Separate Insurance Policy for EVs Coming Soon: Nepal Insurance Authority Initiates Policy Revision Process

Separate Insurance Policy for EVs Coming Soon: Nepal Insurance Authority Initiates Policy Revision Process

The Nepal Insurance Authority has initiated the process of revising the “Motor Insurance Tariff Directive, 2073” with the goal of introducing a separate insurance policy specifically for electric vehicles (EVs).

Currently, insurance companies in Nepal determine motor insurance premiums based on the vehicle's value, regardless of whether the vehicle runs on petroleum or electricity. The existing directive, issued in 2073, does not distinguish between internal combustion engine (ICE) vehicles and EVs, and as a result, both types have been insured under the same structure.

However, with EV adoption growing rapidly in Nepal over the past five years, insurers and stakeholders have raised concerns that the current policy no longer suits the unique risks and repair costs associated with EVs. The Insurance Authority has acknowledged the need and formed a committee led by Director Nirmal Adhikari to study options, including issuing a completely new directive, revising the existing one, or introducing a separate circular addressing EV-specific provisions.

EVs come with unique components like batteries, electric motors, and charging systems—all of which differ significantly in cost and risk from traditional vehicles. Battery malfunction or fire poses a higher risk, and while general maintenance costs may be lower, any critical issue can result in expensive repairs. This calls for a distinct risk assessment model and insurance policy.

The Authority also plans to factor in the higher price of EV spare parts, increased servicing expenses, and the overall vehicle cost while determining insurance premiums. As a result, EV owners may need to pay slightly higher premiums once the new policy is implemented.

Earlier, NADA representatives had also urged the Authority to draft a separate EV insurance policy based on international practices. NADA has expressed readiness to assist in policy development, particularly by studying South Asian market practices to tailor an appropriate model for Nepal.

• Nepal Insurance Authority is drafting a separate policy or directive for electric vehicles.

• EVs’ unique components (like batteries) pose different risks and costs than petrol or diesel vehicles.

• New premium rates are being considered based on EV-specific risks and repair costs.

• Coordination ongoing with NADA and insurance companies.

• Final policy could either be a new directive or a subsection within the existing one.

• EV owners should expect slightly higher premiums due to elevated risks and part prices.

With the increasing number of electric vehicles on Nepali roads and their fundamentally different nature compared to ICE vehicles, the Nepal Insurance Authority is rightly stepping up to create a more relevant, transparent, and risk-sensitive insurance policy framework for EVs.