To identify the territory of regulation and tax of a travel risk, consider:
- The nature of the cover provided;
- The territory in which the contract was taken out; and
- The location of the insured’s residence or business establishment.
Travel insurance can be taken out by an individual, a group of individuals or a corporate entity.
Where a corporate entity takes out a travel policy to cover its staff, the risk location is usually the territory in which the corporate entity’s business establishment is located. If the contract covers staff at more than one establishment, and those establishments are in more than one territory, the contract will have multiple risk locations.
However, if the contract is primarily arranged for the benefit of individual employees the risk location will be the territory in which the individual employees are resident. If it covers employees resident in more than one territory, the contract will have multiple risk locations.
Deciding whether risk location should be determined by the location of the employer or the residences of the employees is not straightforward, although in many cases these will be the same. If the contract provides cover only when the employees are travelling on business it may be viewed as similar to an employer’s liability insurance, and so the employer’s location will determine risk location. This is reinforced if all claims must be made by the employer. If the policy gives employees legal rights to make claims under the policy, their residencies may determine the risk location.
Where an individual or a group of individuals take out a travel policy, the risk location is the territory in which each insured is resident. Each individual creates a separate risk location so, if members of the insuring group are resident in different territories, there will be multiple risk locations,
EEA member states apply a special rule to travel policies with a duration of four months or less. The risk location is then the EEA member state in which the policyholder took out the policy.
If a policyholder in an EEA member state takes out a travel insurance policy for four months or less by post, telephone or internet, the risk location is the territory in which they are situated when they take the policy out, regardless of the location of the insurer or insurance intermediary.