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The General Conditions of Surety Insurance
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Assoc. Prof. H. Murat Develioglu
The General Conditions of Surety Insurance (“General
Conditions”), published by the Undersecretariat of Treasury, entered
into force on 01.02.2014. The General Conditions, which are a novel-
ty to our current legislation, is supposed to solve the problems of guar-
anty with respect to big construction projects or tenders, to remove
employers’ concerns relating to the performance of contractors and to
replace guarantee letters issued by the banks. Information on the main
features of this regulation is provided below, together with general
information on the subject, types and obligations of parties affected by
this regulation.
The Subject of the Insurance
Insurance companies can become a surety for debtors and provide
insurance to beneficiaries against the risk of non-fulfillment of the
obligation defined in the insurance policy. The content of the insurance
is determined pursuant to the conditions and terms set forth in the
General Conditions, as well as the special conditions of the policy.
Some of the Risk Types that may be Secured
Examples of risk types that can be insured are provided in Section
A.2 of the General Conditions. Pursuant to said section – without the
obligation to respect the numerus clausus principle - the following
risks may be secured by surety insurance:
• The risk that the party receiving advance payment for a project
or the provision of a good or service does not fulfill his obliga-
tions to the beneficiary and does not refund the advance pay-
ment.
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NEWSLETTER 2014
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Article of March 2014