What happens when an insurance company goes bankrupt?

The bankruptcy of insurance companies can be a worrying situation for policyholders. In this case, a mechanism called Assurance Account comes into play.

The insurance account provides policyholders under certain conditions with protection in the event of the bankruptcy of insurance companies.

However, this process requires certain conditions to be met and it should be known that payments are subject to certain limits.

In the event of bankruptcy, policyholders must follow certain procedures to recover their losses through this mechanism.

All the details about the topic are in our news details…

When an insurance company goes bust, the first thing you need to do is check the type and coverage of your policy. If your policy is compulsory traffic insurance, you can recover the damage from the insurance account.

The Assurance Account, which addresses possible situations that may arise in the insurance industry, offers an important security in the event that insurance companies go bankrupt.

The basic functions of an Assurance Account can be listed as follows:

  • Liabilities from traffic insurance are automatically transferred to the insurance account in case of bankruptcy of the insurance company. In this case, payments are made from this account as part of traffic insurance for physical or material damage.
  • The insurance account can also come into play for liabilities arising from other types of insurance, but the bankruptcy of the insurance company and the start of the liquidation process are necessary for the insured to receive the payments they deserve.
  • Even if the insurance company is not in bankruptcy, the insurance account can cover the losses of the insured if it is unable to meet its obligations.

In this case, however, the insured must meet certain conditions.

There are certain criteria for receiving payments from an escrow account. Conditions such as the validity of the policy, damage falling within the scope of the policy, no premium debt and damage occurring in accordance with certain conditions are required.

Insured persons must apply for payment from the insurance account within 5 years from the date of damage. The amount of payment may vary depending on the type of insurance and the nature of the damage.

The insurance account is financed from contribution fees and recourse claims paid by insurance companies.

In particular, if the insurance company does not pay, it will hit the insurance account and cover the losses of the insured. This loss can then be claimed back from the insurance company.

The insurance account thus offers the insured significant security and provides a quick and efficient solution to cover their losses when the conditions are met.

How to benefit from Assurance Account?

An Assurance Account offers important assurances that policyholders can use under certain conditions. Certain conditions must be met in order to use this account.

These include situations such as the inability to identify the insured person, non-insurance, bankruptcy or financial inadequacy of the insurance company, accidents with a stolen or hijacked vehicle, a difference in limits in the insurance contract or the use of green card insurance.

If one of the specified conditions is met, a written request is required to draw the insurance account.

Documents such as accident report, hospital report, photocopy of identity card, bank account information, power of attorney if any must be attached with the application.

The claim is assessed by the insurance account and if deemed appropriate, payment may be made to cover bodily injury.

The amount of payment may vary depending on the nature of the damage and the type of insurance. While, for example, there is no compensation limit for physical damage in the case of traffic insurance, the compensation limit for material damage is set at 100,000 TL.
It is important that claims are submitted within 5 years from the date of the damage.

Applications not submitted within this period may be time-barred. With the opportunities it provides to the insured, the insurance account focuses on covering their losses and providing solutions in certain situations.

Which insurances does the insurance account not apply to?

An insurance account is a government guarantee that covers bodily harm to the insured in cases such as bankruptcy or financial inadequacy of the insurance company.

The insurance account only covers the following types of insurance;

  • Motorway compulsory liability for motor vehicles (traffic insurance)
  • Road passenger transport Compulsory seat accident insurance
  • Mandatory financial liability insurance for bottled gas

Insurance other than these types of insurance do not fall within the scope of the insurance account. For example, insurance policies such as motor insurance, life insurance, health insurance, fire insurance and travel insurance cannot benefit from an insurance account.

The liabilities of these insurances are determined by the liquidators in case of bankruptcy or financial incapacity of the insurance company and are covered by the assets of the insurance company.

Source: Erdinç Alkan

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