Contractors and developers active in Kazakhstan, whether financing infrastructure through Astana International Financial Centre structures or building commercial assets in Almaty, are accustomed to a domestic insurance market shaped by KGS guarantees and mandatory civil liability rules. When the same investors move a project or a construction budget into Türkiye, they frequently underestimate how different local insurance practice is, particularly around All Risk coverage. Understanding this gap early protects the capital side of a project, not just the physical works.
Why All Risk Coverage Is Not Optional in Türkiye
In Türkiye, Contractors All Risk (CAR) and Erection All Risk (EAR) policies are the standard mechanism for transferring construction-phase risk away from the developer and the contractor's balance sheet. Almost every institutional lender, and most municipalities issuing building permits for larger projects, will require evidence of an active CAR or EAR policy before construction can proceed on financed developments. For a Kazakhstani investor structuring a project through a Turkish special purpose company, this is typically a closing condition on any construction loan, not a discretionary add-on negotiated later.
Scope : A properly structured CAR policy in the Turkish market covers physical loss or damage to the works during construction, including materials on site, temporary structures, and often existing structures adjacent to the site where demolition or excavation work creates exposure. Third-party liability, covering injury or property damage to neighbors and the public, is usually added as an extension rather than sold as a separate line, which differs from how Kazakhstani insurers tend to package these risks.
Sizing the Policy Correctly
A common error among foreign investors is sizing the policy to the contract price rather than the full reinstatement value of the works, including demolition and debris removal costs that a Turkish insurer would need to fund in a total loss scenario. Underinsurance clauses in Turkish policies are applied strictly, meaning a shortfall in declared value reduces the claim payout proportionally, even on a partial loss. Investors should require their Turkish legal or technical advisor to review the sum insured calculation against the actual bill of quantities before binding cover, not after.
Earthquake and Ground Risk
Türkiye's seismic exposure means that earthquake coverage is either embedded in the CAR policy with a specific sub-limit and deductible, or purchased as a rider tied to DASK, the state-backed catastrophe insurance scheme that applies separately to completed residential units. During the construction phase itself, earthquake risk sits inside the CAR policy, and the deductible structure, often expressed as a percentage of the loss rather than a fixed sum, should be modeled into the project's contingency budget from the outset. Soil and ground movement exclusions are also common in standard Turkish CAR wordings and are worth negotiating out where the site has known geotechnical complexity.
Coordinating With the Construction Contract
The insurance program should be read alongside the FIDIC-based or Turkish Code of Obligations construction contract governing the project, since obligations for who arranges, pays for, and names as insured party on the CAR policy are contractual matters, not purely insurance ones. Kazakhstani investors working through a general contractor structure should confirm whether the contractor or the employer is the policyholder, and ensure the financing bank or the investor's own SPV is named as a joint insured or loss payee where relevant. Gaps here have caused payout disputes on completed projects where the wrong party held the policy.
Practical Steps for Foreign Investors
Before construction financing closes, investors should obtain at least two comparative quotes from Turkish insurers or their reinsurance-backed brokers, confirm that policy wording is available in English alongside the binding Turkish text, and align the policy period with realistic completion timelines including likely delay. Renewal terms should also be checked, since Turkish CAR policies are typically annual and require active management through multi-year construction programs rather than a single upfront purchase.
For Kazakhstani developers and investors entering the Turkish construction market, treating All Risk insurance as a structural part of project finance, reviewed with the same rigor as the land title or the building permit, is the difference between a well-protected capital position and an uninsured exposure discovered only after a loss occurs.