is considered "important" unless proven otherwise.
In case of non-compliance with the notification obligation by the insured, the insurer may have the right to rescind the insurance contract (policy) or demand the difference in premium depending on the "importance" of the incorrectly or incompletely reported matter.
The insured also has an obligation to promptly notify the insurer of any circumstances that may cause an increase in risk or may result in an expansion of the insurer's liability to provide compensation during the continuation of the insurance contract (policy).
In the event of the occurrence of the risk covered by the insurance contract (policy), the insured is also obliged to make an "immediate" notification regarding the occurrence of the risk. Delayed or non-existent notification may result in a "deduction" in the amount of compensation payable by the insurer or other obligations, especially in cases involving "intent", the insured's right to claim compensation may be forfeited.
3.3.Obligation to Prevent, Mitigate Damage, and Preserve the Rights of Recourse for the Insurer
Another obligation of the insured regarding the insurance contract (policy) is to prevent or mitigate the insurer's loss in cases where the risk occurs or the probability of its occurrence is high, and to preserve the insurer's rights of recourse against third parties, whether natural or legal persons.
Examples of the insured’s obligations within this context could be;
· Attempting to extinguish a fire that occurs on the insured property and trying to salvage insured goods,
· To preserve evidence related to the incident to enable the insurer to seek recourse against third parties, whether natural or legal persons, who are found to be at fault due to intent, negligence, or omission.
4. Rights and Obligations of the Insurer
The obligations of the insurer, who is the other party to the insurance contract (policy), are also regulated within the scope of TCC and the insurance contract (policy). The basic obligations of the insurer can be summarized briefly as the obligation to assume the risk and to pay the insurance premium / compensation, the obligation to pay expenses, and the obligation to enlighten.
4.1. Obligation to Assume the Risk and to Pay the Insurance Premium / Compensation
In accordance with the insurance contract (policy), the insurer is responsible for the damage arising from the occurrence of the risks specified in the insurance contract (policy) and the amount payable as compensation for the damage.
In this context, for the insurer to pay the insurance premium / compensation, it is necessary for the insured to provide notification and to fulfill other obligations.
4.2. Obligation to Pay Expenses
Another important obligation of the insurer is the "obligation to pay expenses."
In ordinary circumstances, in the event of the occurrence of the risk covered by the insurance contract (policy), after the insured makes a notification in accordance with the procedure, the insurer conducts various inspections and evaluations; sometimes, an "expert report" is even prepared.
In accordance with TCC, it is the insurer's responsibility to make determinations regarding whether the risk has occurred and to pay expenses in this context.
4.3. Obligation to Enlighten
It is evident that the parties to the insurance contract (policy), namely the insurer and the insured, are not in an equal position when it comes to regulating and assessing the fundamentals of the insurance contract (policy).
In this regard, TCC imposes on the insurer the obligation to inform and "enlighten" the insured both in the establishment of the insurance contract (policy) and during the continuation of the insurance contract (policy).
During the issuance of the insurance contract (policy), the insurer is required to provide in writing all information regarding the type of insurance contract, the rights derived from the policy for the insured, specific situations that the insured needs to pay special attention to, and other relevant matters.
In addition, any "significant" developments that occur during the continuation of the insurance contract (policy) must also be notified to the insured in writing.
5. Conclusion
Insurance contracts (policies) that we frequently encounter in everyday life and the rights, obligations, and responsibilities of both the insurer and the insured in this regard have been regulated in detail in the relevant legal regulations.
When issuing an insurance contract (policy) and in disputes subject to insurance law, it is crucial for the insured to be aware of their rights and fulfill their obligations completely to prevent any loss of rights. Due to the specialized nature of this field, we recommend seeking legal assistance in disputes subject to arbitration proceedings or in cases before judicial authorities.
[1] Ulaş Işıl, Bektaş İbrahim, Ulaş Sigorta Hukuku, Turhan Kitabevi Yayınları, Ankara, 2023, p.207.
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