What Is Liability Insurance?

What Does Liability Insurance Actually Insure?

Property insurance protects an asset: the building that burns, the machine that breaks, the car that is damaged. Liability insurance protects no asset. It covers the compensation debt the insured may owe someone else, and the money usually goes to the injured third party, not to the policyholder.

Article 1 of the Third Party Liability General Conditions sets the frame. It responds where an event during the policy period causes death, injury or damage to the health of third parties, or loss of or damage to their property, and claims are brought against the insured arising from the capacity, activity and legal relationships stated in the policy — within Turkish civil liability law and up to the amounts fixed in the policy.

The second paragraph carries the function most buyers overlook: the policy protects the insured “against unfounded and excessive claims as well as against well-founded ones”. Liability cover is a defence cover as much as an indemnity cover — even a claim that fails generates legal costs.

Note the phrase “the capacity and activity stated in the policy”. Cover attaches to the declared activity, not to the person; when the business widens, the policy must widen with it.

Which Liability Lines Are Compulsory and Which Are Voluntary?

SEDDK publishes separate general conditions for each liability line. Some titles carry the word “compulsory” (zorunlu), marking a cover required in the public interest.

The table below lists the liability wordings held in SEDDK's index of general conditions:

Can a Voluntary Line Still Be Mandatory for You?

It can. The requirement is not read off the title of the general conditions. Some liability covers are imposed by the sectoral rules governing the activity itself; others are demanded by tender documents, leases or loan agreements.

So the answer sits in two places: the legislation your activity is subject to, and the contracts you have signed. That is our first question at quotation stage — which authority, in which document, asks for this policy?

Why Is an Employee's Claim Not Paid Under a Third Party Policy?

Article 3(A) of the Third Party Liability General Conditions excludes claims made by persons bound to the insured by a service or agency relationship, and by the insured's family members. The article itself defines those family members: spouse, ascendants and descendants, siblings living in the same household, sons and daughters-in-law, and the spouse's ascendants, descendants and siblings.

An employee's workplace accident claim therefore does not fall under a business's third party liability policy. Those claims belong to a separate wording: Employer's Liability Insurance.

Article 1 of the Employer's Liability General Conditions responds where liability attaches to the employer after a workplace accident. Up to the sums stated it meets compensation claims brought by employees engaged under a service contract and subject to social insurance legislation, or by their beneficiaries, over and above the benefits the social security institution provides, together with amounts payable under that institution's recourse actions. Court costs and attorney fees awarded in such proceedings are also payable.

The most overlooked provision is article 2. Unless otherwise agreed these fall outside cover: accidents while employees are transported collectively in an employer-provided vehicle, accidents while an employee is away on duty, workplace accidents outside Türkiye, occupational diseases, and claims for non-pecuniary damages. Each can be endorsed back in — and is absent if it is not.

Occurrence Basis or Claims-Made Basis?

The Professional Liability General Conditions were published in the Official Gazette of 26 May 2013, number 28658. Article A.1 defines two distinct cover triggers and leaves the choice to the parties.

Under the first, cover responds to loss from an event occurring during the policy period where compensation is claimed during or after it — an occurrence basis. Under the second, cover responds to claims that can be brought against the insured only during the policy period, arising from an event before or during the policy — a claims-made basis. The parties may write either limb, or both.

This is not academic. Most professional errors surface years later. Whichever limb the policy uses decides whether a claim arriving after expiry is met — sharper still for anyone changing profession, retiring or closing a company.

Article A.2 sets the territorial limit at professional activities performed within the Republic of Türkiye; activities carried out abroad can be brought into scope by separate agreement.

Which Claims Sit Outside a Liability Policy?

All three wordings share the same core exclusion: loss caused intentionally, and claims founded on a contract or special agreement that go beyond the insured's liability at law. This is the most misunderstood boundary in the class — a contractual penalty you accepted is not a matter for the policy where it exceeds your legal liability.

Article A.4.3 of the Professional Liability General Conditions excludes, unless otherwise agreed, every kind of penalty and contractual penalty including administrative and judicial fines. Article A.4.2 places intellectual property infringements, liability towards the insured's parents, siblings, spouse and children, environmental pollution and claims for non-pecuniary damages in the same category.

The wordings also allow certain risks to be brought back in by endorsement. Article 3(B) of the Third Party Liability General Conditions lists them: liability arising from lifts or goods hoists located in the premises stated in the policy or used in the conduct of the business, liability attaching to hotel keepers, and liability for loss caused by earthquake, flood, inundation, avalanche, landslide, volcanic eruption, explosion, fire, smoke, fog, steam and water.

That last limb is directly usable for building managers with lifts on site and for production facilities.

Where Do We Come In as an Agency?

RYL Sigorta Aracılık Hizmetleri Limited Şirketi is an insurance agency. We do not issue policies and we do not pay claims. We prepare quotations from the insurers we act for and show, article by article, which claim falls under which policy. Claims are paid by the insurance company that is party to the contract.

In this class the mistake is usually made at selection: a third party policy is bought and an employee claim arrives; a professional policy is bought on the wrong trigger. Tell us the activity, the headcount and the documents asked of you, and we will settle the right policy together.

Frequently Asked Questions

Sources

• SEDDK — Index of Insurance General Conditions
• Third Party Liability General Conditions (SEDDK)
• Employer's Liability General Conditions (SEDDK)
• Professional Liability General Conditions (SEDDK)

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