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UTU Hukuk ve Danışmanlık11 min readUpdate:
Replacement vehicle cost, that is, compensation for the pecuniary loss suffered by a person who cannot use their vehicle damaged in a traffic accident during the repair period or, where the vehicle has been written off, until they purchase a new one, is examined in this article. Vehicles involved in traffic accidents are damaged. Depending on the circumstances, the repair of the resulting damage is covered by the compulsory traffic insurance of the party at fault or by the comprehensive motor insurance (kasko) of the damaged vehicle. In this article we discuss who may claim replacement vehicle cost and from whom, how the compensation is calculated and within what period it must be claimed.
As is well known, during the repair process a damaged vehicle is handed over for repair to authorised or independent service garages in the automotive repair districts. Those who hand over their vehicles for repair cannot use them until the repair is completed; if they derive commercial income from their vehicles, they cannot do so, or they are deprived of their vehicles by being unable to meet their daily needs.
As a natural consequence of this, persons who cannot use their vehicles suffer pecuniary loss. Although this pecuniary loss is popularly known as “araç yattı parası” (off-road money), in law this loss is replacement vehicle cost/loss of use is the name given to it.
The underlying legal relationship giving rise to this loss is tort. Tort is also known as fault-based liability. Returning to traffic accidents, the party at fault is obliged to make good the other party’s loss of use / replacement vehicle cost.
Compensation for loss of use may be claimed by the party who is not 100% at fault in a traffic accident. In other words, as a result of any traffic accident (assuming a two-vehicle accident), the parties’ fault may be apportioned in various ratios such as 50%-50%, 25%-75%, 15%-85% or 100%-0%. To explain by way of an example: if vehicle A is 75% at fault and vehicle B is 25% at fault, both parties may claim loss of use compensation from each other.
Note · The party 100% at fault
The important point here is that the party who is 100% at fault cannot claim loss of use compensation. This is because, under the tort liability underlying loss of use compensation, no tort or fault can be attributed to the party who is 0% at fault vis-à-vis the party who is 100% at fault. The party who is 100% at fault therefore cannot claim compensation.
As mentioned above, Replacement Vehicle Cost Compensation / Loss of Use Compensation may be claimed from the other party by the party who is not 100% at fault. Replacement Vehicle Cost Compensation / Loss of Use Compensation may be claimed against the driver, owner or keeper of the vehicle at fault in the accident.
The point to be noted here is to examine whether the keeper and the owner of the vehicle at fault are the same person. This is because the owner may have leased the vehicle to a third party under a long-term vehicle lease agreement. In that case, a compensation action brought may be dismissed on procedural grounds for lack of capacity to be sued.
Action against the correct party
At the litigation stage, it is important to bring the action against the correct party and, where necessary, to make a voluntary change of party under Article 124(3)-(4) of the CCP. Otherwise, you may lose an action you were right to bring and face liability for the costs of the proceedings.
Ultimately, as a rule, these claims may be brought against the driver, owner or keeper of the other vehicle. Since claims for Replacement Vehicle Cost Compensation / Loss of Use Compensation are excluded from cover under the general conditions of compulsory traffic insurance, the traffic insurer is, as a rule, not liable for these claims.
We discussed the scope of traffic insurance in our article on compulsory traffic insurance cover , and the principles on which the keeper’s liability is based in our article on strict liability for hazardous activities in our article.
In our article on compensation for diminution in value, we explained that claims for diminution in value of vehicles withdrawn from traffic or scrapped as a result of damage are excluded from cover under the general conditions of traffic insurance. However, for the purposes of a claim for Replacement Vehicle Cost / Loss of Use compensation, it makes no difference whether the vehicle has suffered repairable damage or has been written off. In both cases, a claim for replacement vehicle cost/loss of use compensation may be made.
In calculating Replacement Vehicle Cost / Loss of Use Compensation following a traffic accident, a twofold distinction is drawn according to whether the damaged vehicle has suffered repairable damage or has been written off.
Repairable damage
The reasonable repair period is multiplied by the daily rental cost of a comparable vehicle.
Written-off vehicle
The average time needed to purchase a new vehicle is multiplied by the daily rental cost of comparable vehicles.
Under the first limb, if the vehicle has suffered repairable damage in the accident, what must be established is not how long the repair actually took but what a reasonable period for carrying out the repair would be. In this respect, the repair period estimated in the loss adjuster’s reports is an initial benchmark. However, in an action brought to claim replacement vehicle cost / loss of use compensation, the reasonable repair period for the damaged vehicle is calculated through an expert examination. In determining the reasonable repair period, an average period is set by reference to matters such as the opening of the claim file, waiting for parts and the workload of the garage. Once the repair period has been determined, the daily rental cost is established having regard to features of the damaged vehicle such as its model and segment, and replacement vehicle cost is calculated by multiplying the number of days by the daily rental cost.
Reasonable Repair Period x Daily Vehicle Rental Cost (Comparable Vehicle) = Replacement Vehicle Cost Compensation / Loss of Use Compensation
Under the second limb, in calculating replacement vehicle cost compensation / loss of use compensation for written-off vehicles, it is necessary to determine the reasonable period required for the owner of the damaged vehicle to purchase a new vehicle to replace the written-off one. Replacement vehicle cost / loss of use compensation for written-off vehicles is calculated by multiplying the average time needed to purchase a new vehicle by the daily rental cost of vehicles comparable to the written-off vehicle. Here too, if an action claiming replacement vehicle cost compensation / loss of use compensation is brought, these calculations are made through an expert examination.
Where the vehicle is repaired under comprehensive motor insurance (kasko) following a traffic accident, if the policy cover includes a replacement vehicle service and that service has been used, the period for which the replacement vehicle service was received is deducted in calculating replacement vehicle cost / loss of use compensation. The party claiming compensation should therefore bear this in mind.
Also applies to written-off vehicles
Likewise, where the vehicle for which compensation is claimed has been written off, the calculations take into account whether there is a comprehensive motor insurer and, if so, whether a replacement vehicle service was received.
Under Article 109 of the Highway Traffic Law, claims for pecuniary compensation arising from such a traffic accident must be brought within 2 years of the date on which the damage and the person liable to pay compensation became known, and in any event within 10 years of the date of the accident; if the act is subject to a longer limitation period under criminal law, that period applies. Where the persons from whom the loss may be claimed become known long after the accident, the two-year period starts from that date of knowledge; in any event, however, the claim becomes time-barred once 10 years have passed from the date of the accident. Where the damage and the persons who caused the accident and from whom compensation is to be claimed are known on the date of the accident, the two-year period in effect starts to run from the date of the accident.
2 years
The two-year period starts from the date on which the damage and the person liable became known; if these are known on the date of the accident, the period in effect runs from the accident.
10 years
Even if the persons liable become known late, the claim becomes time-barred once 10 years have passed from the accident.
Effect of delay
It is important to claim this amount without delay after the accident. Because the calculations are made by reference to the rental cost of comparable vehicles on the date of the accident, although interest runs on the compensation receivable from the date of the accident, the benefit expected from the compensation may diminish in an inflationary environment.
Depending on whether the parties are merchants and whether other actions are brought alongside it, a replacement vehicle cost / loss of use compensation action is heard by the civil courts of first instance or the commercial courts of first instance.
To claim replacement vehicle cost, it is not mandatory to rent a vehicle or to submit a document showing that loss was suffered owing to the inability to use the vehicle. In the decision of the 4th Civil Chamber of the Court of Cassation dated 29.09.2022, numbered 2021/26777 E. and 2022/11236 K., on reversal in the interest of the law it was held as follows:
“As a rule, the principle of actual loss applies in actions for compensation arising from tort. The injured party may claim from those liable for the tort only the actual loss suffered as a result of the tort. Pursuant to the second paragraph of Article 50 of the Turkish Code of Obligations No. 6098, in force as at the date of the incident, the judge may determine the loss even if the claimant does not submit documents showing that a vehicle was rented or payment documents. In this case, while the court ought to have determined the reasonable repair period according to the nature of the damage to the claimant’s vehicle and, on the basis of the expert report obtained on the amount the claimant would have had to pay (for a replacement vehicle) during that period owing to being unable to use the vehicle for their needs, granted the claimant’s claim for loss of use, it was not correct, on an erroneous assessment, to dismiss that claim on the ground that the claimant had failed to prove it by objective criteria and evidence.”
Court of Cassation, 4th Civil Chamber, 29.09.2022, 2021/26777 E., 2022/11236 K.
It was thus held that the party claiming replacement vehicle compensation is not required to rent another vehicle in place of the damaged one, that there is no obligation to submit documents showing that loss was suffered, and that judgment must be given by calculating the loss through an expert examination on the basis of certain criteria. This decision is regarded as a guiding criterion in replacement vehicle cost compensation actions.
When preparing a claim for replacement vehicle cost, the apportionment of fault, the persons liable and the periods on which the calculation is based should be assessed together. The points below are a brief summary of the matters explained in the article:
Before the claim
In the calculation
Related page: Traffic Accident Lawyer in Ankara — diminution in value, replacement vehicle, and compensation for accidents involving injury and death
Related page: Flood Damage Compensation Lawyer — comprehensive insurance claims for flood-damaged vehicles and compensation from the administration
Related legislation: Turkish Code of Obligations No. 6098 (mevzuat.gov.tr)
A person who cannot use their damaged vehicle until the repair is completed suffers pecuniary loss. Although this loss is popularly known as “araç yattı parası” (off-road money), in law it is referred to as replacement vehicle cost/loss of use. The underlying legal relationship giving rise to the loss is tort.
Compensation for loss of use may be claimed by the party who is not 100% at fault in a traffic accident. For example, if vehicle A is 75% at fault and vehicle B is 25% at fault, both parties may bring claims against each other; the party who is 100% at fault, however, cannot claim compensation.
Compensation for replacement vehicle cost may be claimed against the driver, owner or keeper of the vehicle at fault in the accident. Insurance companies are not liable for claims for replacement vehicle cost compensation / loss of use compensation.
Yes. For the purposes of a claim for replacement vehicle cost, it makes no difference whether the vehicle has suffered repairable damage or has been written off. In both cases, a claim for replacement vehicle cost/loss of use compensation may be made.
For repairable damage, the reasonable repair period is multiplied by the daily rental cost of a comparable vehicle. For a written-off vehicle, the average time needed to purchase a new vehicle is multiplied by the daily rental cost of comparable vehicles. If an action is brought, these calculations are made through an expert examination.
Yes. Where a replacement vehicle service has been used within the cover of the comprehensive motor insurance (kasko) policy, the period for which the replacement vehicle service was received is deducted in calculating replacement vehicle cost / loss of use compensation.
Yes. According to the decision of the 4th Civil Chamber of the Court of Cassation numbered 2021/26777 E. and 2022/11236 K., the party claiming replacement vehicle compensation is not required to rent another vehicle and is under no obligation to submit documents showing that they suffered loss; the loss is calculated through an expert examination on the basis of certain criteria.
Claims for pecuniary compensation arising from a traffic accident must be brought within 2 years of learning of the damage and the person liable to pay compensation, and in any event within 10 years of the accident; if the act is subject to a longer limitation period under criminal law, that period applies. If the persons liable are known on the date of the accident, the two-year period in effect runs from the accident.
Depending on whether the parties are merchants and whether other actions are brought alongside it, the action is heard by the civil courts of first instance or the commercial courts of first instance.
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