Earthquake, flood, fire? Rs 5,000 is all you need to protect a Rs 10 million home

KATHMANDU: A Nepali household can now insure a house worth Rs 1 crore (10 million) for just Rs 5,000 a year, as home insurance emerges as a critical safeguard against disasters like earthquakes, floods, fire, and landslides, all too common in Nepal’s urban and rural areas.

While owning a house is a dream for many working-class Nepalis—especially in urban centers like Kathmandu, Pokhara, and Bharatpur, built through years of savings—very few consider home insurance, despite the growing threats of natural and man-made disasters. In contrast to global practices, home insurance in Nepal has less than an 8% share in the total non-life insurance portfolio, according to insurance companies.

Recent government efforts, especially under the Property Insurance Directive 2080, allow insurance companies to issue home insurance policies for residential buildings valued at up to Rs 20 million, with an insurance premium of just 50 paisa per thousand rupees insured. This translates to Rs 5,000 annually for a Rs 10 million home.

What Does Home Insurance in Nepal Cover?

According to Schedule 4, Clause 2 of the directive, the insurance provides coverage against:

Fire, explosion, lightning, and water damage during firefighting

Windstorms, hurricanes, tornados, and other atmospheric disturbances

Earthquakes, landslides, and rockfalls

Accidents from vehicles, aircraft, and falling objects

Riots, strikes, vandalism, and terrorism

Theft, robbery, and burglary within the premises

Personal accidents to household members up to Rs 7 lakh per person, including loss of limbs or eyes

However, houses used for commercial purposes, those made from mud, thatch, bamboo, or wood are excluded.

Legal Framework and Claim Rejection Grounds

A claim can be denied if:

Fraud or misrepresentation is detected

No complaint is filed with the Insurance Authority within 6 months after a claim denial

False information is provided regarding the insured property

In the wake of the 2015 Gorkha earthquake, there was a surge in demand for home insurance, but the momentum did not sustain. According to Ram Koju, Deputy Director at the Nepal Insurance Authority, public awareness remains low, despite efforts by the regulatory authority to promote home insurance in both urban and rural municipalities.

Urbanization, Religious Tourism, and Cross-Border Relevance
As real estate in Nepal booms, especially near religious sites like Lumbini, Janakpur, Pashupatinath, and Muktinath, the India-Nepal travel corridor is also seeing rising tourist and property activity. With a large number of Indians investing or traveling frequently for religious and medical tourism, ensuring residential properties near such hubs is gaining relevance.

Low Awareness, High Risk
Despite the affordability, many people are unaware they’re covered—especially when banks insure homes as a condition of housing loans, says Chandranath Upreti, Spokesperson for Nepal Insurance Company. “Many homeowners don’t even know their house is insured,” he said.

Experts like Hanshaman Dangol, Underwriting Head of NECO Insurance, believe the product is excellent but underutilized due to lack of public education. “Home insurance is one of the cheapest and most effective products. Yet, people either don’t understand it, or they ignore it,” he noted.

Insurance company executives agree that natural disasters like earthquakes, floods, and landslides can cause massive property damage, and home insurance offers a critical buffer. “People who can build Rs 5 million or Rs 10 million homes can surely afford Rs 5,000 a year for protection,” said a Deputy CEO at a leading insurance company.

Regulatory Push Needed

While some municipalities have started mandating home insurance during construction approval processes, industry experts argue that government intervention and premium subsidies for low-income households could dramatically expand home insurance coverage.

“If every municipality starts requiring home insurance at the time of land tax or rental registration, just like motor third-party insurance, we could see a transformation,” Dangol added.

Insurance professionals also urge local governments and central agencies to launch joint initiatives targeting rural households, disaster-prone areas, and regions with growing tourism, religious significance, or cross-border migration.

As Nepal continues to face frequent natural calamities, stakeholders believe home insurance is no longer a luxury but a necessity, especially with premiums starting as low as Rs 5,000 annually for houses worth millions.