Individual personal travel insurance
The risk is located in the country where the insured is habitually resident at the time the contract is taken out, ie their normal place of residence.
Corporate travel insurance
The risk is located in the country where the corporate body purchasing the insurance is established, if that corporate body is entitled to make claims under the contract. However, if individuals covered by the insurance are able to make a claim under the policy directly, risk location is determined using the 'individual' rule set out above - see 'global contracts' below.
Group travel insurance
If a contract covers a group travelling together and is not purchased by a corporate body, the risk is located in the country where the insured persons are habitually resident at the time the contract is taken out. If the insured persons are habitually resident in different countries, the contract has multiple locations – see “global contracts” below.
Exception
If a travel insurance contract is for a period of four months or less and is taken out in an EEA member state, the risk is located in the country where the insurance contract is taken out.
Examples
- A UK company takes out a worldwide travel policy covering staff based in the UK. The UK company is the sole insured covered. An injury or other loss to a staff member could take place outside the UK, so the peril is outside the UK, but the risk is a UK risk, as the establishment of the corporate body purchasing the insurance is in the UK. The residential addresses of members of staff covered by the contract are irrelevant.
- A UK company takes out a worldwide travel policy covering group staff. The contract identifies the UK company as the principal insured but also covers group subsidiaries in France and Germany. The subsidiary companies employ their own staff. As the subsidiaries are parties to the contract the insurance contract is a global contract (see below), the risk is located in the UK, France and Germany.
Global contracts
A Global contract is a contract insuring risks located in more than one country.
A travel insurance contract is a global contract if:
- It is taken out by a corporate body and covers individuals employed by, or otherwise associated with, other corporate bodies or other establishments as well. The contract may refer to specific named entities or may state that individuals employed by all subsidiaries, associated companies, branches (or other forms of establishment) are covered under the policy.
- It is taken out by a group of persons, and the group includes individuals who are habitually resident in more than one country.
When identifying the location of risk for a contract covering a single corporate entity its branch structure and other types of establishment associated with the risk should be considered even if they are not specifically referred to in the contract. Establishments' are discussed in detail here.
Premium apportionment
A global contract may give rise to regulatory and tax exposures in different jurisdictions. Compliance with these requirements requires the overall premium to be apportioned between the countries in which risks are located. Guidance on premium apportionment is provided here.
