Kathmandu: There is a provision that insurance claims will not be paid if an accident occurs while driving without a vehicle driver’s license (license) or under the influence of intoxicating substances.
The Nepal Insurance Authority’s directive on motor insurance rates itself states that “the driver must have a license to drive the said vehicle and must not be deemed ineligible to hold or obtain such a license.”
Additionally, the insurance policy issued by the insurer specifies that “the person or driver operating the insured vehicle must have a license to drive that vehicle.” However, despite such clear provisions, dozens of complaints reach the regulatory authority every year demanding insurance claim payments for accidents that occurred without a license or under the influence of alcohol.
According to Puran Bahadur Thapa, Deputy Director and Information Officer of the Insurance Authority, such issues continue to arise in complaints related to motor insurance. “Complaints keep coming in saying that claims are not paid even for accidents without a vehicle license or under the influence of alcohol,” Thapa says. “Since this matter is clearly stated in the law, the Authority has been resolving them accordingly.”
Everyone should be aware that insurance claims will not be paid for accidents that occur under the influence of alcohol or drugs, or without a license. However, not only in cases without a license but also in situations where accidents happen while driving under the influence of alcohol, the insured parties have been filing complaints with the Authority, claiming that insurance companies have not paid the claims.
This situation wastes time of insurance companies as well as the Insurance Authority and has a negative impact on the insurance sector itself. Chunky Kshetry, Chief Executive Officer of Sagarmatha Lumbini Insurance Company (SALICO), says that even though people know they won’t get claim payments in such situations, there is a trend of approaching insurance companies and the Authority in the hope that they might get it.
“Driving without a license or under the influence of alcohol is the driver’s negligence. Our law clearly states that no payment will be made in this regard, which the insured party should understand.” Kshetry says. “But still, there is a practice of filing claims in the hope of getting payment.”
He added that even when insurance companies explain this to those who come to file claims, they file complaints against the insurer and go to the Authority.
On 8 July 2022, a scooter accident resulted in the death of driver Khadga Prasad Sharma. After the accident, the insured party demanded claim payment from the insurance company. Himalayan Everest Insurance Limited informed that payment would not be made because the person driving the insured vehicle did so without a driver’s license.
Driving without a license or under the influence of alcohol is the driver’s negligence. Our law clearly states that no payment will be made in this regard, which the insured party should understand.
After that, Saraswati Sharma filed a complaint with the regulatory Nepal Insurance Authority, demanding an investigation and payment of the insurance amount as per the policy, claiming that the insurance amount was not paid. However, she could not submit proof of the driver’s license to the Authority.
As a result, the Insurance Authority ruled that the insurer is not liable because the accident occurred while driving the insured vehicle in violation of the policy condition that the person driving must have a license. The Authority decided on 1 May 2024 that payment is not required after it was found that the person who died in the motorcycle accident did not have a motorcycle driver’s license.
Similarly, on 30 November 2022, in Kamal Rural Municipality, Jhapa District, a scooter went out of control and crashed into a road divider, causing an accident. Both the scooter driver and the passenger were injured, but during treatment, the passenger Shanti Jagebu died. After that, the insured party filed a claim with Sanima GIC Insurance Company to receive the insurance amount.
However, the company responded that payment would not be made because the driver was found to have consumed alcohol. The directive on motor insurance rates states that “the insurer will not provide any compensation for injuries caused intentionally, suicide or attempted suicide, or damages resulting from accidents under the influence of intoxicating substances or drugs.”
Citing this provision, the insurance company stated that payment could not be made. However, after the insurance company said payment could not be made, Dil Kumari Chemjong filed a complaint demanding compensation as per the policy.
After studying and discussing the case, the Authority held a hearing and ruled in May 2023 that no claim payment is required because the driver had consumed alcohol. The insured party cannot receive the insurance amount in incidents where it is confirmed that the driver consumed alcohol or drove without a driver’s license. In this complaint as well, the Authority made the decision that the insured would not receive payment based on the same grounds.
On 11 July 2022, in Tulsipur Sub-Metropolitan City, Dang, motorcycle number Ra.7 Pa 3649 hit 11-year-old pedestrian Sankalp Basnyat. The injured child died during treatment. This dispute also reached the Authority.
In this incident as well, the driver did not have a driver’s license. However, the deceased’s relatives were provided with Rs 500,000 as funeral expenses and compensation under the supervision of the District Administration Office Dang. After that, New KCI Automobiles, which had insured the motorcycle, filed a claim for the insurance amount with Prabhu Insurance Limited.
During the investigation, after the Tulsipur Area Police Office certified that motorcycle driver Bishnu Prasad Bhandari did not have a driver’s license, the insurance company also stated that no insurance claim payment was required. However, a complaint reached the Authority demanding that the insurance company pay the claim.
Motor insurance holds a significant share in the business of non-life insurance companies. In the first quarter of the current fiscal year (approximately July to October), non-life insurers have brought in nearly Rs 13 billion in business.
In this complaint, after it was certified that the driver did not have a license, the Authority ruled on 19 April 2023 that the insurer has no liability because the vehicle was driven in violation of the policy conditions. These complaints and decisions are just a few representative incidents. In reality, many such complaints reach the Insurance Authority.
CEO Kshetry says it is not appropriate that despite the law clearly stating that no insurance claim payment will be made for accidents without a license or under the influence of alcohol, many such cases reach the regulatory authority every year. He added that although the law provides for no payment, in some cases where people have died, they have been providing payments.
Motor insurance holds a significant share in the business of non-life insurance companies. In the first quarter of the current fiscal year (approximately July to October), non-life insurers have brought in nearly Rs 13 billion in business. Through motor insurance, companies have collected a total premium of Rs 4.26 billion.
According to the Authority’s data, 14 non-life insurance companies and four micro non-life insurance companies have collected this amount through motor insurance, which is 32.98 percent of the total premium earned. Besides this, the main business of non-life insurance companies has been in property insurance, engineering insurance, and so on.
According to the Authority’s data, as of the end of Bhadra in the current fiscal year 2082/83 BS ( September 2025), 23 complaints were registered at the central office and nine at provincial offices, totalling 32 complaints. Including 394 pending applications from last year, a total of 426 complaints were received, out of which 23 were resolved through court decisions and four through agreements, totalling 27 complaints settled. However, 399 complaints remain to be settled.
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