WHAT IS VEHICLE LOSS OF VALUE?

Even if vehicles involved in accidents are repaired and restored to their original condition, they lose value on the used market due to the accident record in the TRAMER (Traffic Insurance Information Center) and are sold at lower prices than similar vehicles. This financial loss in the used market value of vehicles is called "loss of value." To prevent such hardship for vehicle owners, our legal system has developed a compensation system whereby the loss of value is covered by insurance companies.

A. CAN A NEGLIGENT VEHICLE OWNER CLAIM LOSS OF VALUE?

To qualify for vehicle loss of value, the driver must be at no fault or less at fault in the accident. In other words, the driver claiming loss of value must not be 100% at fault. Therefore, the less at-fault party can claim damages from the more at-fault party and/or their insurer, while the party entirely at-fault does not have the right to claim compensation. The degree of fault must be determined with an official document.

B. HOW IS THE ACCIDENT FAULT RATE DETERMINED?

It is extremely important to complete an accident report after a property damage traffic accident. Otherwise, insurance companies will not accept coverage for the damages. Therefore, drivers who do not have an accident report in their vehicles can file a mobile report developed by the Insurance Information and Monitoring Center.

After a property damage traffic accident, the Agreed Accident Reports completed by the parties involved in the accident are forwarded to the insurance company's claims department. Insurance companies electronically submit the report and any photographs to the Insurance Information and Monitoring Center by the end of the following business day.

Each insurance company evaluates its own degree of fault within three business days of the reports being entered into the SBM system. These rates are 0%, 50%, and 100% for each vehicle involved in the accident. If all companies provide the same degree of fault, the case is finalized. If an agreement cannot be reached within three business days (at least one company alleges different faults), the file is forwarded to the Reports Evaluation Commission. The Commission finalizes the case within three business days.

Insured individuals can find out their fault rates by visiting the "Accident Report Inquiry and Objection" screen under the "Services" menu at http://www.sbm.org.tr.

C. WHO CAN CLAIM LOSS OF VALUE?

The vehicle's registration holder can submit a claim for loss of value compensation to three individuals. These individuals are jointly and severally liable for the vehicle's loss of value. Therefore, a claim for loss of value compensation can be made against the at-fault vehicle's registration holder, the driver of the at-fault vehicle, or the at-fault vehicle's traffic insurance company, or it can be claimed from just one of them. However, since insurance companies have obligations to pay damages within their limits, it is more advantageous to first file a claim with the insurance company to avoid problems with the other vehicle's driver, etc.

D. WHAT IS THE INSURANCE COMPANY'S LIABILITY LIMIT?

An upper limit is set annually for insurance companies' liability. For claims exceeding this amount, the vehicle driver or vehicle registration holder may be held responsible, depending on their level of fault.

E. DOES VEHICLE INSURANCE COVER LOSS OF VALUE?

The driver who caused the accident is the one who will be responsible for the loss of value of the vehicle if the driver is not at fault in the accident. Therefore, the traffic insurance company will be involved in covering the loss of value.

Loss of value claims are generally filed against the at-fault vehicle owner's traffic insurance. Comprehensive insurance policies generally exclude loss of value resulting from repairs. However, as with any insurance policy, they can be included in the coverage by paying an additional premium. In this case, a claim can be filed with the insurance company.

Similarly, for claims exceeding the coverage limits of traffic insurance, a lawsuit can be filed against the insurance company that issued the policy under the optional liability coverage provided by the at-fault party in the accident.

F. HOW LONG SHOULD A CLAIM FOR LOSS OF VALUE BE FILED?

There is a statute of limitations for claims for loss of value compensation of two years from the date of the accident. To avoid loss of rights, an application for compensation should be filed before the two-year period from the date of the accident. Even if the loss of value or the perpetrator is not discovered, this right will lapse within 10 years.

G. HOW TO CLAIM FOR A VEHICLE LOSS OF VALUE?

To assess the financial loss of a vehicle, you can first obtain an expert report. After receiving the report, you can initiate enforcement proceedings against the driver or license holder to collect your debt, or you can proceed directly with litigation without obtaining a report. Since expert appraisers will calculate the loss of value in such a case, there is no need to obtain a report beforehand.

If you apply to the insurance company, a written application must be submitted to the insurance company. Legally, you cannot pursue legal action against the insurance company, such as enforcement proceedings, mediation, arbitration, or filing a lawsuit, without submitting a written application to the insurance company. In such disputes, there are multiple legal procedures and multiple opposing parties. The method and the person to whom the claims are made are crucial to avoid loss of rights.

As is often the case in practice, in this article, we will examine the procedure for applying to the Traffic Insurance office of the other vehicle, whether at fault or less at fault, and the subsequent process.

H. IN WHAT CASES CANNOT COMPENSATE?

The party who is 100% at fault for the accident cannot claim loss of value compensation.

To claim loss of value compensation after an accident, you must first be involved in a two-party accident. In other words, accidents such as hitting a tree, hitting a wall, or rolling over are not eligible for loss of value compensation.

Repairing, replacing, painting, etc., parts previously repaired, replaced, etc., due to another accident will not result in a loss of value. In such a case, no compensation can be claimed. If the same parts are damaged a second time, it is not possible to consider the vehicle's value to have decreased twice.

The vehicle should not be scrapped, as a scrapped vehicle will not lose value.

The limitation stipulating that loss of value compensation cannot be claimed for vehicles with 165,000 km and 36 years or older was removed by the Communiqué on Amendments to the General Conditions of Highway Motor Vehicles Compulsory Liability Insurance, published by the Undersecretariat of Treasury in March 2020. The vehicle's age and mileage limit do not preclude a loss of value claim. The crucial point here is not that the accident occurred before this date, but that the insurance policy was issued after April 1, 2020. In other words, if the vehicle's policy was issued before April 1, 2020, the age and mileage limit will apply. However, for insurance policies issued after this date, loss of value claims can be made for vehicles of any age and mileage. With the new regulation (in the Constitutional Court's decision numbered 2019/40, 2020/40, published in the Official Gazette dated 09.10.2020), the phrase "General Conditions" in Articles 90 and 92 of Highway Traffic Law No. 2918 has been revoked. The 165,000 km limit has now been removed, and parts such as plastic bumper/part repairs, glass, radio/tape, tires, airbags, rims, mechanical, electrical, electronic, and upholstery components are now included in the loss of value category. Part replacements, also known as "mini repairs," can now be subject to loss of value.

However, if the material damage to the vehicle is less than 2% of the vehicle's current market value, the loss of value compensation cannot exceed the amount of the material damage to the vehicle.

I. WHICH VEHICLES CANNOT BE COLLECTED FOR LOSS OF VALUE?

These vehicles are specified in paragraphs 7 and 8 of the "Case Excluded from Coverage" section. These paragraphs are as follows:
(7) Loss of value claims made due to damage to wheeled/tracked and armored riot control vehicles, municipal buses, road sweepers, and fire trucks.
(8) Loss of value claims made for foreign-plated vehicles in accidents involving foreign-plated vehicles in Turkey.

In other words, no loss of value claims can be made in favor of the vehicles listed in accidents involving wheeled/tracked and armored riot control vehicles, municipal buses, road sweepers, fire trucks, or foreign-plated vehicles.

J. APPLICATION PROCESS FOR LOSS OF VALUE COMPENSATION

Before filing a lawsuit, the injured party must submit a written application to the relevant insurer, within the limits stipulated in the mandatory liability insurance, along with all the required documents for the specified compensation payments. Documentation requirements for the loss of value compensation may vary depending on the insurance company applied to. However, the following documents are the minimum required documents:

• The amount of compensation requested for loss of value (loss of value claim declaration)
• Bank account information for the injured vehicle owner (bank-branch name, IBAN number).
• A photocopy of the driver's license of the driver who was at no or minimal fault in the accident.
• A photocopy of their ID card or driver's license.
• A certified copy of the property damage traffic accident report or the Tramer Accident Report (KTT).
• Statement and eyewitness reports, if available.
• Damage report, any invoices related to repairs (service invoices).
• Clear images taken from different angles documenting the location of the vehicles and the damage to the vehicle after the accident.
• If available, an expert appraisal report detailing the vehicle's repairs.

In Case of No Accident Report:

Insurance companies reject applications because they are unwilling to pay compensation, citing "incomplete documentation." The presence of an accident report facilitates the insurance company's payment of compensation. Even if there are "missing documents" for arbitration, the absence of an accident report does not constitute a rejection of the application, as the insurance company's application obligation is fulfilled. In the absence of an accident report, the fault report, scene camera footage, and photographic footage come into play.

Similarly, for arbitration, the issue of fault, not the factual basis of an accident, is crucial. The existence of an accident can be proven through damage reports, repair invoices, etc. However, expert experts should be consulted regarding the determination of fault. Furthermore, sometimes, even if an accident report exists, the extent of fault may not be clearly stated. In this case, accident reports that do not specify the extent of fault may not be accepted by insurance companies.

In such cases, there are two options:

In this case, you can apply to the Insurance Information Surveillance Commission in a two-party accident and request the appointment of an expert. A fault assessment can be conducted. You can appoint an expert for a diminished value report by following the "Appointment of Expert" steps under the "Transactions" menu online via e-Government (https://www.turkiye.gov.tr/sbgm-eksper-atama) or the Insurance Information and Monitoring Center (SBM) website (www.sbm.org.tr). Following the request, the system assigns an expert to the file based on rank. The appointed impartial and independent insurance expert, licensed in the relevant branch, contacts the beneficiary and prepares a report based on a complete, accurate, and thorough assessment of the vehicle's diminished value within the framework of relevant legislation. If the amount determined in the expert report meets the requirements for evaluation by the insurance company and all documents are complete, the compensation payment is made directly to the beneficiary's bank account without interruption. The loss of value report fee is covered by the relevant insurance companies according to the degree of fault. If the insurance company fully or partially rejects the loss of value compensation claim or fails to respond in writing to the request within 15 days of the application date; Again, the vehicle owner will apply to the Insurance Arbitration Commission.

To do this, you must have the following documents ready:

• Traffic policy of the insured vehicle (other vehicle)
• Policy of the victim vehicle
• Date of the accident
• Damage file number opened with the insurance company for the vehicle damage repair request
• City, district, and street information where the repair was performed
• Tax identification number, phone number, and address of the repair shop performing the repair (the address of the repair location is entered in the appraisal location address).
• Turkish ID number, name, surname, mobile number, and email address of the person making the appointment
• If the application is made by proxy, the power of attorney, mobile number, and email address

If the insurance company rejects the accident report or the application due to uncertainty of fault, it is best to submit a file to the commission in insurance arbitration, emphasizing that the application is for a fault determination. In a similar case, security camera footage was submitted as evidence, and a file requesting a damage and fault determination was submitted, and despite the lack of a KTT (Compulsory Credit and Credits Law) was ruled in favor.

However, having an accident report will always make things easier. Therefore, if you don't have one, you can obtain it in the following ways:

1) You can access the documents by emailing both insurance companies with the vehicle's license plate and the date of the accident, along with a power of attorney. This is only applicable if the other vehicle notifies its own insurance company.
2) If there is communication with the other vehicle, a retroactive accident report can be prepared.
3) If there is no communication with the other vehicle,
• Obtain an expert report from an independent expert and submit it to the insurance company with additional information such as repairs, damage invoices, the damage report, etc. In this case, an expert fee may even be requested.
• You can go to the police station and file a property damage complaint, claiming a hit-and-run. The police station will contact the vehicle owner, and a report will be prepared. However, it should be noted that the complaint period in this case is subject to the 6-month limitation period. • If this does not work either, you can file a declaratory lawsuit or go to an expert to have the loss of value calculated.

IMPORTANT NOTE: Keep the insurance application amount high; you are not bound by these fees in arbitration. If you submit an application without specifying a fee, and the email you receive specifies the amount, you must expressly decline to accept it before applying for arbitration. Otherwise, submitting an application to arbitration without responding does not constitute an implied rejection. The documents will be returned due to the lack of a prerequisite for applications to arbitration.

Upon submitting the requested documents in writing, the insurance company is obligated to pay the loss of value compensation if the conditions are met. If the insurer fails to respond in writing within 15 DAYS (fifteen days) from the application date, or if there is a dispute that the response does not partially or fully cover the claim, or if an agreement on the compensation amount cannot be reached, legal action must be taken against the insurance company. If we submit the requested documents to the insurance company, and if the insurance company internally reviews the file and deems it positive, it is obligated to pay the loss within 8 days.

Therefore, a lawsuit can be filed in the courts of the insurer's headquarters or branch, or the agency that issued the insurance contract, the court where the accident occurred, or the court where the injured party resides. Alternatively, the dispute can be resolved by applying to the Insurance Arbitration Commission. It should be noted that a fifteen-day period must elapse before filing for arbitration. However, if the insurance company responds negatively within less than 15 days, there is no need to wait the fifteen-day period.

K. ARBITRATION PROCESS IN VEHICLE LOSS OF VALUE COMPENSATION

The insurance arbitration commission adjudicates disputes arising from insurance contracts and related legal matters as if it were a court, and its decisions are legally binding. While arbitration is simpler and more advantageous, it may vary depending on the specific case. Furthermore, the faster completion of the arbitration process, lower costs, and the expertise of the arbitrators handling the dispute make this method more advantageous. However, arbitration can also have certain negative consequences. Therefore, assistance should be sought from an experienced insurance attorney when making these assessments.

Requirements for Application to the Insurance Arbitration Commission:

• The claims must be submitted to the insurance company with documentation.
• The company must not respond within 15 days.
• If it responds, it must reject the entire claim.
• If it doesn't reject the entire claim, it must reject a portion of the claim.
• No other legal or arbitration proceedings must have been initiated.
• However, for the Commission to consider the application, the risk in question must have arisen after the relevant organization's membership date, excluding Compulsory Insurance. For compulsory insurance, applications can be submitted for disputes arising after April 18, 2013, regardless of whether the organization is a member of the Commission. Because traffic insurance is a compulsory insurance type, direct applications are possible.

K. APPLICATION TO THE INSURANCE ARBITRATION COMMISSION

Applications to the Arbitration Commission can be made by individuals who have insurance or benefit from insurance. Applications can be submitted to the Insurance Arbitration Commission's headquarters, the office located in the applicant's place of residence, or the office located in the place where the risk (danger risk) occurred. Applications can be made in person or through a representative. A fee must be paid to the Commission upon application.

L. WHAT DOCUMENTS ARE REQUIRED FOR APPLICATION?
1. Insurance Arbitration Commission Application Form (complete and signed),
2. A photocopy of the applicant's ID,
3. A petition outlining the legal basis for the incident and the requests (The Insurance Arbitration Commission Application Form includes a section that summarizes the incident. However, this may be insufficient. Therefore, it would be preferable to submit a petition in addition to the application form.)
4. A copy of the insurance contract/policy, if available,
5. Evidence, reports, image files, etc. related to the incident. All forms of evidence,
6. All information and documents related to the dispute, even if they are not elements of proof,
7. Documentation proving that an application was made to the insurance company, that the request was unanswered or rejected,
8. A receipt proving that the application fee was paid,
9. For applications made through a lawyer's power of attorney (must include special authorization), a copy of the power of attorney, a receipt for the fee, and a bar association stamp.
These documents must be completed in full. Otherwise, the application will not be accepted.

M. INSURANCE ARBITRATION COMMISSION TRIAL PROCEDURE

The Insurance Arbitration Commission Trial Procedure can be explained as follows:

Applications submitted to the Commission are initially evaluated by rapporteurs. During their preliminary review, rapporteurs primarily examine whether the application requirements have been met. This includes whether the required application has been submitted to the insurance company, whether the 15-day period has been met, whether the insurance company has partially or completely rejected the claim, and whether the dispute has been referred to court, arbitration, or a consumer arbitration committee. If it is determined that the application requirements are not met, this must be notified in the application, and 90% of the application fee will be refunded. Similarly, if the application is abandoned before the rapporteur has even begun its review, 90% of the fee will be refunded.

If the dispute is determined to meet the application requirements, the file review will begin. The file will be reviewed to determine whether the necessary information and documents are present. If it is determined that the dispute between the insurance company and the applicant is due to a lack of information and documentation, the rapporteur will inform the parties and close the file. In this case, 50% of the application fee will be refunded.

The rapporteur must complete the review of the file within 15 days. Rapporteurs prepare reports for applications that are not finalized in the preliminary review.

The file, whose preliminary review has been completed, is now referred to the arbitrators. The commission first examines whether a panel is necessary to resolve the dispute. If the value of the dispute is 15,000 TL or more, a panel must be formed. A minimum of three-person arbitration panel is formed. If a legal professional is listed, at least one legal professional must be included on this three-person panel. The parties are informed of the arbitration panel and its names.

The arbitration panel resolves the dispute within four months, unless the parties explicitly agree otherwise. Arbitrators may commission expert reviews on matters requiring technical expertise within this period.

The panel reaches its decision by majority vote. If a decision is not reached within four months, the dispute is referred to the competent court. The commission director handles the referral process. However, this is not common. In fact, the dispute is usually resolved within four months. Or, the parties agree on an extension of time.

To summarize the timeframes: 15 days after applying to the insurance company, an application for arbitration is filed. A preliminary examination is conducted by rapporteurs 15 days after the application for arbitration. An arbitration panel is then formed, and the panel resolves the dispute within four months unless the parties agree to an extension. In practice, this period can be slightly longer. After applying to the insurance arbitration commission, you can track your application online using the password provided. However, this only displays the current stage of the process. Otherwise, notifications will be sent to the individual by mail. The decision is notified to the parties by the commission director. Following the application for arbitration, the applicant's request may be rejected in full, partially rejected, partially accepted, or fully accepted.

N. PROCEDURE FOR APPEAL TO THE INSURANCE ARBITRATION COMMISSION DECISION

The possibility of appealing the decision made by the commission depends on the severity of the dispute. The parties have the right to appeal the decision within 10 days of its notification. The objection petition must reach the commission within the objection period. Otherwise, the application will not be accepted. In the objection process, an objection application form is filled out, and the grounds for the objection are explained in a separate petition, along with their legal basis. There is also an objection application fee. The objection fee is the same as the initial application fee. It varies depending on the size of the dispute.

The commission establishes a three-person objection arbitration panel. This panel re-examines and makes a decision within two months. The decision is reported to the commission.

If the amount of the dispute is below 5,000 TL, the decision rendered in insurance arbitration is final. No appeal can be filed with the arbitration panel, and no appeal is possible. If the amount of the dispute is between 5,000 and 40,000 TL, the arbitration panel's decision can be appealed. Objections are filed with the "Objection Arbitration Panel." The decisions of the objection arbitration panel are final and cannot be appealed. If the amount of the dispute exceeds 40,000 TL, both appeal and appeal are available.

If the arbitrator's decision is not appealed, it becomes final and enforceable. This means it can be collected by force through enforcement. In this case, enforcement by writ is the preferred method, as the arbitrator's decision has the force of a writ.

Each dispute is unique and may touch upon different aspects of legal regulations. Therefore, it is crucial to work with experienced insurance attorneys to avoid loss of rights.

ATTORNEY AYŞEGÜL ÖTER
U&T Law - U&T Law and Consulting