In practice that's how I've always looked at it but Mark's point that the bike needs to be legal in your home country to be legally used in another country is also something I understood as well. Quite where that understanding came from I'm not sure though. It may be something that was agreed between European countries pre EU or maybe it forms some part of the various international transport treaties that international driving licences for example are the visible face of, or it may be something else totally. In reality though nobody is going to delve that deeply even if it does apply.
This comes up most often not so much with insurance but with MOT's if you're out of the country for more than a year. There's no (easy / cheap - I suppose you could always fly the bike back once a year for an MOT  ) way round it and everybody takes a pragmatic approach (ie don't bother).
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