VATINS2110 - What is insurance for the purposes of the exemption?: characteristics of insurance

There is no statutory definition of insurance for VAT purposes although guidance can be gained from previous legal decisions in which the essential nature of insurance has been considered.

The House of Lords in the case of Card Protection Plan Ltd v C & E Commrs (Case C-349/96) [1999] concluded that:

“…the essentials of an insurance transaction are… that the insurer undertakes, in return for prior payment of a premium, to provide the insured, in the event of materialisation of the risk covered, with the service agreed when the contract was concluded.”