To identify the territory of regulation and tax of a casualty risk, consider:
1. The nature of the cover provided;  and
2. The location of the insured’s residence(s) or business establishment(s).

The insured might be a corporate entity or an individual. Subsidiary offices of a global entity may each constitute an establishment for risk location purposes.

Public liability
Products liability
Product recall
Employers’ liability and workers’ compensation
Medical malpractice
Clinical trials
Carnet
Bankers blanket bond (BBB) and commercial crime
Directors and officers (D&O) liability
Errors and omissions (E&O) and Professional Indemnity (PI)

Public liability

Public liability insurance covers the legal liabilities of the insured to third parties for bodily injury or property damage arising from the insured’s business activities. It includes environmental impairment liability and property owners’ liability.

The risk location is the territory in which the insured is resident or its business establishment is located.

If the contract covers business establishments in more than one territory, it will have multiple risk locations.  


Products liability

Products liability insurance covers the legal liabilities of the insured to third parties for bodily injury or property damage arising from products manufactured, sold or supplied by the insured.

The risk location is the territory in which the insured’s business establishment is located.

If more than one insured resident or business establishment is covered, then each may individually create a risk location.

Please note: the territory in which a product is sold does not by itself determine the risk location.

Product recall

Product recall insurance covers the expenses incurred by an insured as a result of recalling products that it has manufactured or sold because those products have caused, or are likely to cause, bodily injury or property damage.

The risk location is the territory in which the insured’s business is established.

If the contract covers more than one business establishment, and they are located in different territories, then the contract will have multiple risk locations.

Please note: the territory in which a product is sold does not normally determine the risk location.

Employers’ liability and workers’ compensation

Employers’ liability insurance covers the legal liabilities of the insured to pay damages to its employees in respect of bodily injury or disease suffered as a result of their employment.

Workers’ compensation insurance provides a range of benefits to employees who are injured during the course of their employment, with the proviso that those employees surrender their right to sue their employer for negligence under common law.

In both types of insurance the insured is the employer and not the employees and therefore the risk location is the territory in which the insured’s business is established.

If more than one business establishment is covered, then each may individually create a risk location.

Medical malpractice

Medical malpractice insurance covers the legal liabilities of the insured to third parties for bodily injury arising from the insured’s negligent activities as a practitioner in medicine or a related profession.

The risk location is the territory in which the insured is resident or its business is established.

If the contract covers more than one individual insured or business establishment and the insureds’ residences or business establishments are in different territories, each individual residence or establishment will create a separate risk location.

Clinical trials

Clinical trials insurance covers the legal liabilities of the insured in respect of clinical trials for bodily injury arising from the trial. Insured parties may include the sponsor, research organisation, hospital, pharmaceutical company or individual doctors, each of whom may create a risk location.

The risk location is the territory in which the insured is resident or its business is established.

If more than one insured resident or business establishment is covered, then each may individually create a risk location.

Please note: the territory in which a clinical trial takes place does not normally determine the risk location. However, it may still be relevant to an insurance contract’s legal or regulatory compliance as some countries have specific legislation in respect of clinical trials conducted on their territory, which insurers must take into account.

Carnet

A “carnet de passages” is issued to a motorist by a national motoring organisation when they import a vehicle ‘duty-free’ into a territory. The insured is the carnet issuer, not the motorist.

The risk location is the territory in which the insured’s (i.e. the carnet issuer’s) business is established.

If more than one business establishment is covered, then each may individually create a risk location.

Bankers blanket bond (BBB) and commercial crime

BBB and commercial crime insurance covers the liability of an insured for losses arising from the dishonest acts of its employees and external parties.

The risk location for both is the territory in which the insured’s business is established.

If more than one business establishment is covered, then each may individually create a risk location.

Directors and officers (D&O) liability

D&O covers the personal liabilities of the directors and officers of a company that result from acts committed or allegedly committed while acting in their capacity. The insured may be the corporate entity, individual directors and officers or both.

Where a corporate entity takes out a D&O policy to cover its directors and officers the risk location is the territory in which the insured’s business is established. However, if individual directors and officers are party to the contract, i.e. they can independently make claims under the contract, then the risk location is the territory in which the directors and officers are resident.

If more than one insured resident or business establishment is covered, then each may individually create a risk location.

Errors and omissions (E&O) and Professional Indemnity (PI)

E&O and PI covers the third party liabilities of professionals and service providers arising from errors, omissions and negligent acts committed in the course of their professional duties. The insured can be a corporate entity or an individual professional person.

The risk location is the territory in which the insured is resident or its business is established.

If there are more than one insured resident or business establishment covered, each individually may create a risk location.


Definition of 'business establishment'

European Union (EU) legislation defines the term ‘establishment’. Outside the EU the term is not so well defined, so in the absence of any contradictory guidance, it is appropriate to follow the EU approach.

Examples of business establishments:

  • subsidiary companies 
  • branches of companies 
  • representative offices 
  • offices managed by businesses’ own staff 
  • tied selling agents 
  • factories and workshops 
  • mines and quarries 
  • oil and gas wells 
  • drilling platforms fixed to sea bed

 

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Risk locator tool

Risk Locator | Establish the location of your risk

Frequently asked questions 

Introduction to Risk Location

What is risk location and why is it important ?

Introduction to risk location

Establishing the risk location

To help establish risk location please consider the questions provided via the link below

How to establish the risk location

Class of business guidance

To help you establish the risk location please consider the class of business

Class of business guidance 

Risk Location Examples

The interaction of different territorial rules can make a given scenario complex. Applying the principles set out will assist market participants in establishing the risk location.

Risk location examples

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