Why All-Risk Insurance Deserves a Line Item in Every Iranian Investor's Budget
Iranian investors financing residential and mixed-use construction in Türkiye are, in most cases, funding the build from abroad while managing daily oversight remotely, through a local project manager, or through periodic site visits. That distance is exactly why Contractors All Risk (CAR) insurance, and its erection-phase counterpart Erection All Risk (EAR), matters more here than it might for a domestic buyer standing on site every week. A fire, a crane collapse, a flood during the foundation stage, or a third-party injury claim can stall a project for months and erode the capital an investor has already committed. Insurance does not prevent these events, but it determines who absorbs the financial shock.
What CAR/EAR Policies Actually Cover
A standard Turkish CAR policy typically covers physical loss or damage to the works under construction, on-site materials and temporary structures, and construction plant and equipment while in use. A companion Third Party Liability (TPL) section covers bodily injury or property damage caused to neighbors, passersby, or adjoining structures, a real exposure on dense urban sites in cities like Istanbul, Bursa, or Antalya where excavation and shoring work can affect adjacent buildings. Most policies exclude design defects, wear and tear, and losses arising from war or nuclear risk, and sublimits often apply to items such as debris removal, professional fees, and expediting costs. Reading the exclusions schedule as carefully as the coverage schedule is not optional; it is where disputes originate.
Who typically buys the policy : In most Turkish construction contracts, the main contractor is contractually obligated to procure and maintain the CAR/EAR policy for the duration of the works, with the developer or investor named as a co-insured or additional insured party. Iranian investors funding a build-to-suit villa, a boutique apartment block, or a commercial fit-out should confirm this obligation is written into the construction contract itself, not left as an informal understanding, and should request a copy of the policy schedule before disbursing the first payment tranche.
Sum Insured and Currency Considerations
The sum insured should reflect the full reinstatement value of the works at completion, not the current contract price, since under-insurance clauses in Turkish policies can proportionally reduce any claim payout if the declared value falls short of actual exposure. For Iranian investors, currency denomination is a practical detail worth negotiating: policies can generally be issued with sums insured referenced in Turkish lira, US dollars, or euros, and aligning the policy currency with the currency of the underlying construction contract avoids a mismatch that complicates claims settlement if the lira moves significantly during a multi-year build.
Practical Due Diligence Before Groundbreaking
Before construction begins, an investor's advisor should verify three things: that the CAR/EAR policy is active from the mobilization date, not merely promised; that the insurer is a licensed Turkish carrier with adequate reinsurance backing for the sum insured in question; and that the policy period extends through the maintenance or defects liability period, typically 12 months after practical completion, since many claims surface only after occupancy begins. It is also worth confirming whether the policy includes a Delay in Start-Up (DSU) extension, which compensates for lost rental or resale income if an insured event pushes back the completion date, a clause that matters more to an investor relying on projected returns than to a contractor focused purely on rebuild costs.
Working With a Local Advisor
Because Turkish insurance intermediaries and construction contracts are typically drafted in Turkish, an Iranian investor benefits from an independent advisor who can review the policy wording against the construction contract, confirm the additional-insured designation is correctly recorded, and flag any sublimits that could leave a real gap in coverage. This is a modest upfront cost against the alternative, discovering after a loss event that the policy in hand does not actually respond the way the contract implied it would. For an investor whose capital is already crossing a border and a currency, that clarity is worth securing before, not after, the first excavator arrives on site.