6.

The insurance in Nepal

a) The insurance boards.

b) Settlement of dispute

Insurance law in Nepal is structured around three main categories: life insurance, non-life insurance, and
re-insurance. The regulations, set by the Insurance Board, govern each category. Life insurance covers
products such as whole life, endowment, and term life insurance, with the board having the authority to
introduce additional categories. Non-life insurance encompasses various risks including fire, motor,
marine, engineering, aviation, and miscellaneous insurance. Terms and conditions for both life and non-
life insurance policies are regulated by the board. Re-insurance allows insurers to transfer risks to other
companies.

The Laws Governing Insurance in Nepal are:

1. Insurance Act, 2079 (2022)

2. Insurance Regulations, 2049 (1993)

The Authorities governing Insurance in Nepal is Nepal Insurance authority.

Property Insurance provides the coverage against loss or damage caused by Accidental Fire and
Lightening. The properties that can be insured under this insurance are Office & Residential Building,
factory Building, Plant & Machinery and various types of equipment. Standard Fire Insurance policy
covers perils: Fire, Lightning, and Earthquake. It may include coverage against loss by windstorm or
earthquake and other allied risks when such risks are covered by an extension to fire insurance policies
or under separate policies.

Motor Insurance is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary
use is to provide financial protection against physical damage and/or bodily injury resulting from vehicle
accidents. This Insurance covers both the damage of the vehicles and the Third-Party Liability under
Comprehensive Vehicle Policy. It covers the loss or damage to the motor vehicles and/or its accessories
while they are on land or in transit. This insurance additionally offers financial protection against theft of
the vehicle.

The types of Motor vehicle insurance policy:

1. Car Insurance: Car Insurance gives coverage against accidental loss or damages to own car or to
a third party. The amount of premium would depend on the make & value of the car, state from
where it is registered and manufacturing year.
2. Two-Wheeler Insurance: It provides protection to bikes and scooters. The features of the two-
wheeler policy are similar to car insurance.
3. Commercial Vehicle Insurance: Commercial vehicle insurance helps all commercial vehicle
drivers to reduce losses they might incur due to damage to their vehicle. Commercial vehicles
include those which are not used for personal purposes, like goods carrying vehicles.
4. Third Party Insurance Policy: It covers the third person who has been injured in an accident. The
policy doesn’t provide any direct benefit to the insured.
5. Comprehensive Insurance Cover: This cover is an add on to the third-party insurance plan and
protects the owner from financial losses caused by damage or theft of the insured vehicle.
Besides ensuring vehicles, it also provides third-party coverage.
6. Liability only Policy: It provides third-party liability cover for bodily injuries and property damage. It
also includes personal accident cover for the driver.
Micro Insurance

Micro Insurance is purchased by agricultural producers, farmers and others to protect themselves against
either the loss of their crops due to natural disasters, such as hail, drought, and floods. Microinsurance is
a newly emerging type of insurance in Nepal. In case of Micro Insurance, farmers are liable to pay only
25% of the total premium; remaining 75% is subsidized by the Nepal Government so that most of the
farmers are benefited by this policy. Micro Insurance includes:

1. Crops Insurance
2. Fruits Insurance
3. Vegetable Insurance
4. Fish Insurance
5. Cattle Insurance
6. Birds Insurance and
7. Bee Insurance

Marine Insurance

Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport by which
property is transferred, acquired, or held between the points of origin and final destination. It covers transit
by any modes of transit like, sea transit, inland waterways, land transit by road/rail vehicle and transit by
air. The scope of cover depends upon the type of clauses attached with the policy. Mainly these clauses
can be grouped under two categories:

 Institute Cargo Clauses (I.C.C.)

 Inland Transit Clauses (I.T.C.)

Miscellaneous Insurance

 Travel Medical Insurance

Travel Medical Insurance is designed for individuals traveling outside their home country for a certain
period of time. This offers medical expense and emergency medical evacuation coverage while away
from home in a foreign country.

 Personal Accident (PA)

Personal Accident insurance is an annual policy which provides compensation in the event of injuries,
disability or death caused solely by violent, accidental, external and visible events. It is different from life
insurance and medical & health insurance.

 Group Personal Accident (GPA)

Group Personal Accident insurance policy offers benefits like accidental death cover, disability cover. This
policy is beneficial to those organizations where a number of employees is more and it covers all the
employees under one policy.

 Fidelity Guarantee

The policy covers the loss caused by an act of fraud or dishonesty committed by any salaried person
employed by the insured.

 Public Liability
Public Liability Insurance covers one's businesses liability for injuries to another person or damage to
their property. This insurance is your protection if you are found to be legally responsible for personal
injury to a third party or damage to their property. One can ensure more than one unit situated in different
locations under a single policy.

 Product Liability

Product liability insurance covers the cost of compensating anyone who is injured by a faulty product that
a business designs, manufactures or supplies. This Policy pays for any damage or injury resulting from
the use of the insured’s goods or services.

 Cash IN Transit

Cash in transit insurance is a cover which indemnifies the insured against loss of money while carrying it
by an authorized person up to the destination. This type of insurance is beneficial to those organizations
which frequently operates cash transactions.

 Group Medical Insurance

Group Medical Insurance Policy provides medical coverage which includes hospitalization
expenses, medicine, consumables, and diagnostic expenses.

 Health Insurance

Health insurance is a type of insurance coverage that covers the cost of an insured individual’s medical
and surgical expenses.

 Bankers Indemnity Insurance

This insurance provides an indemnity to the bank in case of loss of money/ securities by fire, riot and
strike, burglary, housebreaking, and theft.

 Burglary

This policy covers the contents of business premises against the risk of loss or damage by burglary/ theft.

 Professional Indemnity Policy

This policy is meant for professionals to cover liability falling on them as a result of errors and omissions
committed by them while rendering professional service. Group policies can also be issued covering
members of one profession. Group discount in premium is available depending upon the number of
members covered.

 Jewellers Block Insurance

Jewellers block insurance is extremely important to any retailer, manufacturer or distributor handling high
value items such as jewellery or fine art as a single loss can have a dramatic impact upon overall
business performance.

 Television Insurance
The television insurance policy is designed to indemnify the insured against loss of or damage to the
Television apparatus by:

Accidental external means:-

Fire, Lighting,

Short Circuiting,

Flood and Storm,

Bursting and overflowing of water tanks,

Theft,

Riot and Strike,

Earthquake, fire, and shock