In Nepal, motor vehicle insurance policies and their pricing, including bikes and cars, are regulated by the Nepal Insurance Authority (NIA). The key directive guiding these policies is the “Motor Insurance Tariff related Directive, 2073” issued by NIA. This directive outlines various types of motor insurance policies, but in this article, we will focus on insurance provisions for private bikes and cars.
Types of Motor Insurance Policies
The directive classifies motor insurance into three main categories based on vehicle type:
- Motorcycles (Bikes and Scooters)
- Private Vehicles (Cars, SUVs, etc.)
- Commercial Vehicles (Trucks, Pickups, Buses, etc.)
For bikes and cars, the policies can be divided into:
- Comprehensive Insurance: Covers both own damage and third-party damage.
- Third-Party Liability Insurance: Covers damage to third parties, including property damage, accidents, or death.
Mandatory Insurance
The “Motor Vehicles and Transport Management Act, 2049” mandates third-party liability insurance for all vehicles. Therefore, insurance shall cover damage to third-party property and injuries or death of third parties. Additionally, for vehicles, the act requires insurance coverage of the driver, passengers, and any other personnel like helpers or security staff. This means both the rider and the pillion rider of a bike must also be insured. One cannot renew the registration of their vehicle (Bluebook) without purchasing these insurance coverages.
For bike or scooters, rate is standard for all these mandatory coverage as bikes generally have two people capacity including rider and pillion rider. In case of car, seating capacity determines the rate.
Optional Insurance Coverage
While third-party liability insurance is mandatory, coverage of own damage is optional. Own damage covers your vehicle against damages caused from external factors or perils like water, lightning, thunder, theft, accidental collision etc. You can choose to cover own damage of your vehicle under comprehensive policy (which also includes third party liability). Additionally, coverage for Riot, Strike, Malicious Damage, Sabotage, and Terrorism (RSMDST) is also optional and requires an additional premium. The premium for these optional covers is determined based on the vehicle’s value, seating capacity, and age.
Other optional facilities include, but may not be limited to:
- Towing Cover: Covers the cost of towing the vehicle after an accident.
- Recovery: Covers the cost of bringing an overturned or damaged vehicle back to the road from a pit or accident area.
- Other roadside assistance insurance coverages
Coverage and Limits
In case of severe injury or disability of the insured individuals, the coverage limits are as follows:
| Type of Injury/Disability/Loss | Coverage per Person (NPR) |
|---|---|
| Permanent Disability | 5 lakhs |
| Loss of Both Eyes | 5 lakhs |
| Permanent Damage of Both Hands or Legs | 5 lakhs |
| Permanent Damage of One Hand/One Leg and Loss of One Eye | 5 lakhs |
| Loss of One Eye Only | 2.5 lakhs |
| Permanent Damage of One Hand or One Leg | 2.5 lakhs |
| Damage to Other Organs | Based on bodily damage ratio as determined by a medical expert |
| Medical Expenses | Up to 3 lakhs (based on actual expenses) |
If an insured individual suffers more than one of the above mentioned losses, such all losses shall be payable by the insurance company without exceeding the cap of NPR 5 lakhs per person.
In case of death, the beneficiary shall receive NPR 5 lakhs, plus up to NPR 3 lakhs for medical expenses if the person dies during treatment.
The maximum third-party liability limits are:
- Bike-Related Policies:
- Property Damage: NPR 25 lakhs
- Human-Related Damage: NPR 25 lakhs
- Car-Related Policies:
- Property Damage: NPR 80 lakhs
- Human-Related Damage: NPR 80 lakhs
Premium Rates
The premium rates for third-party and comprehensive insurance, along with RSMDST, are guided by the “Motor Insurance Tariff related Directive, 2073”. As a result, the pricing across all non-life insurance companies in Nepal is relatively consistent. The decision to choose a particular company should be based on factors such as convenience and the quality of customer service, including how quickly and hassle-free the company issues the policy or settles the claim.
The premium rates to be charged for bike-related policies are outlined in Annexure 7 of the directive, while those for car-related policies are outlined in Annexure 8. Discounts and no-claim bonuses are also available as follows:
Discounts
- Third Party and RSMDST Policies: No discount is allowed.
- Comprehensive Policies: A 10% discount is provided, if the policy is purchased directly from the insurance company without any agent, on premium of items other than third party and RSMDST.
No-Claim Bonus
- 15% if no loss in the past year.
- 25% if no loss in the past two consecutive years.
- 50% if no loss in the past three or more consecutive years.
No-claim bonus is not applicable in premium of RSMDST.
For more detailed information on deductions, exclusions, and other specific terms, it is advisable to read the insurance policy or consult with underwriters/agents of the non-life insurance companies in Nepal.
Conclusion
Choosing the right insurance policy for your bike or car in Nepal involves understanding the mandatory requirements, optional covers, and the benefits of each type of policy. By considering factors such as the vehicle’s value, seating capacity, and your personal preferences, you can select a policy that offers the best protection for your needs. Always ensure that you review the terms and conditions carefully and consult with insurance professionals to make informed decisions. Also, since the premium rate are similar among companies, pick the one based on their reputation of customer service and claim settlement.
For further details, you can refer to the “Motor Insurance Tariff related Directive, 2073” or consult with your insurance provider.
This comprehensive guide aims to provide a clear and structured overview of car and bike insurance in Nepal, helping you make informed decisions about protecting your vehicle and yourself on the road.
