ABC of Motor Vehicle Insurance

Kathmandu: An insurance policy that provides risk cover against the damage or loss of motor vehicles is known as motor vehicle insurance policy. All kinds of vehicles including commercial, non commercial, heavy vehicles, public transport vehicles, light commercial vehicles(LCV), SUVs can be insured under motor vehicles insurance.

The risk covered under motor vehicles insurance are compensation against accidental damage, damage caused to vehicle due to natural calamities, lost of vehicle etc. The third party coverage provides compensation against the actual loss caused to the third party by the insured vehicle. The motor vehicle insurance under motor vehicles insurance has been made mandatory by the Government of Nepal.

Two types of risk coverage:

Comprehensive Insurance: Comprehensive insurance policy covers the risk of any kind of physical damage of the vehicle caused by an accident. It also includes compensation to be paid to the third party for death, or bodily injuries or loss or damage of property.

Some Insurance companies like Shikhar Insurance have introduced customized motor vehicle insurance in coordination with the authorized importer of four-wheelers. Recently, Shikhar Insurance has launched a specialized motor vehicle insurance product ‘auto-plus’ which guarantees the replacement of vehicle incase of the loss of vehicle or total damage caused due to accident. Moreover, daily compensation upto Rs.1500 is payable incase the vehicle remains at the recognized workshop for more than a week for repairing after accidental damages.

Third Party Liability Insurance: If any damage or loss of life or property of the third party caused by the insured vehicle, the insurer will compensate the third party against the actual loss. The vehicle owner won’t have to bear any financial liabilites against the loss caused to the third party.

Geographical Region Covered:

Though the insurance policy is issued by the Nepalese Insurance Company, the motor vehicle insurance coverage includes the territory of Nepal, India, Bangladesh, Bhutan and Tibet. It means any vehicle insured in Nepal can get insurance claim under motor vehicles insurance if the loss caused to the vehicle in any of these geographical regions.

The risks covered:

  1. Fire, Lightning, Explosion, Self-ignition
  2. Earthquake, Flood, Inundation, Landslide, Storm, Hailstorm, Snow, Frost
  3. Accidental external means
  4. Damage to vehicle due to mechanical breakdown,
  5. Theft, Burglary
  6. Whilst in transit etc.
  7. Terrorism Group Risks (Optional Risks)
  8. Third Party Liability covers the liability of vehicle to pay compensation to third party personal injury (incl. Death) and property damage arising out of the use of the insured Motor Vehicle.

Motor Vehicle Insurance does not include:

  • Consequential loss
  • Depreciation, wear and tear
  • Mechanical or electrical breakdown
  • The damage resulting from participating in motor race, durability test and speed test
  • The damage caused by atomic radiation and the radiation of atomic weapons
  • The damage caused by war or war like operation and civil war
  • The claim which is not supported by insurable interest
  • The damage caused by the accident occurred outside the geographical region mentioned in the policy
  • The liability resulting from a contract
  • The damage caused by overuse of the vehicle, exceeding the limitation
  • The damage if the motor vehicle is driven by the person who has no driving licence
  • The damage if the driver is under the influence of alcohol or drugs
  • The damage caused by the accident occurred during the period in which the vehicle is in possession of the government authority

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