Kathmandu. Banks and financial institutions or any business organization have to transfer cash from one place to another on a regular basis. The office is compelled to transfer the money collected from the service recipient from one branch to another, deposit it in the bank, withdraw it from the bank account for payment.
Apart from this, Nepal Rastra Bank should also repatriate cash from India and third countries or to provide cash as required to the regional offices of the Rastra Bank. The Nepal Rastra Bank (NRB) conducts cash transfers within the security of the Nepal Army. Banks and financial institutions move cash with the help of armed or unarmed private security personnel. Private business organizations may not have such a security arrangement.
Therefore, on-way cash insurance is designed to protect against the risks that may occur during cash transactions or cash transfers. The Insurance Authority has implemented the ‘Monetary Damage Insurance Directive, 2081’ to provide insurance for such risks. In this guideline, the authority has outlined specific rules, risk factors and exceptions for cash-moving businesses, and has implemented broad guidelines governing monetary damage insurance.
Transit cash is defined as the transportation or transfer of cash in a specified geography within Nepal under the control of an authorized person of an insured institution. This insurance policy protects against loss of cash, cash equivalents, and securities due to theft, theft, hold-up, or robbery. This applies regardless of whether an overnight stop (night stay) is required for risky travel. It also covers losses due to employee negligence or fraudulent acts that go with cash.
According to NEA, the premium rate for transit cash insurance has been fixed at 1.5% for the maximum amount of coverage (‘C’) of the cash transported at any point of time.
For a cash insurance policy, a specific sum insured is determined on the basis of the amount of cash transferred in a one-time transaction, cash equivalents and the maximum amount of securities.
Although the risk of cash transportation is covered, the claim under this insurance policy is not paid in case of loss of cash during the transaction. This insurance policy does not cover cash transported by post or courier. It covers fraud or dishonesty committed by insured business owners, partners or directors and employees.
Insured entities are required to maintain all the details and documents confirming cash transactions and cash transfers on a daily basis. Insurers should be allowed to inspect these details at any time.
This insurance also includes provisions for compulsory excess and voluntary surplus. Under this, the insured company itself has to bear the minimum amount of loss in cash due to insurance risk.
