What is Vehicle Depreciation in Turkish Law? How is it Compensated?
What is Vehicle Depreciation?
Briefly known as ”depreciation” or ”vehicle depreciation”, it refers to the determination of the financial loss in the second-hand market value of vehicles that have been repaired after traffic accidents. Regardless of how perfectly the vehicle is repaired after a traffic accident, depreciation is inevitable.
The second-hand values of vehicles registered with Tramer (Traffic Insurance Information Center) decrease, making their sale more difficult. The amount offered for a repaired vehicle after an accident is usually lower than for similar vehicles that have not been involved in an accident and are in good condition. Therefore, it is important to compensate for the depreciation that occurs in the vehicle after the accident.
“How to Claim Vehicle Depreciation Compensation?”
When a traffic accident occurs, the innocent vehicle owner can claim compensation for the damage and depreciation in their vehicle. The party responsible for the accident must cover the damage to the vehicle of the innocent party.
Therefore, vehicle owners who experience depreciation in their vehicles as a result of a traffic accident but are not at fault can apply to the insurance company that issued the traffic insurance policy of the faulty vehicle under the compulsory liability insurance. The insurance institution must respond to the application in writing within 15 days from the date of application. If the insurance institution does not respond or the response does not meet the request, the victim can file a lawsuit or apply for arbitration under Law No. 5684.
” (…) Moreover, the defendant … being the insurance company of the vehicle causing the accident is responsible for the actual damage caused to the vehicle. Since depreciation is considered as actual damage, the case should not have been dismissed without considering the defendant … company’s responsibility.
CONCLUSION: For the reasons explained above, the appeal objections of the plaintiff’s attorney are accepted, and the decision is REVERSED, the advance fee to be returned to the appellant upon request (…)” – 17th Civil Chamber 2011/7637 E., 2012/1904 K.
When the insurance company of the at-fault vehicle defaults, the victim has the right to file a lawsuit in two different places. These places are respectively the Commercial Courts of First Instance and the Insurance Arbitration Commission.
Normally, the person at fault in the accident does not have the right to claim depreciation. However, if the vehicle is covered by comprehensive insurance and is entitled to claim depreciation even if it is at fault, then depreciation compensation can be claimed.
” (…) In the General Conditions of the Comprehensive Insurance, article A.5 states the conditions excluded from the coverage, and the state of being “100% faulty” is not excluded from the coverage. The damage occurred remains within the coverage of the comprehensive insurance policy arranged as stated in the contract. Therefore, it is incorrect to decide in writing without considering that the tenant is not responsible for the damage caused to the vehicle. For these reasons, the decision had to be REVERSED. (…)” – 6th Civil Chamber 2014/3150 E., 2014/13914 K.
“How is Vehicle Depreciation Determined?”
The determination of vehicle depreciation resulting from an accident, according to the Supreme Court’s decisions, should be based on the market value of that period. Generally, this determination process is carried out with a very simple logic. The amount of depreciation is determined by calculating the difference between the pre-accident market value of the vehicle involved in the accident and its market value after the repair. However, there are different calculation methods. Another widely used method recently can be explained as follows:
Total Depreciation = Basic Depreciation x Damage Dimension Coefficient x Vehicle Usage Condition
” (…) The case is related to the collection of the depreciation occurred in the vehicle.
For the determination of the depreciation occurred in the vehicle, the market value of the vehicle at the date of the accident without damage and the market value after the repair should be determined, and the difference between them should be considered as the depreciation damage.
The expert report used as a basis for the judgment determined the depreciation without applying this method. A judgment cannot be made with incomplete examination (…) The decision is REVERSED for the benefit of the counter-claimant (…) 17th Civil Chamber 2014/21354 E., 2017/3848 K.
Insurance experts consider various criteria when determining the depreciation occurred in the vehicle. These criteria include:
– Second-hand market value of the vehicle
– Previous damage history
– Vehicle mileage
– Year of manufacture
– Damaged parts and their value in the vehicle
All these factors are taken into account in the depreciation determination process and are used to determine the pre- and post-accident values of the vehicle.
“What are the Conditions for Claiming Vehicle Depreciation Compensation?”
There are legal conditions determined for claiming vehicle depreciation compensation. These conditions are as follows:
Application Period: Applications for depreciation compensation must be made within 2 years from the date of the accident.
Fault Rate: The person claiming compensation must not be 100% at fault in the traffic accident. The fault rate is a determining factor for the validity of the claim.
Undamaged Parts: The parts damaged in the accident must not have been previously damaged. The claim is based on new and additional damages resulting from the accident.
Damage Level: The vehicle must be repairable and in good condition. The depreciation claim is based on the assumption that the vehicle is repairable.
Claimant and Fault Status: With the above conditions met, the party involved in the accident must be faultless or less at fault. In this case, depreciation compensation can be claimed and a compensation lawsuit can be filed for the depreciation.
These conditions form the legal basis for claiming vehicle depreciation compensation. Applications that comply with these conditions are more likely to have a positive outcome.
” (…) In compensation cases arising from traffic accidents, the liable party is responsible for the actual damage proportional to their fault. The fault and actual damage should be determined by an expert. In the accident report, it is stated that the defendant is completely at fault for violating the rule of hitting the plaintiff’s vehicle from behind. The plaintiff’s attorney argues that the defendant is 100% at fault and therefore the damage to the vehicle should be covered by the defendant (…) 17th Civil Chamber 2015/547 E., 2015/7868 K.
“Who Should Cover Vehicle Depreciation Compensation?”
In a traffic accident, the guilty party is responsible for compensating the damage of the vehicle owner who is not at fault. Therefore, claims related to vehicle depreciation are directed to the guilty party involved in the accident and consequently to the insurance company that issued the traffic insurance policy. These claims should be submitted to the relevant insurance company in writing.
According to the 97th article of the Highways Traffic Law, it is mandatory to apply to the insurer of the liable party before filing a lawsuit. The application to the insurance company is considered a precondition for filing a lawsuit. Lawsuits filed without applying to the insurance company are dismissed by the courts due to lack of a precondition. The aim of this regulation is to ensure that the victim’s damage is compensated by applying to the insurance company before resorting to the judiciary.
“Insurance Companies’ Liability for Vehicle Depreciation”
Vehicle depreciation in traffic accidents is a critical issue in terms of insurance processes. In this context, the situations faced by faulty and faultless vehicle owners and the responsibilities of insurance companies are as follows:
Vehicle Owners at Fault in the Accident: The traffic insurance, i.e., Compulsory Financial Liability Insurance Policy, of vehicle owners causing the accident covers the costs of their own vehicles and the damages to other vehicles. However, vehicle owners at fault cannot claim depreciation for their own vehicles through traffic insurance. Therefore, depreciation claims are not covered by traffic insurance.
Vehicle Owners Not at Fault in the Accident: The traffic insurance policy of faultless vehicle owners covers the repair costs of their own vehicles and the damages to other vehicles. However, if faultless vehicle owners experience depreciation in their vehicles due to the accident, the party responsible for covering this loss is the traffic insurance company of the faulty vehicle owner. Faultless vehicle owners can claim depreciation through traffic insurance.
Comprehensive Insurance and Depreciation Claims: Any vehicle owner covered by comprehensive insurance can claim depreciation compensation even if they are at fault, provided that the policy includes the right to claim depreciation.
” (…) The defendant insurance company’s attorney argued that the plaintiff’s vehicle depreciation claim is not covered by the policy, no depreciation occurred in the plaintiff’s vehicle due to the accident, but rather an increase in value was observed as original parts were used in the repair, and therefore they should not be held liable for the litigation costs (…)” – 17th Civil Chamber 2015/2939 E., 2015/11176 K.
“How to Initiate a Vehicle Depreciation Lawsuit?”
After completing the warning or application process for a vehicle depreciation lawsuit, a lawsuit can be directly filed at the Insurance Arbitration Commission. Another option is to file a lawsuit at the Commercial Court of First Instance (or the civil court of first instance if there is no commercial court) after completing the warning or application process.
Courts that hear vehicle depreciation lawsuits against insurance companies are generally the Commercial Courts of First Instance.
The competent court is the court in the place where the accident occurred, the court in the defendant’s location, or the court in the victim’s location.
To answer the question of who to file this lawsuit against, it can be filed against the driver and/or owner of the faulty vehicle or the traffic insurer of the faulty vehicle.
“How Long Does a Vehicle Depreciation Lawsuit Take?”
Lawsuits filed at the Insurance Arbitration Commission must be resolved by Insurance Arbitrators within 4 months as per the Insurance Law. This process includes processing by the rapporteur, notifications, and enforcement procedures. Therefore, it can be said that lawsuits at the Insurance Arbitration Commission are generally resolved within 6 months and the collection processes are completed.
“When Does a Vehicle Depreciation Lawsuit Become Time-Barred?”
The statute of limitations for a vehicle depreciation lawsuit is 2 years from the date the damage is discovered, but in any case, it is 10 years from the date of the accident. If an accident occurred within the last 2 years and you are not 100% at fault, you can claim vehicle depreciation compensation through litigation.
A vehicle depreciation lawsuit is a process that requires expertise. Before filing these lawsuits, it is very important to obtain a report from a professional vehicle depreciation expert. This report will guide the legal application and litigation process.
” (…) The plaintiff increased the amounts claimed in the lawsuit with the amendment petition dated 24.06.2013; the defendant’s attorney (upon proper notification of the amendment petition on 28.10.2013) raised the statute of limitations defense against the increased part within the time period; considering that the date of the amendment was after the 2-year statute of limitations period specified in article 109/1 of the Highway Traffic Law, the parts increased by the amendment should be dismissed due to the statute of limitations, the judgment established as written was incorrect. (…)” – 17th Civil Chamber 2016/7239 E., 2017/8442 K.
“How to Apply to the Insurance Arbitration Commission?”
The Insurance Arbitration Commission was established to resolve legal disputes between insurance companies and individuals quickly. According to the Insurance Law, a dispute file must be resolved by an arbitrator within 4 months after it is submitted.
On average, considering a 1-month process including the appointment of the rapporteur, selection of the arbitrator, etc., followed by a 4-month trial period, and finally a 1-month decision writing and notification process, decisions for legal disputes up to 5,000.00 TL are made within 6 months.
Decisions made by the Insurance Arbitration Commission for disputes up to 5,000.00 TL are final. Parties have no right to appeal or similar higher judicial remedies, but they have the right to file a lawsuit for the annulment of the arbitration proceedings, although the likelihood of obtaining positive results is very low.
For disputes over 5,000.00 TL, parties can apply to the Appeal Arbitration Board. The Appeal Arbitration Board must make a decision within 2 months after the file is submitted to them. For disputes up to 40,000.00 TL, the decision of the appeal arbitration board is final and cannot be appealed or cassated. However, for disputes over 40,000 TL, an appeal can be made to the Regional Courts of Appeal.
” (…) The plaintiff filed a direct appeal against the decision made by the Dispute Arbitration Board of the Insurance Arbitration Commission without applying to the appeal route. However, according to the
aforementioned article, the decisions made by the Dispute Arbitration Board of the Insurance Arbitration Commission can only be appealed against the decisions made upon the appeal, and therefore the plaintiff’s appeal against the decision of the Dispute Arbitration Board of the Insurance Arbitration Commission had to be rejected.
CONCLUSION: For the reasons explained above, the plaintiff’s appeal is REJECTED (…)” – 11th Civil Chamber 2020/1246 E., 2021/1227 K.
“Application Process to the Insurance Arbitration Commission”
Vehicle Depreciation Lawsuit
As a result of traffic accidents, vehicle owners can apply to insurance companies to claim depreciation compensation. However, in some cases, insurance companies may reject claims or pay a lower amount than requested. In such cases, it may be necessary to apply to the Insurance Arbitration Commission for a resolution. This process occurs through the following steps:
Insurance Company Evaluation: The vehicle owner making a depreciation claim expects payment from the insurance company. However, in some cases, the insurance company may refuse to pay or find the requested amount low.
Application to the Insurance Arbitration Commission: If the insurance company refuses to pay or makes an insufficient payment, an application should be made to the Insurance Arbitration Commission. It is necessary to check whether the insurance company is a member of the commission in this process.
Response Period: The insurance company must respond in writing within 15 business days after the application is made. If no response is received, the steps for applying to the Insurance Arbitration Commission should be followed.
Application Form and Documents: To apply to the Insurance Arbitration Commission, the necessary application form must be filled out and submitted with the required documents. The application can be made online or by mail.
Arbitrator Appointment and Evaluation: When the application is accepted, the Commission appoints an arbitrator. The arbitrator evaluates the information and evidence provided by the parties and prepares a report and makes a decision.
Decision Process: The arbitrator makes a decision within 4 months after evaluating the information and evidence in the application.
Application for Compulsory Insurance: For compulsory traffic insurance, an application can be made to the Insurance Arbitration Commission for disputes arising after April 18, 2013, regardless of whether the insurance company is a member of the commission.
” (…) The Dispute Arbitration Board of the Insurance Arbitration Commission accepted the application and decided to pay 12,369.74 TL with legal interest from the defendant Halk Sigorta AŞ to the applicant, and upon the objection of the defendant’s attorney (opposing party’s attorney) against the decision (…)” – 17th Civil Chamber 2020/7091 E., 2020/8523 K.
“Courts Responsible and Authorized for Vehicle Depreciation Lawsuits”
In compensation lawsuits arising from vehicle depreciation, the responsible court is the Civil Court of First Instance.
However, if a lawsuit is to be filed against an insurance company, the authority shifts to the Commercial Courts of First Instance.
Additionally, the Insurance Arbitration Commission located in Istanbul is also authorized for such lawsuits.
” (…) In this case, since there is no consumer relationship between the parties and the compulsory financial liability insurance of the defendant Insurance Company, regulated in the Turkish Commercial Code No. 6102, the dispute, which is understood to be a commercial case pursuant to Article 4 of the Turkish Commercial Code No. 6102, should be heard and resolved in the Commercial Court of First Instance.
CONCLUSION: For the reasons explained above, it was unanimously decided on 06/10/2015, pursuant to articles 21 and 22 of the Civil Procedure Code No. 6100, that … the Commercial Court of First Instance is DETERMINED AS THE COURT OF JURISDICTION (…)” – 20th Civil Chamber 2015/3440 E., 2015/8511 K.
There are multiple competent courts for compensation lawsuits arising from vehicle depreciation. Therefore, the lawsuit can be filed in the defendant’s place of residence, if there are multiple defendants, in the place of residence of one of them, in the court where the traffic accident occurred, in the place of residence of the victim or in the place where the insurance company’s headquarters is located.
” (…) The plaintiff’s attorney claimed compensation for depreciation and loss of earnings, stating that the defendant was 100% at fault in the accident. Although the accident location and the defendants’ residence addresses are in Konya; according to the case file, the plaintiff company’s (central address) place of residence is Ankara. According to Article 16 of the Civil Procedure Code, the place of residence court of the victim is also competent in lawsuits arising from tortious acts. Therefore, the court should reject the objection to jurisdiction and decide on the merits of the case (…)” – 17th Civil Chamber 2014/2427 E., 2014/2176 K.
“Replacement Vehicle Cost: Calculation and Claim”
Replacement vehicle cost is the compensation paid to cover the cost of renting a vehicle while the damaged vehicle is being repaired after a double-sided traffic accident. This compensation has become standardized in accordance with the Supreme
Court’s decisions.
The following conditions are required to receive replacement vehicle cost:
– Not being 100% at fault in the accident,
– The vehicle being damaged in the accident,
– Being deprived of the vehicle for at least one day.
While calculating the replacement vehicle cost, the brand, model, and age of your vehicle are considered, and the rental cost of a similar vehicle within the market value is calculated. The rental days are determined according to the repair duration of the damage.
Replacement vehicle cost is not covered by traffic insurance as it is a type of compensation for commercial loss of earnings or loss of labor. Therefore, the insurance company of the opposing party at fault does not pay this compensation. This compensation should be claimed from the owner and driver of the at-fault vehicle.
Moreover, whether or not you have comprehensive insurance or rented a vehicle from the comprehensive insurance is not important while receiving replacement vehicle cost. Because comprehensive insurance is a type of insurance that you make to protect yourself. The third party involved in the accident must pay the replacement vehicle cost. To collect the replacement vehicle cost, you can initiate enforcement proceedings or file a lawsuit.
” (…) The court should request the plaintiff’s evidence regarding the replacement vehicle cost, then obtain a detailed, explanatory, and reviewable additional report from the same expert to determine the rental fee of a similar vehicle (after deducting necessary expenses such as fuel, which the plaintiff would incur even if the accident did not occur) within the 5-day repair period determined by the expert, and make a decision accordingly. It was incorrect to make a decision as written (…)” – 17th Civil Chamber 2015/10936 E., 2016/1324 K.
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