DASK with the right information

DASK answered the questions that may be on the minds of the insured in order to ensure that citizens have access to accurate and transparent information during the intensive and devoted process.

Following the recent earthquakes, the Natural Disaster Insurance Institution (DASK) is swiftly continuing its damage assessment processes and damage payments. As of 10 March 2023, DASK has made 3 billion lira in compensation payments and is continuing to work diligently to support its policyholders.

DASK has made available to the public answers to questions that policyholders may have, with the aim of ensuring citizens have access to accurate and transparent information during this intensive and dedicated process.

What is DASK?

Established in 2000, DASK is a public institution with an important social function, affiliated with the Ministry of Treasury and Finance, and not for profit, operating in accordance with the Disaster Insurance Law No. 6305. DASK's regulatory, supervisory, and oversight activities are carried out by the Insurance and Private Pension Regulation and Supervision Authority, which is affiliated with the Ministry. DASK provides financial security to insured homeowners against the risks of earthquakes and earthquake-related fires, explosions, landslides, and tsunamis.

Who does DASK belong to?

It belongs to you, the insured. That is, it belongs to our citizens who are currently holders of Compulsory Earthquake Insurance. The funds formed from the premiums you pay and the reinsurance protection purchased with these funds are used to compensate you, the insured, for earthquake-related damages, subject to the policy limit.

How is Compulsory Earthquake Insurance obtained?

DASK collaborates with insurance companies, agents, and banks in the implementation of the Compulsory Earthquake Insurance system. All insurance companies, agents, and bank branches issue Compulsory Earthquake Insurance policies on behalf of DASK.

What information is required to issue a policy?

The insurance policy is issued based on the insured's declaration regarding the property. In the event of an earthquake, the property owner must accurately declare the gross floor area, building type, address, damage status, and other important details about the building to ensure that they can receive the full amount of the damage assessed after the earthquake, within the policy limits.

How much can your insurance coverage be?

In determining the insurance amount, the amount obtained by multiplying the square metre rate specified in the Compulsory Earthquake Insurance Tariff and Instructions published by the Insurance and Private Pension Regulation and Supervision Authority for the structure type of the insured property by the gross floor area (or approximate floor area) of the same property is taken as the basis. The insurance value of a property cannot exceed the maximum coverage amount specified in the policy.

What is a tariff?

A tariff consists of the main elements of a policy. The Compulsory Earthquake Insurance tariff includes 14 tariff prices determined according to 7 risk groups and 2 different building types. Your coverage amount is calculated by multiplying the tariff price by the coverage amount.

What should be done when the tariff changes?

Following a tariff change, to avoid any adverse effects, you should contact the insurance company or agent where the policy was purchased to have an endorsement added to the policy and the coverage amount updated to the current level. If no endorsement is made, the payment made to you will be calculated based on the previous tariff.

What should you do if you think your coverage is insufficient?

As DASK, we always prioritise ensuring that compulsory earthquake insurance policies are accessible to policyholders at affordable prices and maintain the compulsory portion at a certain level. However, citizens who wish to obtain additional coverage can purchase optional insurance from insurance companies on top of the compulsory insurance coverage for which DASK is responsible.

Do you need to renew your policy every year?

The term of the Compulsory Earthquake Insurance policy is one year. The policy must be renewed every year.

Who is responsible for renewing the policies?

According to the Disaster Insurance Law No. 6305, the renewal of the Compulsory Earthquake Insurance policy is the responsibility of the insured. In credit-linked insurance policies, the responsibility for renewal during the credit term lies with the credit user, while the responsibility for notifying the credit institution of the renewal of the insurance contract lies with the credit institution. In the case of Mandatory Earthquake Insurance specifically, if the Mandatory Earthquake Insurance required in connection with housing loans granted by credit institutions is not obtained by the borrower, the credit institution shall inform the insured and obtain the insurance. If the borrower fails to renew the insurance during the loan period, the lending institution must renew the policy by informing the insured party and collecting the premium amount from the insured party. To prevent any potential issues during the policy renewal process, please remember to update your contact information.

What happens if your policy is not renewed?

Property owners or rights holders are required to renew their insurance contracts every year. If the insurance contract is not renewed by the policy expiry date, DASK's liability for coverage ends on the expiry date specified in the policy.

What happens if the policy is issued with incorrect information regarding square metres or building type?

If false statements regarding square metres or building type are discovered after an earthquake, compensation will be paid in proportion to the ratio between the premium paid and the premium that should have been paid. The insured may suffer losses due to false statements, as the full amount of the damage payment may not be received.

Can you give an example of incorrect square metre information?

If you paid a premium of 300 TL for a 100 m² residence and received 301,600 TL in coverage, in the event of damage, you will be paid 295,568 TL after a 2% deductible is applied. If the 100 m² property is declared as 50 m² and the policy is issued accordingly, paying a premium of 150 TL will only provide coverage of 150,800 TL, and in the event of damage, the amount paid out will be 147,784 TL after deducting the 2% deductible. As a result, the insured pays 150 TL less in premiums when purchasing the policy, but incurs a loss of 147,784 TL in the event of damage.

Which buildings are covered by Compulsory Earthquake Insurance?

Compulsory Earthquake Insurance is, in general terms, an insurance system developed for immovable properties located within municipal boundaries. Buildings constructed as residences on immovable properties registered in the land registry and subject to private ownership, as well as independent sections within these buildings used for commercial purposes such as shops, offices, and similar purposes (e.g., supermarkets, grocery stores, hair salons, law offices, etc.), are covered under the Compulsory Earthquake Insurance (ZDS). SMEs, factories, and similar facilities are not covered by DASK. Insurance companies provide coverage for such large businesses.

Is the mandatory earthquake insurance premium a type of tax?

No, it is not a tax. Mandatory Earthquake Insurance has no connection or relation to earthquake taxes. DASK does not receive any share of income taxes. DASK funds consist solely of premiums paid by insured parties, and these funds are used exclusively for compensation payments to insured parties. DASK is an insurance premium, and when property is damaged, compensation is paid to the insured party from the funds formed by these premiums.

Does DASK have sufficient payment capacity?

DASK bases its payment capacity on scientific studies and models and conducts its work according to the maximum possible magnitude of an earthquake. Our institution has the capacity to pay the compensation for all policies it guarantees.

Is there a time limit for reporting damage to DASK?

Our insured parties can report damage claims without any time restrictions. They can submit damage claims at any time, provided they remain within the two-year statute of limitations period. The General Conditions of Compulsory Earthquake Insurance stipulate that ‘the insured must notify DASK or the insurance company that entered into the contract on behalf of and for the account of the Institution within fifteen business days of learning that the risk has occurred.’ This provision is a rule introduced to ensure that urgent measures are taken to mitigate the damage and that the necessary procedures are initiated promptly against the persons responsible for the damage to the building, if any. It is not a provision that restricts the insured's right to claim compensation or shortens the statute of limitations period.

Can a tenant take out ZDS insurance in their own name?

Compulsory Earthquake Insurance cannot be taken out by a tenant in their own name. A tenant can take out Compulsory Earthquake Insurance as the ‘Insured Party’ on behalf of the property owner. In all cases, compensation is paid to the person listed as the ‘Right Holder’ in the land registry.

Can insurance companies and agents issue optional earthquake insurance policies for buildings covered by ZDS without a ZDS policy?

For optional home insurance policies to be issued for independent units and buildings covered by Mandatory Earthquake Insurance, Mandatory Earthquake Insurance must first be obtained. If the value of the building exceeds the coverage amount provided by Mandatory Earthquake Insurance, insurance companies may issue a home insurance policy for the remaining portion.

Is the land value taken into account when issuing a ZDS policy?

The Compulsory Earthquake Insurance policy covers damages incurred on the property. The land value of the property is not included in the insurance premium. Even if the property is completely destroyed in an earthquake, the land value is not considered and no payment is made, as the insured party's share of the land remains intact.

Can a ZDS policy be obtained without condominium ownership?

Yes, it can. For a building to be eligible for Compulsory Earthquake Insurance, it must be constructed as a ‘residence’ on registered and privately owned real estate (land, plots, etc.). Accordingly, buildings that are subject to private ownership, have a title deed issued by the Land Registry Office, and are registered in the title deed are covered by Compulsory Earthquake Insurance.

Can a ZDS policy be issued for damaged residential properties?

Heavily damaged buildings cannot be insured until they are rebuilt, as they must be demolished for safety reasons. Insurance procedures for moderately damaged buildings can be carried out depending on the repair and/or reinforcement of the buildings; insurance can be taken out if the completion of these procedures is documented and submitted. Buildings with minor damage or no damage can be insured based on the insured's declaration.

What is the maximum coverage amount provided by DASK to its insureds?

As of 25 November 2022, the coverage amounts for Compulsory Earthquake Insurance have been updated, with the construction unit cost per square metre increasing from 1,508 TL to 3,016 TL, and the maximum coverage amount increasing from 320,000 TL to 640,000 TL. Citizens who wish to obtain additional coverage may purchase optional insurance from our insurance companies without any upper limit, in addition to the mandatory insurance coverage for which DASK is responsible.

Is a single payment made if multiple damages occur within a year? If a payment is received for damage, can another payment be made if damage occurs again?

In the event of total damage due to an earthquake, the insurance coverage ends upon payment of the compensation. In the case of partial damage, the insurance amount is reduced by the amount of compensation paid from the date the risk occurred. If the building is completely destroyed in any earthquake and the entire insurance amount is compensated, the policy coverage ends. If repairs are made after the damage payment is received, compensation may be paid for the next damage based on the expert's inspection of the repaired areas. These earthquakes may occur within the same policy period or in consecutive policy periods.

How is damage assessment conducted when the information in the policy and the identified information differ?

If the gross floor area or construction style of the property differs, the damage payment to be made under Article C.2 of the Compulsory Earthquake Insurance General Conditions is recalculated by comparing the premium paid with the premium that should have been paid.

Can the ZDS policy be cancelled?

Mandatory Earthquake Insurance is a mandatory policy and cannot be cancelled. However, in accordance with the provisions of the General Conditions of Mandatory Earthquake Insurance regarding the Insured's Duty of Disclosure and Cancellations, the policy may be cancelled in cases of duplication, intentional misrepresentation by the insured of moderate or severe damage, or changes made to the insured property during the insurance period that violate regulations, the insured location ceasing to exist for reasons other than an earthquake, or the insured location falling outside the scope of Compulsory Earthquake Insurance.

What should be done to correct errors in the ZDS policy or change the beneficiary in the policy?

If the beneficiary changes during the insurance contract period due to the sale of the property, etc., an ‘endorsement’ must be issued by applying to the authorised agent or insurance company. Similarly, changes to the policy information and corrections of errors can also be made with an endorsement. The changes made will be valid from the date of the endorsement.

If there is a bank mortgage on a property purchased with a loan, to whom is the compensation payment made?

If there is a mortgage on the policy or title deed, the compensation payment is made to the rightful owner as stated in the title deed or inheritance certificate, provided that the mortgagee bank gives its unconditional consent. If the mortgagee does not consent, the compensation payment is made to the bank holding the mortgage.

In the event of the death of the title deed holder, to whom and how is the compensation payment made?

The compensation payment is made in proportion to the shares of the right holders indicated in the inheritance certificate.

Is compensation paid for earthquake-related damage in buildings where the load-bearing system has been weakened by cutting columns?

Since our insured parties may not have been aware of or involved in the column cutting, compensation is paid by DASK. Subsequently, compensation is sought from the person or persons responsible for this situation through legal action.