Non-payment under yacht insurance is not merely a matter of an exclusion appearing in the policy. First, the coverage under which the damage falls is investigated; then it is examined whether the asserted exclusion was incorporated into the contract and whether it was applied to the specific event. A deductible, underinsurance, the duty of disclosure and aggravation of risk are different grounds for rejection or reduction.
Hull and machinery insurance, third-party liability insurance and personal accident coverages are not the same product. That a vessel is insured does not show that injury to a guest, an environmental penalty or loss of commercial income would necessarily also be covered.
Which documents the policy is read together with
The policy, quotation, application form, general conditions, special conditions, endorsements and all referenced clauses must be assessed together. If a reference is made to an English Institute clause, which version applies is determined. A problem of priority and conflict may exist between the documents. Looking only at the coverage names on the first page of the policy is not sufficient.
The vessel’s purpose of use, maximum speed, navigation area, winter lay-up location, captain and commercial activity must be shown correctly in the policy. Moving to charter activity after purchase or undertaking a major refit may require notification to the insurer. The consequences of these changes are examined within the framework of the provisions on declaration in Article 1435 and following of the Turkish Commercial Code (TTK) and the provisions on aggravation of risk in Articles 1444–1445.
Distinction between an excluded event and a breach of obligation
Wear, rust, lack of maintenance, design failure or machinery failure may be excluded in whole or in part in some policies. However, the coverage status of the cost of the failed part itself and of other damage caused by the failure may differ. Instead of characterizing the entirety of the damage with a single word, “lack of maintenance”, the rejection letter should explain which technical finding and which clause it relies on.
A deductible refers to the portion of the loss that remains with the insured; underinsurance refers to the consequences of the difference between the insured value and the value. These differ from the absence of coverage from the outset. In the case of a breach of the duty of disclosure or notification as well, fault, the statutory conditions and, in some cases, the connection with the risk are assessed. Not every formal deficiency can automatically be treated as a ground for full rejection.
Under Article 1409 of the Commercial Code, the insurer is liable for the loss arising from the occurrence of the risk provided for in the contract; when the insurer asserts that a matter is outside the scope of coverage, the burden of proof relating to this is significant. The insured, too, must establish the occurrence of the risk and the loss claimed with appropriate evidence. The allocation of the burden of proof does not mean that the documents in the claim file are unnecessary.
For details on this subject, see the section on precautionary attachment of vessels and yachts.
Court of Cassation decision on the speed clause
In the decision of the 11th Civil Chamber of the Court of Cassation (Yargıtay 11. Hukuk Dairesi) dated December 4, 2024, E. 2024/4376, K. 2024/8627, the propeller damage to a motor yacht, the speed information in the policy and the special clauses were assessed. The file contains a finding that the maximum speed of the vessel was 34 knots although 17 miles was stated in the policy. The dispute should not be reduced to an assumption that the vessel exceeded the speed limit at the time of the accident.
Although the arbitral tribunal found that the duty to inform (aydınlatma) had not been proven, it took into account the 14-day objection provision in Article 1423/2 of the Commercial Code and the absence of an objection, applied the written terms of the policy, and reached the conclusion that the loss was outside coverage. The Court of Cassation affirmed this decision. The decision does not support the claim that every claim must necessarily be paid where there was a deficiency in the information provided. The outcome is tied to the specific policy and special conditions; nor can it be relied upon as a basis for the proposition that all propeller damage is without exception outside coverage.
First steps when damage occurs
Safety of life and the environment must be ensured, and reasonable measures to prevent the loss from growing must be taken. Notification to the insurer is made without delay within the framework of Article 1446 of the Commercial Code. The special notification method in the policy and the information requested are also checked. Even if the period is thought to have passed, notification should not be abandoned entirely; the legal consequence of delay is determined according to the specific circumstances.
Photographs, video, navigation logs, weather conditions, engine alarm data, maintenance history and, if any, the official record must be preserved. Except in an emergency intervention, discarding the damaged part in a way that removes the insurer’s opportunity to inspect makes proof difficult. If repair is mandatory for the safety of the vessel, the procedure, the parts and the reasons are recorded in detail.
With respect to the insurer’s approval, an acknowledgment of the liability of a third party, or the making of a settlement, the conditions in the policy and the law are taken into account. The insured must not needlessly impair the insurer’s ability to proceed against the liable person through subrogation. A broad release signed with a marina or a shipyard must therefore be examined separately.
How to build the file against a rejection letter
The ground for rejection is classified first: does the risk not fall within the scope of coverage at all, is a special exclusion being applied, is a breach of obligation asserted, or is only the amount of the loss in dispute? Each item requires different evidence and a different legal assessment. A general objection of “I have a policy, so it must be paid” is not sufficient.
| Ground for rejection | Document to be requested or examined | Core counter-review |
|---|---|---|
| Lack of maintenance | Service and expert appraisal records | Cause of the failure and the policy exclusion |
| Use outside the navigation area | Policy, route and location records | Boundary, exclusion and endorsement |
| Incorrect declaration | Quotation form and correspondence | Information asked, answer given and statutory consequence |
| Special speed clause | Clause text and technical speed data | Distinction between design speed and speed at the time of the incident |
| Deductible or underinsurance | Valuation and calculation table | Conformity of the reduction with the contract and the law |
The objection petition must match each ground in the rejection letter with the relevant document. A private expert appraisal report may help; however, it is not conclusive evidence that automatically binds the court or the arbitrator. In the technical opinion, assumption must be separated from measurement results, and any part that could not be examined must be stated clearly.
For details on this subject, see the section on the yacht sale and purchase agreement.
For details on this subject, see the section on objecting to an expert report in a civil lawsuit.
Payment due date, interest and statute of limitations
Under Article 1427 of the Commercial Code, the date on which insurance indemnity falls due is tied to the risk, the submission of the documents and the completion of the investigation. The general 45-day period in the law must be read together with the provision on delay of the investigation for reasons not attributable to the insurer. Therefore, in every file, merely adding 45 days to the notification date may not be sufficient.
If the investigation cannot be completed within three months, an advance payment may come into question under the conditions of Article 1427/3. When the claim has fallen due, default and interest are assessed. The date of the insurer’s rejection letter should not be treated as the sole and mandatory starting point of the statute of limitations.
Article 1420 of the Commercial Code provides, for claims arising from an insurance contract, a two-year basic period running from the date the claim falls due and, for claims for indemnity and the sum insured, a six-year maximum period running from the risk; the provision of Article 1482 is reserved. Liability insurance, special provisions and acts that interrupt or suspend the period are examined separately. It should not be assumed that correspondence with the company alone suspends all the periods.
Insurance arbitration or court
For an application to the Insurance Arbitration Commission (Sigorta Tahkim Komisyonu), it is checked whether the relevant insurer is a member of the system, the scope of the dispute and the statutory exceptions. In voluntary yacht insurance, it cannot be said that this route is open against every foreign insurer. The condition that the insurer be applied to first and a final negative reply be received or, in general, that no reply be given within 15 business days is important.
In arbitration, the application fee and the monetary limits for legal remedies must be checked in the regulation current on the application date. The pendency of the same dispute before another authority also affects the admissibility conditions. When the court route is chosen, the commercial or consumer character, the subject-matter jurisdiction and mediation as a condition precedent to litigation are assessed separately. An application to the Insurance Arbitration Commission and voluntary contractual arbitration are not the same institution.
For details on this subject, see the section on legal checks when buying a yacht or boat.
For details on this subject, see the section on yacht law, flag, taxes and import procedures in Türkiye.
Conclusion
In yacht insurance, a strong objection examines the policy text and the technical cause of the damage together. When coverage, exclusion, deductible and breach of obligation are separated, it becomes clear which document is required. Just as important as preserving the records after the loss is correctly declaring the vessel’s real characteristics when the policy is taken out.
Frequently Asked Questions
Does insurance against all kinds of risk cover all losses?
No. Even policies with broad coverage may contain exclusions, deductibles and special conditions.
Is propeller damage always outside coverage?
No. The specific policy and clause are examined. A single decision does not carry the same outcome over to all policies.
Does an expert appraisal report make payment mandatory?
No. Determining the loss and the legal assessment of coverage are different; the bases of the report may also be examined.
Can I apply to the insurer again after the rejection letter?
A reasoned and documented objection is possible. However, it should not be assumed that this application automatically suspends the statute of limitations.
Is it necessary to apply to the company before going to insurance arbitration?
Yes. The statutory preliminary application and reply conditions must be met; the general waiting period for a reply is 15 business days.
Should the start of commercial chartering of the yacht be notified to the insurer?
The policy and the provisions on change of risk must be examined. A transition from private use to commercial use may affect coverage.
Sources and legal bases
- Law No. 6102, Turkish Commercial Code. Articles 931, 935, 940, 1001, 1320, 1352–1376, 1420–1446; different pages by article. Source link
- Turkish Commercial Code Article 1427 — insurance indemnity falling due. Payment due date and advance payment. Source link
- Insurance Association of Türkiye (Türkiye Sigorta Birliği) — General Conditions of the Hull Policy (Tekne Poliçesi Genel Şartları). The relationship between general conditions, special clauses and the policy. Source link
- Insurance Arbitration Commission — how to apply (başvuru nasıl yapılır). Preliminary application, negative reply or 15 business days; participation and jurisdiction conditions. Source link
- Court of Cassation 11th Civil Chamber, December 4, 2024, E. 2024/4376, K. 2024/8627. Speed clause, duty to inform and propeller damage; affirmed. Source link