What Is Market Value (Rayiç Bedel) in Turkish Insurance?

How Do the General Conditions Define It?

The clearest definition sits in clause B.5 of the General Conditions for Fire Insurance, which states that indemnity is calculated on "the indemnity value of the insured items at the moment the peril occurs (rayiç bedel)". Market value is therefore measured for the moment of loss, not for the day the policy was written.

The kasko general conditions — Türkiye's motor own damage cover — apply the same logic to vehicles: the insurer covers the vehicle up to its market value as at the date of loss, and indemnity is calculated on the market values of the insured interests at the moment the peril occurs.

That produces the point behind most disputes: market value is not a figure fixed by agreement but a reality measured at the moment of loss. The sum insured on the policy and the value measured on the day of the claim can diverge, and the gap feeds straight into the settlement.

Sum Insured, Insurable Value and Market Value: One Thing or Three?

Three separate concepts, living in different places. Article 1460 of the Turkish Commercial Code defines insurable value as "the full value of the insured interest". Article 1461 provides that the insurer's liability is limited by the sum insured and that, even where the sum insured exceeds the value of the interest at the moment of loss, the insurer pays no more than the loss actually suffered.

Market value bridges the two: it is insurable value as measured on the day of loss. The sum insured sets the ceiling, market value sets the real figure, and any mismatch between them produces underinsurance or over-insurance.

The table below compares where each concept lives and what it decides.

How Is a Vehicle's Market Value Established?

The kasko general conditions lay down a definite procedure. The policy must state the reference to be used for market value, or the method by which it will be determined. If no such reference is set, or the wording is not concrete, the reference market values determined under rules laid down by the regulator apply. The text of the general conditions attributes that task to the former Undersecretariat of Treasury; regulatory and supervisory authority over insurance now sits with SEDDK, the Insurance and Private Pension Regulation and Supervision Authority.

The total loss test is also tied to market value. Where repair costs exceed the vehicle's value as at the date of the peril and an adjuster's report establishes that the vehicle is beyond repair, the vehicle is treated as a total loss. In that case indemnity is not paid until the scrap registration document has been produced to the insurer.

If the claimant consents to keeping the vehicle in its damaged state, the difference between its market value at the date of the peril and its damaged value may be paid as indemnity. The insurer is treated as guaranteeing the salvage figure it has notified for one month from that notification.

Theft uses a different date but the same logic: where the vehicle is stolen, its market value on the day of the theft is paid. In partial losses, if repair produces an obvious betterment in the vehicle, that difference may be deducted from the indemnity — but only if the policy states which parts attract a deduction and at what rate.

Homes and Business Premises: Market Value or New Value?

The fire general conditions put both options on the table. Market value is the default; the policyholder and the insurer may nevertheless agree that the policy is written on a reinstatement — new value — basis, and where they do the policy must say so expressly. If it does not, the policy is a market value policy.

The choice changes the settlement directly. On a market value policy, deductions are made for depreciation, wear and tear and other reductions in value, and any material difference in efficiency or quality between old and new is deducted as well.

On a new value policy, provided the maximum depreciation rate or age stated in the policy is not exceeded, the reinstatement cost calculated by reference to the rebuilding or purchase cost at the place and date of the loss applies. Where that rate or age is exceeded, the settlement reverts to the market value basis — so new value cover is not an open-ended guarantee.

A third route is agreed value. If, at inception or during the policy period, the value of the building, fixed installations, machinery, fixtures or household goods is assessed by experts jointly chosen by the parties and accepted by them, that value cannot be challenged when calculating indemnity. The schedule of agreed values holds good for at most one policy year, and agreed value contracts cannot be written on trading stock.

One item never enters the calculation: in real property, land value is disregarded when the sum insured is established. That is precisely why a home's asking price on the property market differs from its insurable figure.

Does DASK Use Market Value?

No — compulsory earthquake insurance follows its own method. The sum insured is found by multiplying the square-metre value set for the building type in the published Compulsory Earthquake Insurance Tariff and Instructions by the gross floor area of the dwelling, and the resulting figure cannot exceed the maximum sum insured stated in the same Tariff and Instructions.

Because the square-metre value and the maximum sum insured are revised each year, quoting a figure here would be misleading; the amounts set for the relevant year apply and current values are published by DASK alongside the general conditions.

The deductible works differently too: a deductible of 2% of the sum insured applies to each loss, and for that purpose all losses occurring within any 72-hour period count as a single loss. The practical meaning is that a dwelling's true market value and its DASK limit are not the same thing; closing the gap is the job of a household package policy.

What if Market Value Moves During the Policy Year?

Market value tracks the market. Construction costs, used-car prices and equipment replacement costs can all move sharply within a year. When the sum insured stays where it was, the two drift apart and an underinsurance argument arrives with the claim.

Article 1462 of the Turkish Commercial Code governs the outcome: where the sum insured is below the insurable value, the insurer pays indemnity in the proportion the sum insured bears to the insurable value, unless otherwise agreed. In the opposite direction, Article 1463 makes the excess portion void where the sum insured exceeds the value of the interest, with the corresponding premium refunded. We cover the arithmetic of both in a separate article.

The practical rule is simple: review the sum insured when the value moves, not when the renewal notice arrives. The fire general conditions also provide that in a partial loss the sum insured is reduced by the indemnity paid from the date of the peril, and that it may be restored against an additional premium.

How We Set the Figure as an Agency

At RYL Sigorta Aracılık Hizmetleri, the first thing we settle when preparing a quotation is which valuation basis the policy will be written on: market value, reinstatement value or agreed value. On the document it looks like a single line, but it decides what is paid on the day of a loss.

We then test the declared figure against reality: gross floor area and construction type for a home, a fixtures and stock inventory for business premises, model and specification for a vehicle. As an insurance agency we do not provide the cover; indemnity is paid by the insurance company. Our work is to make sure the figure in the policy is one that can be defended when a claim is made.

If you are not sure which valuation basis your current policy uses, send us a copy through our quotation form and we will review the figure and the cover structure with you.

Frequently Asked Questions

Sources

• Turkish Commercial Code No. 6102, Book Six: Insurance Law — Turkish Legislation Information System
• General Conditions for Land Vehicles Comprehensive (Kasko) Insurance — Turkish Legislation Information System
• General Conditions for Compulsory Earthquake Insurance — Turkish Legislation Information System
• Compulsory Earthquake Insurance General Conditions and Tariff — DASK
• General Conditions for Fire Insurance — Insurance Association of Türkiye

This article is for information only; the scope of cover is set by the policy’s specific and general terms.