Compulsory insurance that every vehicle owner must obtain by law is called traffic insurance. This mandatory policy covers material and bodily damages caused to third parties. Under the Highway Traffic Law No. 2918, traffic insurance must be obtained and renewed annually.
Not every driver on the road follows traffic rules, and that noncompliance often leads to accidents. Those accidents can result in both loss of life and property damage. In such cases, compulsory traffic insurance covers damages the insured driver causes to the other party when the insured vehicle is at fault. However, this mandatory insurance does not cover damage to the policyholder’s own vehicle; it only compensates for harm done to others.
Because compulsory traffic insurance is required by law, any vehicle found without it can be detained and prevented from continuing on the road. Therefore, all vehicle owners must obtain and timely renew their compulsory traffic insurance policies.
Compulsory traffic policies set maximum limits that correspond to the paid premiums, and compensation to the other party is made up to those limits. If damages exceed the policy limit, the remaining amount is the legal responsibility of the vehicle owner.
The limits set for compulsory traffic insurance vary according to the type of loss. For example, compensation paid to relatives of a deceased person differs from medical expenses for injuries or costs related to material damage. These figures change from year to year, and the premium system is adjusted accordingly.
Protections provided by compulsory traffic insurance include:
- Per-person death compensation and medical expense coverage
- Per-accident death compensation and medical expense coverage
- Per-accident coverage for material damages
Insurance companies use details such as the province where the vehicle is registered and the vehicle’s make and model when calculating premiums. Because compulsory traffic insurance is taken seriously, failure to secure it can result in the vehicle being towed to a parking facility and being barred from traffic.
If a vehicle is towed due to lack of insurance, the owner must pay both the parking fees and penalties for not having compulsory traffic insurance. The vehicle is not allowed back on the road without valid insurance, which can cause significant financial and emotional stress for the owner. That is why securing compulsory insurance promptly and renewing the policy on time are essential. Driving with an expired compulsory traffic insurance policy also incurs financial penalties.
Compulsory traffic insurance protects the vehicle owner indirectly: when an unfortunate accident occurs, it pays the material and non-material damages suffered by people on the other side of the accident on behalf of the driver. Even if the driver is at fault, the insurance company covers the damage costs within the policy limits.
Large-scale accidents often result in damages many individuals cannot afford to pay. In such situations, compulsory traffic insurance steps in and covers expenses up to the policy limits.
How are compulsory traffic insurance limits determined?
The limits and coverages of compulsory traffic insurance are standardized. These limits and coverages are set by the Undersecretariat of Treasury (Hazine Müsteşarlığı). However, prices and payment conditions for compulsory traffic insurance can vary between insurance companies.
Several factors influence the price of compulsory traffic insurance. For example, if the province where the vehicle is registered has a high traffic density and a high incidence of accidents, insurance premiums tend to be higher. The logic is that vehicles registered in areas with frequent accidents are at greater risk of being involved in collisions.
The vehicle model also affects the premium. If the insured vehicle is a higher-end model, the insurance cost is usually higher because potential repair or compensation costs would increase accordingly.
Comprehensive (kasko) insurance is often confused with compulsory traffic insurance, but they are different. Traffic insurance is mandatory, while kasko is optional. Compulsory traffic insurance only covers damages to the other party; kasko covers damages to the insured vehicle as well.
Compulsory traffic insurance rates for 2018
As renewal time approaches for 2018 policies, many vehicle owners have questions about the new rates. Government regulations play an important role in determining these costs. Recently, premiums for some vehicles approached the vehicle’s market value, raising concerns. Thanks to a ceiling price application for traffic insurance, average premiums have decreased significantly—reports suggest reductions around 42% in some years. Under this ceiling system, Turkey is divided into several province groups. Prices are set according to the vehicle’s model and the registration province, and they can vary among insurers.