Learn when foreign businesses can claim business interruption losses after fire or flood damage in Turkey in 2026, including lost gross profit, reduced turnover, increased operating costs, indemnity periods, underinsurance and insurer disputes.

Yes. A foreign-owned company can claim business interruption losses after a fire or flood in Turkey if its insurance program includes applicable business interruption coverage and the conditions triggering that coverage have been satisfied.

Foreign ownership does not reduce the rights of an insured company. The crucial questions are whether the underlying physical damage is insured, whether business interruption coverage was purchased, whether fire or flood is among the insured causes, what financial loss resulted from the interruption, and what maximum indemnity period and policy limit apply.

Under the applicable business interruption insurance conditions, losses resulting from the partial or complete interruption of commercial activity following damage caused by a risk insured under the underlying property policy may be covered. The covered loss is principally based on the reduction in turnover and increased operating costs resulting in loss of insured gross profit.

For factories, hotels, warehouses, manufacturers, logistics businesses, retailers and other commercial enterprises, the business interruption claim can sometimes be substantially larger than the physical property claim itself.

What Is Business Interruption Insurance?

Business interruption insurance protects a business against certain financial losses that occur because an insured physical event interrupts or reduces its operations.

A serious fire may destroy machinery within hours, but the financial consequences can continue for months.

The business may lose:

• Production;
• Sales;
• Customers;
• Contracts;
• Gross profit;
• Market opportunities.

At the same time, it may continue paying salaries, rent, financing costs and other fixed expenses.

The applicable insurance conditions recognize business interruption loss principally as insured gross profit lost because turnover decreased, together with qualifying increased costs incurred to prevent or reduce that decline.

Is Business Interruption Automatically Included in Property Insurance?

No.

This is one of the most important issues in commercial insurance disputes.

A company may have comprehensive insurance for its:

• Building;
• Machinery;
• Stock;
• Furniture;
• Equipment;

without having adequate business interruption insurance.

Physical damage insurance pays for insured damage to property.

Business interruption coverage addresses the financial consequences of having to reduce or suspend commercial operations.

The existence of one does not automatically establish the existence of the other.

What Must Happen Before Business Interruption Coverage Is Triggered?

Under the standard framework, the interruption generally needs to result from damage to property used in the insured commercial activity, such as buildings, machinery, equipment, fixtures or goods, caused by a risk covered under the relevant underlying property insurance.

The applicable conditions further require the underlying physical loss to have been indemnified by the relevant insurer or for the insurer’s liability for that damage to have been accepted.

This creates an important link between the property damage claim and the business interruption claim.

If the insurer disputes the underlying fire or flood coverage, the business interruption claim may also become disputed.

Can a Foreign Business Claim After a Fire?

Yes, where fire is insured and business interruption coverage applies.

For example, a manufacturing company may suffer a fire that damages:

• Production machinery;
• Electrical infrastructure;
• Raw materials;
• Finished products;
• Warehouse areas.

Even if the physical damage is repaired within several months, the business may lose significant turnover while production remains suspended.

If the applicable coverage exists, the company may potentially claim qualifying lost gross profit and increased operating costs during the indemnity period.

Can Business Interruption Losses Be Claimed After a Flood?

Potentially, yes, but the policy must cover the relevant flood risk.

Flood is commonly treated as an additional peril under the commercial fire-policy framework rather than something that should automatically be assumed to be included in every basic policy.

The applicable flood endorsement can extend coverage to specified losses caused by events such as overflowing rivers or channels, rainfall-related flooding and certain groundwater events, subject to its exclusions and conditions.

For business interruption insurance to respond, the relevant flood peril must also fall within the agreed events capable of triggering the business interruption coverage.

Does Every Type of Water Damage Count as Flood Damage?

No.

This distinction can become critical.

Damage resulting from external flooding may fall under flood coverage, while damage caused by matters such as a burst internal water pipe, overflowing water tank or certain internal plumbing incidents may fall under a different policy extension.

The official flood endorsement itself distinguishes covered flood events from several other water-related causes.

A business interruption dispute should therefore begin by identifying the precise cause of the physical damage.

What Losses Can Be Included in a Business Interruption Claim?

Depending on the policy, a claim may include losses resulting from:

• Reduction in turnover;
• Lost insured gross profit;
• Continuing business expenses;
• Increased operating costs incurred to reduce the interruption;
• Temporary relocation or production measures;
• Additional costs necessary to maintain operations.

The exact formula depends on the policy.

A business should not assume that “lost profit” simply means accounting net profit.

What Does Gross Profit Mean in Business Interruption Insurance?

Insurance gross profit can differ significantly from accounting net profit.

Under the applicable general conditions, business interruption compensation focuses on gross profit loss arising from reduced turnover and increased operating costs incurred to limit that reduction.

This is why business interruption claims often require specialist accounting analysis.

The company’s audited profit shown in a financial statement does not necessarily equal the insured gross-profit figure.

How Is Loss of Turnover Calculated?

The starting point is normally the turnover that the business would reasonably have achieved if the fire or flood had not occurred.

Evidence may include:

• Historical monthly sales;
• Previous-year figures;
• Confirmed customer orders;
• Production forecasts;
• Seasonal patterns;
• Existing contracts;
• Growth trends;
• Budget forecasts.

The actual turnover achieved during the interruption period is then compared with the turnover that reasonably would have been achieved without the insured event.

The resulting shortfall becomes an important component of the business interruption calculation.

Can a Growing Business Use Forecast Growth?

Potentially.

A rapidly expanding company should not necessarily have its loss calculated solely by copying the previous year’s turnover.

For example, the business may have:

• Opened a new production line;
• Signed major customer contracts;
• Expanded export capacity;
• Increased warehouse capacity;
• Received substantial confirmed orders.

Evidence demonstrating that the business would probably have generated materially higher turnover can become relevant.

However, the forecast must be commercially credible and supported by documentation.

Can Seasonal Businesses Claim Their Seasonal Loss?

Yes, if the policy responds and the calculation properly reflects seasonal trading patterns.

This can be particularly important for:

• Hotels;
• Tourism businesses;
• Agricultural processors;
• Seasonal manufacturers;
• Retail businesses.

A hotel closed during its busiest period may suffer far more financial loss than the same hotel closed during its quietest months.

A mechanical annual average can therefore materially understate the actual interruption loss.

Can a Factory Claim Lost Production After a Fire?

Yes, but lost production is not automatically the same as insurance compensation.

The company usually needs to establish how reduced production affected turnover and insured gross profit.

For example, the analysis may examine:

• Normal production capacity;
• Actual post-fire production;
• Existing finished-goods inventory;
• Ability to fulfil orders from stock;
• Lost customer orders;
• Delayed rather than permanently lost sales.

If sales were merely postponed and later recovered, the insurer may dispute whether the entire production shortfall represents an insured financial loss.

What Are Increased Costs of Working?

A business may spend additional money after a fire or flood to prevent an even larger business interruption loss.

Examples include:

• Renting temporary premises;
• Leasing temporary machinery;
• Outsourcing manufacturing;
• Paying additional freight costs;
• Moving stock to another warehouse;
• Paying overtime;
• Operating additional shifts at another facility;
• Installing emergency equipment.

Where the policy permits, these expenses can potentially be recoverable because they reduce the insured loss.

Is Every Emergency Expense Recoverable?

No.

The company should generally establish that the expense was:

• Reasonable;
• Connected with the insured interruption;
• Incurred to reduce or avoid a larger loss;
• Within applicable policy limitations.

For example, spending TRY 2 million to preserve TRY 10 million of insured gross profit may be commercially justifiable.

An expense that produces no meaningful loss reduction may receive greater scrutiny.

What Is the Indemnity Period?

The indemnity period is one of the most important provisions in business interruption insurance.

The applicable conditions provide that the insurer is liable for covered business interruption losses from the occurrence of the physical damage until the interruption or reduction in commercial operations has been remedied, but only up to the maximum indemnity period stated in the policy.

A company should therefore examine whether its policy provides an indemnity period such as:

• 6 months;
• 12 months;
• 18 months;
• 24 months.

The exact contractual period controls.

What If Rebuilding Takes Longer Than the Policy’s Indemnity Period?

This can create a serious uninsured loss.

Suppose a factory requires 20 months to rebuild but the business interruption policy has a 12-month maximum indemnity period.

Subject to the precise policy wording, losses occurring after the maximum period may remain outside insurance coverage even though the business has not yet fully recovered.

For capital-intensive businesses, selecting an adequate indemnity period is therefore extremely important.

Does the Indemnity Period End When the Building Is Repaired?

Not necessarily.

Physical reconstruction and restoration of normal commercial activity are different concepts.

A factory may be structurally repaired but still need months to:

• Reinstall machinery;
• Test production systems;
• Obtain regulatory approvals;
• Rebuild inventory;
• Restore customer orders.

The applicable conditions focus on the period during which the commercial interruption or reduction continues, subject to the policy’s maximum indemnity period.

Can Continuing Salaries Be Included?

Potentially, depending on how insured gross profit and continuing expenses are defined by the policy.

A business may continue paying key employees after a fire because terminating the workforce would prevent it from restarting operations efficiently.

Whether salaries are effectively protected through the gross-profit calculation depends on the policy structure and which expenses are treated as insured or uninsured costs.

Can Rent Be Included?

Potentially.

Rent may be a continuing fixed expense even while the business generates little or no turnover.

Whether it contributes to the insured business interruption loss depends on the policy’s gross-profit calculation and expense classification.

What Happens If the Business Saves Expenses While Closed?

Saved expenses normally need to be considered.

For example, the business may save:

• Electricity;
• Raw materials;
• Packaging;
• Certain transportation costs;
• Variable production expenses.

Business interruption insurance is intended to compensate the insured economic loss, not to place the company in a financially better position than if the incident had never happened.

Accordingly, expenses genuinely avoided because operations stopped may reduce the claim.

Can the Insurer Say the Business Would Have Lost Money Anyway?

Yes, and this is a frequent dispute.

An insurer may argue that falling demand, economic conditions or existing business problems would have reduced turnover even without the fire or flood.

The business should therefore demonstrate the counterfactual position using credible evidence.

Relevant material may include:

• Signed customer contracts;
• Historical sales;
• Purchase orders;
• Production bookings;
• Export records;
• Management forecasts;
• Market evidence.

Can an Insurer Underpay a Business Interruption Claim Even if It Accepts the Fire?

Yes.

Acceptance of physical damage does not automatically mean agreement on the financial calculation.

Disputes frequently concern:

• Expected turnover;
• Gross-profit rate;
• Saved expenses;
• Increased costs;
• Length of interruption;
• Underinsurance;
• Policy limits.

A company may therefore receive its physical property compensation while still having a significant unresolved business interruption claim.

What Is Business Interruption Underinsurance?

The insured business interruption amount should reflect the appropriate projected gross profit over the relevant period.

The applicable conditions specifically address underinsurance and contemplate estimation of turnover for the indemnity period when establishing the insured gross-profit amount.

If the insured amount was substantially below the financial exposure, the insurer may seek a proportional reduction where the policy and applicable conditions permit.

This is a common problem when businesses grow rapidly but fail to update their insured values.

Can an Underinsurance Reduction Be Challenged?

Yes.

The company should verify:

• The insurer’s projected turnover;
• Gross-profit calculation;
• Applicable indemnity period;
• Policy endorsements;
• Any underinsurance waiver;
• Whether the policy amount was periodically adjusted.

The general conditions contemplate revising the insured amount based on turnover at periodic intervals, subject to the contractual arrangement.

An insurer’s percentage reduction should therefore be independently checked.

What Evidence Is Needed for a Business Interruption Claim?

A serious claim may require extensive financial evidence, including:

• Complete insurance policy;
• Business interruption endorsements;
• Property damage reports;
• Previous financial statements;
• Monthly management accounts;
• Sales ledgers;
• Customer contracts;
• Purchase orders;
• Tax records;
• Production reports;
• Stock records;
• Payroll;
• Lease agreements;
• Temporary premises invoices;
• Replacement-equipment expenses;
• Logistics costs;
• Forecasts prepared before the loss.

Documents created before the fire or flood are particularly persuasive because they are less vulnerable to accusations that projections were constructed only after the claim arose.

Should the Company Preserve Electronic Accounting Records?

Absolutely.

After a serious fire or flood, physical accounting records may be destroyed or inaccessible.

Cloud accounting systems, enterprise resource planning records, customer-management databases, bank records and off-site backups can therefore become essential.

Foreign businesses should secure these records immediately.

Must the Business Try to Reduce Its Loss?

Yes.

The applicable business interruption conditions impose obligations to take reasonable measures to prevent, reduce or mitigate the loss.

A company should therefore examine reasonable alternatives such as:

• Temporary production;
• Alternative warehouses;
• Outsourcing;
• Transferring operations to another branch.

However, mitigation should remain commercially reasonable.

The insured should not be expected to take irrational steps merely to reduce the insurer’s payment.

Can the Insurer Reject the Business Interruption Claim Because the Property Claim Was Rejected?

Potentially, yes.

The standard business interruption framework requires qualifying underlying physical damage under the relevant property insurance and generally requires that loss to have been compensated or liability accepted by the insurer.

Therefore, challenging an incorrect denial of the property claim may be essential to recovering the related interruption loss.

What If the Fire Is Covered but the Flood Is Not?

The result may differ between the two events.

If the business interruption policy is triggered only by risks insured under the underlying property policy, an excluded flood may not generate an interruption claim even though a fire would.

This is why businesses should review the list of insured perils rather than relying on the broad title “business interruption insurance.”

Can the Insurer Reject a Flood Claim Because the Wrong Water-Damage Coverage Was Purchased?

Potentially.

External flood, internal water escape and other water-related events may fall under different clauses.

The official flood endorsement specifically identifies covered external flood circumstances and separately lists certain excluded water-loss causes.

Determining the actual origin of the water can therefore decide both the physical damage and business interruption claims.

What If Operations Are Only Partially Interrupted?

Business interruption coverage can apply to a partial reduction of commercial activity, not only complete shutdown.

The official conditions expressly contemplate commercial activity being either partially or completely interrupted or disrupted.

For example, a factory operating at 40% capacity may still have a substantial claim.

Can a Hotel Claim After Some Rooms Become Unusable?

Potentially, yes.

If an insured fire or flood reduces room capacity and thereby reduces turnover, applicable business interruption coverage may respond even though the hotel remains partly operational.

The calculation may examine:

• Available rooms;
• Historical occupancy;
• Average room rates;
• Seasonal bookings;
• Cancelled reservations.

Can a Warehouse Claim if Customers Move Their Business Elsewhere?

Potentially.

A prolonged interruption may cause customers to migrate permanently to competitors.

The insurer may argue about the point at which continuing revenue loss remains attributable to the insured event rather than general commercial circumstances.

The indemnity period and causation evidence become particularly important.

Can Losses Continue After the Business Reopens?

Potentially.

Reopening does not necessarily mean turnover immediately returns to normal.

A manufacturer may restart production gradually, while a hotel may take months to rebuild occupancy.

Subject to the maximum indemnity period and policy terms, a continuing reduction in activity may remain relevant to the calculation.

Can Foreign Parent Companies Claim Their Own Losses?

Not automatically.

If the insured is a Turkish subsidiary, the business interruption claim generally concerns that insured company’s commercial loss.

A foreign parent company’s reduction in shareholder value, dividends or group profit is not automatically covered by the subsidiary’s policy.

The identity of the insured and financial interest covered by the contract must be examined.

What If the Company Has an International Master Insurance Policy?

Foreign-owned companies may have both:

• Local insurance issued in Turkey; and
• An international master policy.

The master program may contain additional coverage, higher limits or protection for differences between local and global policies.

The company should review both policies rather than assuming the local insurer’s payment represents the entire available insurance recovery.

What Should a Company Do If the Insurer Makes a Very Low Offer?

The company should request the insurer’s full calculation and prepare its own independent calculation.

The analysis should identify:

Expected turnover without the loss
minus actual turnover during interruption
adjusted according to the insured gross-profit methodology
plus qualifying increased operating costs
minus applicable savings and contractual deductions.

Each disputed component should be supported with financial evidence.

Should the Company Sign a Final Settlement?

Not before understanding its consequences.

A settlement may contain language releasing the insurer from all further liability.

The business should review whether the proposed payment covers:

• Physical property damage;
• Stock;
• Machinery;
• Business interruption;
• Increased operating costs;
• Other insured categories.

A payment covering the building should not inadvertently eliminate a much larger unresolved business interruption claim.

Can Business Interruption Disputes Be Taken to Insurance Arbitration?

Potentially, where the dispute satisfies the statutory and institutional conditions for insurance arbitration.

Claims involving low valuations, policy interpretation, underinsurance, business interruption calculations or partial rejection can potentially require formal dispute resolution.

For large commercial claims, the choice between insurance arbitration and court litigation should be made after considering claim value, technical complexity, expert evidence and available review procedures.

Can a Foreign Business Sue the Insurer?

Yes.

Foreign-owned companies are not prevented from pursuing judicial remedies against insurers operating in Turkey.

A claim may seek:

• Unpaid business interruption compensation;
• Wrongfully deducted amounts;
• Additional property compensation;
• Interest;
• Other amounts recoverable under the policy and applicable law.

The strength of the case will usually depend heavily on contemporaneous accounting and technical evidence.

2026 Business Interruption Claim Strategy After Fire or Flood in Turkey

Foreign businesses should approach major interruption claims as both an insurance-law dispute and a financial-loss calculation.

The strongest claims typically follow several principles.

Confirm the underlying insured event. Fire or the particular type of flood must fall within the applicable property coverage. Flood coverage depends on the relevant endorsement and its exclusions.

Confirm business interruption coverage. Standard property insurance alone should not be assumed to cover lost commercial profit.

Establish the causal connection. The reduction in operations must result from the insured physical damage.

Calculate lost gross profit correctly. Turnover reduction, gross-profit rate, saved expenses and increased costs should be analyzed together.

Check the maximum indemnity period. Compensation cannot ordinarily extend beyond the period agreed in the policy.

Review underinsurance. Rapid business growth can create a large gap between the insured amount and actual financial exposure.

Preserve evidence immediately. Pre-loss forecasts, customer orders, historical financial records and mitigation costs can determine the outcome of the claim.

The size of a business interruption claim should therefore never be determined simply by accepting the insurer’s first accounting calculation.

Frequently Asked Questions

1. Can a foreign-owned company claim lost profits after a fire in Turkey?

Yes, where the company has applicable business interruption coverage and the fire constitutes an insured physical loss triggering that coverage.

2. Can a company claim business interruption after flood damage?

Potentially. The relevant flood risk must be covered under the property insurance, and the business interruption policy must respond to that insured event.

3. Is business interruption automatically covered by commercial fire insurance?

No. Appropriate business interruption or loss-of-profit protection must generally be included in the insurance program.

4. What financial losses can business interruption insurance cover?

Depending on the policy, it can cover insured gross-profit loss resulting from reduced turnover and qualifying increases in operating costs incurred to mitigate that reduction.

5. Can a business claim even if it was only partially closed?

Yes. The standard framework expressly contemplates both partial and complete interruption of commercial activity.

6. How long can business interruption compensation continue?

It may continue until the insured interruption or reduction is remedied, but not beyond the maximum indemnity period stated in the policy.

7. Can temporary warehouse or production costs be claimed?

Potentially, where they qualify as reasonable increased operating costs incurred to reduce the insured interruption loss.

8. Can an insurer reduce the claim because the business was underinsured?

Potentially. Business interruption underinsurance can result in a reduction where the insured gross-profit amount was inadequate and the applicable contractual rules permit proportional adjustment.

9. Can the insurer’s business interruption calculation be challenged?

Yes. Turnover projections, gross-profit rates, saved expenses, increased costs, underinsurance and the duration of loss may all be challenged with independent accounting evidence.

10. Can a foreign business take an underpaid business interruption claim to arbitration or court?

Potentially, yes. Depending on the policy and procedural requirements, formal insurance arbitration or judicial proceedings may be available.

Client-Focused Legal Support for Business Interruption Insurance Claims in Turkey

A serious fire or flood can create two different losses for a commercial enterprise: the visible destruction of property and the less visible but potentially much larger loss caused by months of interrupted business.

A factory may replace its damaged machinery but lose major customers during reconstruction. A hotel may repair flood damage but miss an entire tourism season. A warehouse may reopen but permanently lose contracts because deliveries were interrupted.

For this reason, business interruption claims should be valued independently and should not be treated merely as an additional line in the physical property claim.

Fırat Fesih Kaya Law Office assists foreign-owned businesses, international investors, manufacturers, factories, hotels, warehouses and logistics companies with substantial business interruption insurance claims in Turkey.

Lawyer Fırat Fesih Kaya provides legal assistance concerning fire and flood business interruption claims, lost gross profit, turnover disputes, increased operating expenses, underinsurance, indemnity-period disputes, insurer underpayment, expert report objections, settlement negotiations, insurance arbitration and litigation against insurers.

Phone: +90 312 434 22 22
Mobile: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey