Why All Risk Coverage Deserves Early Attention
German investors financing or developing construction projects in Türkiye tend to focus first on land title, permitting, and contractor selection. Insurance is often treated as a closing formality rather than a structural decision. That sequencing creates avoidable exposure, particularly for German family offices, developers, and industrial groups accustomed to the depth of coverage standard in the DACH construction insurance market, where Contractors All Risk (CAR) and Erection All Risk (EAR) policies are negotiated with far more granularity than is typical in Turkish practice.
Context : Türkiye's insurance market offers CAR and EAR products broadly comparable in structure to German equivalents, underwritten by a mix of domestic insurers and international reinsurers active in the market. The framework will feel familiar. The gap is in default scope, exclusion language, and how claims are actually administered when a loss occurs mid-project.
What All Risk Policies Typically Cover in Türkiye
A standard CAR or EAR policy in the Turkish market covers physical loss or damage to the works, materials, and, where scheduled, construction plant and equipment, arising from fire, flood, earthquake, storm, theft, and workmanship error, during the construction period and often through a defects liability extension. Third-party liability sections cover bodily injury or property damage caused by the works to adjacent parties, which matters in dense urban sites in Istanbul, Izmir, or Ankara where German investors frequently build.
The earthquake peril deserves specific attention. Türkiye's seismic zoning affects both premium pricing and sub-limits, and German investors used to relatively modest natural catastrophe loadings at home should expect earthquake coverage to carry its own deductible structure, sometimes materially higher than the base policy deductible. Reviewing the seismic sub-limit against the full reinstatement value of the works, rather than assuming it mirrors the primary sum insured, is a step worth taking before binding coverage.
Where Default Wording Falls Short
Standard market wording in Türkiye, like standard wording anywhere, is written to protect the insurer's downside. Several gaps recur in practice. Delay in completion, business interruption tied to construction delay, and consequential loss are rarely included by default and must be negotiated as separate extensions, often at additional premium. Design defect exclusions can be broader than German investors expect, particularly where a contractor also serves as design-builder, which shifts more residual risk onto the employer than a typical German FIDIC-based contract would.
Subcontractor coverage is another frequent gap. Where a project uses multiple subcontractors, confirming that each is named as a co-insured or that the policy extends automatically to subcontracted works avoids a situation where damage caused by a subcontractor falls outside the primary policy and into a dispute over whose liability insurance responds.
Practical point : German investors accustomed to insurers who proactively flag coverage gaps should not assume the same posture from a Turkish broker acting purely as an intermediary. Independent technical review of the policy wording, ideally by an advisor who reads both the insurance contract and the underlying construction contract together, catches misalignments that a policy read in isolation will not.
Claims Administration and Currency Considerations
Claims in the Turkish market are typically settled in Turkish lira unless the policy is explicitly denominated and payable in a foreign currency, which matters for a German investor whose project financing and equity are structured in euros. Where currency mismatch exists, negotiating a foreign-currency-indexed settlement clause at policy inception is far more effective than disputing the exchange rate applied after a loss has already occurred.
Documentation standards for a claim, photographic evidence, contemporaneous site records, sign-off from the resident engineer, tend to be less automated than in Germany, where many of these processes are digitized by default. Building a claims-ready documentation habit into the project's standard site management routine from day one, rather than after the first loss event, materially shortens settlement timelines.
A Practical Starting Point
Before binding a CAR or EAR policy in Türkiye, a German investor should request the full wording, not a summary, have it reviewed against the construction contract for gaps in delay, design, and subcontractor coverage, and confirm settlement currency terms in writing. Coordinating this review with local legal and technical advisors alongside the insurance broker, rather than relying on the broker's recommendation alone, is the difference between coverage that reads well and coverage that actually pays out when it is needed.