What should foreign business owners do when commercial insurance refuses to pay in Turkey? Learn how to challenge rejected fire, property, machinery, business interruption, theft, liability and commercial insurance claims in 2026.

A foreign entrepreneur, shareholder or international company operating a business in Turkey may suffer substantial financial losses after a fire, flood, machinery breakdown, theft, property damage, business interruption, third-party liability event or another unexpected incident. The financial consequences can become considerably worse when the insurance company subsequently refuses to cover the loss.

A commercial insurance rejection should not automatically be treated as the final answer. The insurer’s decision must be tested against the complete insurance policy, applicable insurance conditions, endorsements, exclusions, actual cause of the loss, notification history, expert findings and evidence establishing the amount of damage.

Turkey’s current insurance framework contains separate General Conditions for numerous commercial risks, including fire insurance, fire-related loss of profit, machinery breakdown, electronic equipment, theft, construction all-risks, employer liability, professional liability, product liability and commercial credit insurance. (SEDDK)

For a foreign business owner, the most important objective after a rejection is therefore to identify exactly what the insurer refuses to pay, why it refuses to pay and whether that reason is actually supported by the insurance contract and evidence.

Can Foreign-Owned Businesses Claim Commercial Insurance Compensation in Turkey?

Potentially, yes.

Foreign ownership of a company does not itself prevent a business from enforcing rights arising from an insurance contract covering its operations, property or liabilities in Turkey.

The legal entity identified as the insured, the insured interest, policy wording and circumstances of the loss are generally much more important than the nationality of the company’s shareholders.

A foreign-owned company should therefore approach the rejection as a contractual insurance dispute rather than assuming that its foreign ownership places it in a weaker position.

Obtain the Complete Insurance Policy

The first step is obtaining the entire policy file.

Do not rely solely on a one-page policy schedule or certificate.

Commercial insurance arrangements can contain numerous endorsements, additional coverages, sub-limits, deductibles, warranties, exclusions and special conditions.

A foreign business should obtain the policy schedule, General Conditions, special conditions, endorsements, renewal documents, premium records and communications concerning how the insurance was originally arranged.

These documents determine what the insurer actually promised to cover.

Obtain the Rejection in Writing

A telephone call saying:

“Your loss is not covered.”

is not enough.

The company should request a formal written position identifying the reason for rejection.

The insurer should clarify whether it alleges an exclusion, failure to comply with a policy condition, late notification, underinsurance, non-disclosure, lack of causation, absence of an insured event or another basis.

The exact reason determines how the rejection should be challenged.

Ask Which Policy Clause Supports the Rejection

This is one of the most important questions in a commercial insurance dispute.

The insurer should identify the contractual provision it relies upon.

The dispute can then be reduced to a much clearer question:

Does that policy provision actually apply to the facts of this loss?

Without identifying the relevant clause, businesses can waste time arguing generally about whether the rejection is “fair.”

Determine the Exact Cause of Loss

Commercial insurance claims are often causation disputes.

Suppose a factory stops production after an electrical incident damages essential machinery.

Was the loss caused by fire?

Electrical failure?

Machinery breakdown?

An external power problem?

Operator error?

Defective equipment?

The answer may determine which policy responds.

Technical causation should therefore be established before deciding that no insurance coverage exists.

Commercial Fire Insurance Claims

Fire can create enormous losses for foreign-owned businesses.

The fire may damage the building, machinery, inventory, furniture, electronic equipment and business records.

Smoke and firefighting water may cause additional damage.

The company’s claim should therefore document the entire financial impact rather than focusing only on visibly burned property.

Turkey’s current official insurance framework continues to recognize separate General Conditions for Fire Insurance and Fire-Related Loss of Profit Insurance. (SEDDK)

Business Interruption After a Fire

Physical property damage and loss of profit should not automatically be treated as the same coverage.

A factory may suffer relatively limited physical damage but remain unable to operate for six months.

During that period, the company can lose revenue while continuing to incur salaries, rent, financing expenses and other fixed costs.

Whether these financial consequences are insured depends on the applicable business interruption or loss-of-profit coverage.

A business should therefore examine whether separate loss-of-profit insurance was purchased.

Machinery Breakdown Claims

Foreign manufacturers frequently insure expensive industrial machinery.

When critical equipment fails, an insurer may argue that the breakdown resulted from ordinary deterioration, inadequate maintenance or an excluded internal defect.

Turkey’s official insurance framework includes Machinery Breakdown Insurance General Conditions. (SEDDK)

A substantial machinery claim should therefore be supported by technical evidence addressing exactly why the machine failed.

Do Not Repair Machinery Before Documenting the Failure

Emergency repairs may be commercially necessary.

However, the condition of the machinery should be documented before important components are removed or replaced whenever reasonably possible.

Photographs, videos, maintenance records, error logs and engineering assessments should be preserved.

Removed components may also constitute important evidence.

Once a machine is completely repaired, proving the original cause of failure can become substantially harder.

Electronic Equipment Claims

Modern businesses depend heavily on servers, production control systems, telecommunications equipment and specialized electronics.

Turkey’s current insurance framework separately recognizes Electronic Equipment Insurance General Conditions. (SEDDK)

Where electronic equipment is damaged, the company should determine whether the problem resulted from an insured event and whether data restoration or other associated losses fall within additional coverage.

Theft and Burglary Claims

A foreign-owned business may suffer theft of inventory, machinery, electronics, cash or other assets.

The insurer may dispute how entry occurred, whether security conditions were satisfied or whether the company can prove ownership and value of the allegedly stolen property.

Police documentation, security-camera recordings, inventory records, purchase invoices and accounting evidence can become crucial.

Turkey’s official insurance framework also maintains separate Theft Insurance General Conditions. (SEDDK)

Inventory Losses

Inventory claims require particularly strong documentation.

A business cannot rely solely on an estimate that “approximately” a certain amount of stock was destroyed or stolen.

Accounting systems, warehouse records, purchase invoices, sales records, customs documents and inventory reports can help establish what was present immediately before the incident.

Cloud backups of accounting and inventory systems can become extremely valuable when physical records are destroyed.

Warehouse Losses

Warehouse claims can involve fire, flooding, theft, structural damage and destruction of stored goods.

The claimant should determine whether the warehouse building, stored inventory or both were insured.

If the business stores goods belonging to customers, additional liability questions may arise.

Ownership of the damaged goods should therefore be documented carefully.

Water and Flood Damage

Commercial water damage can shut down operations even where structural damage appears relatively modest.

Water may destroy inventory, machinery, electrical installations, flooring and electronic equipment.

The source must be established.

A sudden pipe rupture, gradual leakage, external flooding and roof failure may create different insurance issues.

The claimant should therefore document the source before emergency repairs eliminate the evidence.

Construction and Installation Risks

Foreign investors developing factories, hotels, energy projects or other facilities may carry construction or installation insurance.

Turkey’s official framework includes Construction All-Risks and Installation Insurance General Conditions. (SEDDK)

Disputes can become technically complex because the insurer may argue that the loss resulted from defective design, workmanship, excluded conditions or an event falling outside the insured construction period.

The underlying construction contracts and technical project documentation may therefore become relevant to the insurance claim.

Employer Liability Insurance

A serious workplace accident can create substantial financial liability for a business.

Employers may maintain liability insurance designed to respond to covered liabilities arising from workplace injuries.

Turkey’s official insurance framework recognizes Employer Liability Insurance General Conditions. (SEDDK)

If an insurer refuses coverage after a workplace accident, the company should distinguish between two separate questions: whether the employer is legally liable to the injured worker and whether that liability falls within the employer liability policy.

Product Liability Claims

Foreign manufacturers, distributors and sellers may face claims alleging that defective products caused personal injury or property damage.

Turkey’s current insurance framework also includes Product Liability Insurance General Conditions. (SEDDK)

When coverage is rejected, the business should examine whether the claim falls within the insured product activities, policy period, territorial limits and applicable exclusions.

Professional Liability Claims

Consultants and other professional businesses can face claims arising from alleged professional errors.

A professional liability insurer may reject coverage because it disputes the timing of the claim, nature of the professional service or applicability of an exclusion.

Professional liability policies can be especially sensitive to notification provisions and the relationship between when the alleged error occurred and when the claim was made.

The complete policy history should therefore be reviewed.

Commercial Credit Insurance

Foreign businesses may also insure certain commercial receivables.

If a customer fails to pay, the insurer may dispute whether the debt qualifies for coverage or whether policy procedures were followed.

Turkey’s insurance framework contains Commercial Credit Insurance General Conditions. (SEDDK)

The underlying commercial debt and insurance claim should be analyzed separately.

What If the Insurer Says the Loss Is Excluded?

An exclusion should never be evaluated in isolation.

The claimant should ask:

What exactly happened?

What coverage was purchased?

Which exclusion is being invoked?

How does the insurer say that exclusion applies?

What technical evidence supports that conclusion?

A rejection based on an exclusion may potentially be challenged where the insurer’s interpretation does not correspond with the actual cause of the loss or policy wording.

What If the Insurer Claims Poor Maintenance?

This is common in machinery, fire and property claims.

The insurer may argue that the business failed to maintain electrical installations, machinery or other equipment.

The company should preserve maintenance contracts, service records, inspection reports and repair invoices.

An independent engineer may also need to determine whether the alleged maintenance problem actually caused the loss.

What If the Insurer Alleges Late Notification?

The company should reconstruct the chronology precisely.

When did the event occur?

When did management discover it?

When was the broker informed?

When was the insurer formally notified?

What information was provided?

All emails, claim forms and claim-reference communications should be preserved.

The legal effect of any alleged delay should then be evaluated under the policy and applicable rules rather than assuming that every delay automatically eliminates coverage.

What If the Insurance Broker Failed to Notify the Insurer?

This can create an additional dispute.

Businesses frequently communicate through brokers or agents and assume that the insurer has been formally notified.

If notification was mishandled, the communications should be preserved.

The business may need to investigate both the underlying insurance claim and whether another intermediary bears responsibility for the failure.

Underinsurance

Underinsurance can substantially reduce recovery after a major commercial loss.

A factory may have been insured years earlier for a value that no longer reflects current reconstruction or machinery replacement costs.

The insurer may then raise underinsurance arguments.

Businesses should examine how the insured value was determined and whether any proportional reduction applied by the insurer is contractually and mathematically correct.

Insurance Limits and Sub-Limits

A policy with a large overall insured amount may contain much smaller limits for particular categories.

Electronic equipment, debris removal, temporary relocation, professional fees or other losses may be subject to separate limits.

The company should therefore examine the complete coverage structure rather than focusing only on the headline policy amount.

Deductibles

The insurer may also reduce compensation by applying a deductible.

The business should verify that the correct deductible was used.

Policies can contain different deductibles depending on the type of event.

An incorrectly applied deductible can materially affect a high-value commercial claim.

Obtain the Insurance Expert’s Findings

The insurer’s assessment can become central to the dispute.

The business should seek available documentation explaining the cause and valuation of the loss.

If the insurer concludes that only part of the damage is covered, the company should understand how that conclusion was reached.

Technical conclusions should be tested against independent evidence where necessary.

Obtain an Independent Technical Report

High-value commercial insurance disputes frequently require independent experts.

Depending on the claim, this may involve engineers, architects, machinery specialists, accountants or other technical professionals.

The expert should address the actual disputed issue.

For example, a machinery expert should not merely calculate repair costs if the insurer’s principal argument is that poor maintenance caused the breakdown.

The report must address causation.

Business Interruption Requires Accounting Evidence

A claim for lost profit cannot be established simply by stating that the business was closed.

The company may need historical financial statements, tax records, management accounts, sales data, budgets and other financial evidence.

The objective is to demonstrate what the business probably would have earned if the insured event had not occurred.

The methodology must also comply with the applicable policy.

Continuing Expenses

Business interruption coverage may also involve expenses continuing during shutdown.

Examples can include rent, certain salaries and other fixed costs.

The company should therefore preserve detailed accounting records from both before and after the insured event.

The financial claim should be prepared systematically rather than estimated informally.

Additional Expenses to Keep the Business Operating

A company may rent temporary premises, lease replacement machinery or pay additional transportation costs to continue operating after a loss.

Depending on the policy, certain increased costs of working may potentially be relevant.

These expenses should be separately documented.

Invoices should explain clearly why the expense was incurred.

Mitigate Further Losses

Businesses should take reasonable measures to prevent avoidable additional damage.

A damaged roof may require temporary protection.

Floodwater may need immediate removal.

A machine may need to be shut down to prevent further damage.

These measures should be documented.

Emergency actions should not destroy important evidence unnecessarily.

Preserve CCTV and Digital Records

CCTV can help establish the origin and development of a fire, theft or other incident.

Server logs, machinery data and security records may also be valuable.

Digital evidence can disappear quickly.

A preservation strategy should therefore begin immediately after a significant commercial loss.

Preserve Internal Incident Reports

Internal company reports can help establish what happened immediately after the incident.

However, management should ensure that reports are factual and accurate.

Speculation concerning responsibility or causation should not be presented as established fact before technical investigation has been completed.

What If the Insurance Company Offers Only Part of the Claim?

Partial payment does not necessarily mean the insurer’s calculation is correct.

The business should identify which components were accepted and which were rejected.

For example, the insurer may accept machinery repair costs but reject business interruption.

Or it may accept the fire claim while reducing compensation because of alleged underinsurance.

Each disputed component should be analyzed separately.

Be Careful With Final Settlement Documents

An insurer may offer payment subject to signing a release.

The company should understand whether accepting the payment resolves only an agreed portion of the claim or releases the insurer from all further liability.

This becomes particularly important where business interruption losses continue to develop after physical repairs begin.

A foreign business should not sign a final release without understanding its legal effect.

Submit a Detailed Written Challenge

A strong challenge should respond to the insurer’s actual reasoning.

It should identify the policy, insured event, disputed coverage, evidence establishing causation, amount claimed and contractual basis for payment.

Technical reports and financial documentation should be included where appropriate.

The objective is not simply to complain about the rejection but to demonstrate why the insurer’s interpretation or factual conclusion is incorrect.

Can Commercial Insurance Disputes Go to Insurance Arbitration?

Potentially, yes.

Turkey’s Insurance Arbitration Commission resolves qualifying insurance-contract disputes between participating insurance organizations and policyholders or persons benefiting from insurance. The Commission emphasizes that supporting documents establishing the claimant’s position should be submitted because cases are generally examined on the file unless the arbitrator considers a hearing necessary. (Sigorta Tahkim Komisyonu)

The claimant must first pursue the matter with the insurance company before taking a qualifying dispute to the Commission. (Sigorta Tahkim Komisyonu)

Whether arbitration is available for a particular commercial policy should therefore be checked before proceedings begin.

Foreign Individuals and Insurance Arbitration

Where a foreign national personally needs to make a qualifying application, there is an important procedural rule.

The Insurance Arbitration Commission currently states that foreign nationals cannot use its ordinary online application procedure because it relies on national digital identity verification. Foreign nationals must instead submit a physical application with the required documents. A passport or other qualifying identification document can be included. (Sigorta Tahkim Komisyonu)

Where the insured is a company rather than an individual shareholder, the company’s legal personality and representation documents must be handled according to the applicable procedure.

Representation Through a Lawyer

Commercial insurance claims can also be pursued through properly authorized legal representation where appropriate.

For applications made to the Insurance Arbitration Commission through an attorney, the Commission states that the power of attorney must include specific authority concerning alternative dispute resolution or direct application to the Commission. (Sigorta Tahkim Komisyonu)

This can be particularly important where the foreign business owners or company directors are outside Turkey.

2026 Insurance Arbitration Developments

Businesses should use current procedural information rather than relying on outdated online guides.

The Insurance Arbitration Commission changed its application fee schedule effective July 16, 2026. The current tariff is TRY 600 for disputes up to TRY 8,500, TRY 1,200 for disputes from TRY 8,501 to TRY 17,000, TRY 1,750 for disputes from TRY 17,001 to TRY 85,000, and 1.8% of the disputed amount for claims above TRY 85,000, subject to a minimum of TRY 1,750. (Sigorta Tahkim Komisyonu)

The applicable procedural and financial thresholds should always be checked at the time of filing because they can change.

Challenging an Arbitration Decision

Depending on the disputed amount, an arbitration decision may itself be subject to further review.

The Commission’s current 2026 guidance states that decisions concerning disputes of TRY 35,000 or more can be challenged once before the Commission’s appeal mechanism, while decisions following appeal concerning disputes above TRY 383,000 can potentially be taken to the Court of Cassation. The applicable monetary threshold is determined according to the rules in force at the relevant procedural point. (Sigorta Tahkim Komisyonu)

For high-value commercial losses, the possible appeal route should therefore be considered from the beginning.

Court Proceedings

Insurance arbitration is not necessarily the appropriate or available route in every commercial insurance dispute.

Court proceedings may be necessary depending on the insurer, policy and nature of the dispute.

Complex litigation may involve technical expert examination, accounting evidence, policy interpretation and detailed calculation of commercial losses.

A multi-million-value factory or business interruption claim can require a substantially different litigation strategy from an ordinary property claim.

Foreign Insurance Policies

International companies sometimes insure Turkish operations through global insurance programs.

This can create additional questions concerning governing law, jurisdiction, local policies, master policies and international insurers.

The fact that the physical loss occurred in Turkey does not automatically determine every insurance issue.

The complete multinational insurance structure should therefore be reviewed.

Master Policy and Local Policy Disputes

A multinational group may have both a local Turkish policy and a global master policy.

If the local insurer refuses or limits payment, the company should investigate whether difference-in-conditions or difference-in-limits protection exists elsewhere in the international insurance program.

The corporate risk-management team should therefore coordinate the Turkish claim with the group’s international insurance advisers.

Do Not Ignore Claims Against Responsible Third Parties

Insurance may not be the only source of recovery.

A fire may have been caused by a contractor.

Machinery may have failed because of a manufacturing defect.

Water damage may have resulted from a neighboring business.

A logistics company may have caused destruction of insured goods.

The company should investigate potential third-party liability separately from its own insurance claim.

25-Step Action Plan After a Commercial Insurance Rejection

A foreign-owned business should generally:

1. Obtain the complete insurance policy.
2. Obtain the rejection in writing.
3. Identify the exact policy provision relied upon.
4. Preserve the entire claim correspondence.
5. Establish the technical cause of the loss.
6. Photograph and record all physical damage.
7. Preserve CCTV and digital evidence.
8. Preserve damaged machinery or components where possible.
9. Obtain official incident reports.
10. Obtain the insurer’s available assessment.
11. Commission independent technical evidence where necessary.
12. Calculate property damage separately.
13. Calculate machinery and equipment losses separately.
14. Document destroyed inventory.
15. Review business interruption coverage.
16. Preserve historical financial statements.
17. Calculate lost profit carefully.
18. Document continuing expenses.
19. Document additional mitigation expenses.
20. Check insured amounts and underinsurance allegations.
21. Check policy limits, sub-limits and deductibles.
22. Avoid signing premature final releases.
23. Submit a detailed written challenge to the insurer.
24. Determine whether Insurance Arbitration is available.
25. Evaluate court proceedings and third-party recovery if the insurer continues to refuse a covered loss.

The strongest commercial insurance disputes are built around policy wording, technical causation, reliable financial evidence and a precise calculation of every category of insured loss.

Frequently Asked Questions

Can a foreign-owned company challenge an insurance rejection in Turkey?

Potentially, yes. Foreign ownership does not itself prevent a company from enforcing rights arising from a valid insurance contract.

What should a business do first after receiving a rejection?

Obtain the rejection in writing and identify the exact policy clause relied upon. The complete policy should then be compared with the actual cause of loss.

Can a company challenge a low insurance settlement instead of a complete rejection?

Potentially, yes. Repair costs, replacement values, policy limits, deductibles, underinsurance calculations and expert findings should be examined.

Can commercial insurance cover lost profits?

Potentially, where appropriate business interruption or loss-of-profit coverage exists. Turkey’s official insurance framework separately recognizes Fire-Related Loss of Profit Insurance General Conditions. (SEDDK)

What if the insurer says machinery failed because of poor maintenance?

The company should preserve maintenance records and obtain technical evidence concerning the actual cause of failure. Turkey maintains separate Machinery Breakdown Insurance General Conditions. (SEDDK)

Can an insurer reject a claim because it was notified late?

The notification history, applicable policy provisions and circumstances should be examined carefully. The company should preserve evidence showing when the loss was discovered and when notification occurred.

Can commercial insurance disputes be taken to Insurance Arbitration?

Potentially, where the relevant insurer, policy and dispute satisfy the Commission’s jurisdictional requirements. An application to the insurance organization must first be made. (Sigorta Tahkim Komisyonu)

Can a lawyer handle the dispute while the business owner is abroad?

Potentially, yes. For Insurance Arbitration applications made through an attorney, the Commission requires the power of attorney to contain the applicable special authorization. (Sigorta Tahkim Komisyonu)

What if the insurer pays property damage but rejects business interruption?

The two components should be analyzed separately. Physical damage coverage does not automatically determine whether loss-of-profit coverage exists.

What if the commercial loss exceeds the insurance limit?

The company should investigate all available policies and potential claims against responsible third parties. International businesses should also review whether a global master policy provides additional protection.

Client-Focused Legal Support for Foreign Businesses Facing Rejected Insurance Claims

A rejected commercial insurance claim can threaten the financial stability of a foreign-owned business, particularly when the company has suffered a major fire, machinery breakdown, inventory loss or prolonged interruption of operations. These disputes should be approached as more than simple requests for reconsideration.

The complete insurance structure should be reconstructed first. Coverage, exclusions, endorsements, insured amounts, sub-limits and deductibles should be examined together with technical evidence establishing exactly why the loss occurred. Where business interruption is involved, accounting evidence must also establish the actual financial consequences of the shutdown.

Foreign companies should also avoid assuming that the insurer’s appointed assessment is the only possible valuation. Independent engineering, technical and financial evidence can be particularly important where the insurer disputes causation, alleges poor maintenance, applies underinsurance or substantially undervalues the claim.

Fırat Fesih Kaya Law Office assists foreign entrepreneurs, international companies and foreign-owned businesses with commercial insurance claim rejections, fire insurance disputes, business interruption claims, machinery breakdown insurance, property damage claims, inventory losses, employer liability insurance, product liability insurance, low settlement disputes, Insurance Arbitration and commercial insurance litigation in Turkey.

Where foreign shareholders, directors or company representatives are outside Turkey, appropriate proceedings may still be handled through properly authorized legal representation. The policy, rejection letter, technical reports, accounting records, expert assessments and all communications with the insurer should be preserved from the earliest stage.

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