United Kingdom developers and investors placing capital into Turkish construction projects are accustomed to a mature insurance market at home, with Contractors All Risk (CAR) policies, professional indemnity cover, and JCT-aligned insurance clauses treated as standard practice. Türkiye's insurance market operates on similar underlying principles but with enough local variation in policy wording, regulatory oversight, and claims practice that UK parties should not assume their London broker's template will transfer unchanged.
How All Risk Coverage Works in Türkiye
The Turkish equivalent of Contractors All Risk insurance, known locally as "İnşaat Sigortası" or "All Risk İnşaat Sigortası," is issued by insurers regulated under the Insurance and Private Pension Regulation and Supervision Agency. Policies typically bundle two core sections: material damage cover for the works, plant, and materials on site, and third-party liability cover for injury or property damage arising from the construction activity. Most Turkish insurers use wordings modelled on international market language, so the structure will feel familiar to a UK risk manager, but exclusions, deductibles, and definitions of "sudden and unforeseen" events are negotiated line by line and vary meaningfully between carriers.
Policy period and handover : A frequent gap arises around the maintenance period. UK contracts typically extend CAR cover through a defects liability period tied to practical completion. Turkish contractors sometimes propose narrower maintenance cover, ending cover earlier than the UK party expects. This should be checked and adjusted before signing, not assumed to mirror JCT or NEC conventions.
Earthquake and Natural Catastrophe Exposure
Türkiye's seismic risk is the single largest divergence from UK practice and the item that most affects premium and coverage design. Earthquake, and often flood and landslide, are written as separate extensions rather than automatic inclusions, and insurers apply sub-limits and higher deductibles to these perils depending on the seismic zone of the site. Since 2023, insurers have tightened underwriting on structures near active fault lines, and UK investors should expect a site-specific seismic risk assessment to be requested before terms are quoted. Confirming that the earthquake extension limit matches the actual reinstatement value of the works, not a discounted estimate, is a step worth insisting on rather than delegating entirely to the local contractor.
Sum insured basis : Policies can be written on a first loss or full reinstatement basis. For UK investors funding the project, full reinstatement value is generally the more prudent basis, even though it carries a higher premium, since first loss limits can leave a funding gap after a partial loss event.
Who Should Hold the Policy
On many Turkish projects the contractor arranges and holds the CAR policy, with the employer and any lenders named as additional insureds or loss payees. UK investors financing a project, whether directly or through a joint venture structure, should confirm in the construction contract that they are named on the policy, that the insurer has confirmed this in writing, and that the policy cannot be cancelled or materially altered without notice to all named parties. This is a standard UK contractual protection that is worth writing explicitly into the Turkish contract rather than assuming local custom will replicate it.
Currency and Claims Settlement
Premiums and claims on Turkish CAR policies are commonly denominated in Turkish lira, though foreign-currency-linked policies are available for larger commercial projects, particularly where the underlying construction contract itself is priced in US dollars or euros. Given lira volatility, UK investors should clarify the settlement currency in advance and understand how a claim payout in lira would translate against project costs that may be partly denominated in foreign currency. This is a point worth raising directly with the broker rather than leaving to standard policy wording.
Practical Due Diligence Steps
Before committing capital, UK investors should request a copy of the proposed CAR policy or its binding quotation, confirm the insurer's credit rating and regulatory standing, verify the earthquake extension limit and deductible structure, and confirm their own status as an additional insured or loss payee. Independent local insurance advice, alongside legal review of the construction contract's insurance clauses, remains the most reliable way to close the gap between UK expectations and Turkish market practice.
Eurasia Experts works with UK clients to align insurance, contract, and risk structures on Turkish construction and real estate projects, coordinating with local brokers and legal counsel so that coverage matches the actual exposure on the ground.