House insurance policy

Name and commencement: (1) This policy is called the "House Policy". (2) This policy commences once the insured has paid the premium.

(a)"Excess" means the amount the insurer must deduct from the assessed claim amount.

(b)"Exclusion" means a risk the policy does not cover, or a situation for which the policy does not pay or which it does not include.

(c)"Fire" means fire or flame that breaks out accidentally. A fire lit for a purpose and kept within its own bounds is not fire for this policy.

(d)"Consequential loss" means indirect loss caused by an insured risk, or indirect loss that follows from an event.

(e)"Average condition" means the proportionate compensation the insurer pays when, at the time of loss, the sum insured of the damaged property is less than its market value. It is calculated as: compensation = (sum insured of the damaged property × actual loss) ÷ market value of the damaged property.

(f)"House" means a residential building or apartment, built for permanent living and not for business or trade, in which the insured has an insurable interest, together with its movable and immovable property. It includes a building or apartment let for residential use and, for an apartment, the insured's proportionate share of the common area.

(g)"Lightning" means fire, physical damage or high-voltage electric current caused by a lightning strike or electric flash.

(h)"Risk" means the uncertainty of whether an event will or will not happen.

(i)"Schedule" means the schedule forming part of the policy, stating the insured property, sum insured, premium and other details needed to issue the policy.

(j)"Claim" means the compensation the insured asks for, for loss of the insured property.

(k)"Impact" means the effect on the inside or outside of the property of a collision with or blow from an animal, vehicle, train, any moving or stationary object, or any other mechanical object.

(l)"Directive" means the Property Insurance Directive, 2080.

(m)"Material fact" means an important fact that can increase or decrease the risk to the insured property.

(n)"Insurer" means the insurance company issuing this policy.

(o)"Insurance contract" means the bilateral contract between insurer and insured, including the proposal form, policy, schedule, endorsements, amendment schedules, premium receipt and other related documents.

(p)"Insured property" means the house, and the goods and property within the house premises, covered by this policy as stated in the schedule and in which there is an insurable interest.

(q)"Sum insured" means the total insured amount stated in the schedule that the insurer provides for loss.

(r)"Policy" means the insurance contract between insurer and insured.

(s)"Premium" means the amount the insured pays the insurer for insuring the property.

(t)"Insured" means the person or organisation taking the insurance, or the policyholder.

(u)"Earthquake" means fire or other damaging events caused by an earthquake.

(v)"Basic details" means the important details needed to analyse the risk to the insured property and its extent, set the premium, and decide whether to accept the proposal.

(w)"Cover" means the insurer's agreement to compensate loss of the insured property.

(x)"Explosion" means an internal or external explosion of any machine or equipment, or an explosion of any other kind.

(y)"Pro-rata rate" means the rate for a stated period in proportion to the rate for one year.

(z)"Loss" means damage, harm, spoiling or destruction resulting from an event.

(aa)"Compensation" means the claim amount the insurer pays the insured as set out in the policy.

(bb)"Authority" means the Nepal Insurance Authority under section 3 of the Insurance Act, 2079.

Cover: the insurer compensates direct physical loss to the insured property (the house, the house premises and the property within the premises) caused by the perils below.

(a)Fire: loss caused by fire, and loss caused while putting out a fire.

(b)Wind: loss caused by wind, storm, gale or tempest; by cyclone or tornado; and by any kind of atmospheric disturbance.

(c)Water: loss caused by hail, snow or snowstorm; by flood, inundation or submersion; and by the blocking, overflow, leaking or bursting of pipes, tanks, dams, ponds, sprinklers, drains, water outlets or anything else.

(d)Earth: loss caused by earthquake, and by ground shaking from any explosion.

(e)Falling or sinking: loss caused by landslide; rockfall; mud or debris flow; falling or sinking of land, mounds, soil, sand, pebbles or stones; and falling or sinking of banks, paths, floors or roads.

(f)Lightning: loss caused by lightning.

(g)Explosion: loss caused by explosion or implosion.

(h)Aerial objects: loss caused by aircraft, rockets or flying objects; meteorites or unidentified flying objects; any machine, equipment or object arriving suddenly from the sky; and the sonic boom of flying objects.

(i)Impact: loss caused by a vehicle, train, animal or other moving object; by a tree, plant, pole, wire, goods, machine or other external object; or by another building or structure striking, touching, falling on or hitting the property.

(j)Spontaneous combustion: loss caused by spontaneous or internal combustion, or by self-ignition.

(k)Riot and terrorism: loss caused by riot, strike, malicious acts, terrorist and destructive activities, and sabotage.

(l)Other: loss caused by missile testing operations.

(a)Extra benefit — architect, engineer or surveyor fees: paid up to 3% of the assessed claim amount, within the sum insured.

(b)Extra benefit — debris removal: the cost of removing or clearing the debris of damaged property, up to the lower of Rs 10 lakh or 10% of the assessed claim amount, within the sum insured.

(c)Extra benefit — accident: if the insured or up to five members of the insured's family suffer an accident inside the house premises from an insured peril, the insurer pays: death, loss of both hands or both legs, or total loss of sight in both eyes — Rs 7 lakh per person; loss of one hand at the wrist or one leg at the ankle or above — Rs 3 lakh per person per hand or leg; loss of a thumb or big toe — Rs 1 lakh per person per thumb; loss of any other finger or toe — Rs 50,000 per person per finger; injury to any other part — a proportionate amount on a doctor's recommendation.

(d)Extra benefit — theft, robbery or burglary: the insurer compensates loss from theft, robbery or burglary, or an attempt at it, in the house or house premises.

Exclusions: whatever else this policy says, the insurer does not compensate loss caused by the following.

(a)Consequential loss arising from any loss: loss or reduction of income or profit; loss from delay; loss or reduction of goodwill or reputation; loss from interruption of production; and loss due to the market.

(a)Breakdown of machinery: loss to a machine or equipment caused by its own breakdown. Loss to other property (other than the broken-down machine) caused by it is covered.

(b)Electrical equipment: loss to electrical and electronic equipment from high voltage caused by lightning or other causes. Loss to electrical or electronic equipment from a direct lightning strike is covered.

(c)Computer data: loss of information and data held on computers. Physical loss to computers and computer equipment is covered.

(d)Action by an authorised body: loss caused for any reason by an authorised body demolishing, setting fire, using water or acting in any other way.

(e)Theft in these cases: theft, robbery or burglary, or an attempt at it, by the insured or a family member living permanently with the insured; by a person taking property through fraud; and loss from wear and tear, mechanical or electrical breakdown, breakage, depreciation, gradual deterioration, inherent defect, frost, rain, dew, weather effects, insects, or the process of new construction and demolition.

(f)Accident in these cases: no claim is paid for the death of the insured or a family member in an accident caused by intoxicating drugs; insanity or mental disorder; taking part in any race or dangerous sport; unlawful activity; or suicide or attempted suicide.

(g)Radioactive material and weapons of mass destruction: loss from contamination by radioactive material or waste; and loss from the use of nuclear, chemical or biological weapons of mass destruction.

(h)War or war-like conditions: loss during military mutiny, usurped power, siege or war, invasion, act of a foreign enemy, any war-like operation, civil war or similar conditions.

(i)Third-party loss: liability to a third party arising from the insured's property.

(j)Other: loss from a change in the nature of goods; from pollution or contamination by other substances; and during drying or heating.

Proposal and acceptance: (1) Before the policy is issued the insured must fill in the proposal form completely and give it to the insurer. (2) The policy will not be issued with details different from those in the proposal form. (3) The insurer must notify the insured before the insurance period is about to end.

Premium calculation: the premium is calculated under the Property Insurance Directive, 2080.

Premium payment: (1) The premium is not treated as paid until the insurer issues a signed and stamped receipt. (2) The policy is not issued until the premium is paid.

Interpretation: (1) The policy, proposal form, schedule, endorsements, amendment schedules and premium receipt are read together as one insurance contract, not separately or in parts. (2) Special words and phrases carry the meaning with which they are used. (3) The main and technical insurance terms mean what the definitions section says.

False statement: the insured is treated as having given a false statement if they give false basic details they know about the building or place where the insured property is; hide the facts needed to analyse the risk and state something false; or leave out a material fact.

Insurer not bound to pay: the insurer is not bound to pay a claim if a false statement was given under clause 10, or the insurer's written consent was not obtained under clause 17. Before refusing a claim the insurer must prove these facts.

Not yet confirmedNo compensation: the insured gets no compensation if the claim is fraudulent; if the insured or someone acting for them gives a false statement during the claim to gain an unfair benefit; if no complaint is made to the Nepal Insurance Authority within six months of the insurer rejecting the claim; or if no appeal is made to the High Court within 35 days of the Authority deciding in the insurer's favour. Before refusing payment the insurer must prove these facts.

Not yet confirmedCancellation: (1) The policy is cancelled automatically if no proposal form was filled in; if the policy was issued without the full premium reaching the insurer's bank account; if property without insurable interest was insured; if the policy was issued on a bank guarantee of more than thirty days; if all the insured property is moved from the location stated in the policy to anywhere other than a place covered under this same policy; or if the policy is not transferred to the new owner within sixty days of a change of ownership. (2) The insurer may cancel the policy if the insured asks; if the Nepal Insurance Authority directs it with reasons; or if the insured property is proven to be illegal. (3) When cancelled at the insured's request, the insurer keeps premium for the period in force at the short-period rates (up to 1 month 15%, up to 3 months 40%, up to 6 months 70%, up to 9 months 85%, over 9 months the annual premium) and refunds the rest; nothing is refunded if a claim has already been made. (4) If the insurer cancels, it must give the insured 15 days' notice and refund the premium for the remaining period pro rata.

Contribution: (1) Property insured under this policy may not also be insured under another house or property policy. (2) If for any reason it is also insured with another insurer, the insurer pays only its proportionate share of a claim. (3) If compensation is also payable under a marine policy, this policy pays only the balance after the marine policy payment.

Subrogation: (1) If the insured can also recover the loss from another party, on being compensated by the insurer they must hand that right to the insurer. (2) The insurer may take any suitable action at any time to recover from the other party. (3) Where the insured must do this themselves they must do so, or give the insurer written permission. (4) The cost is borne by the insurer.

Under-insurance: (1) If, when a loss is assessed, the sum insured is less than 85% of the market value of the damaged property, the insurer pays under the average condition formula. (2) Where there is more than one insured item, this applies to each item separately. (3) The average condition does not apply when the loss is no more than 10% of the sum insured or Rs 10 lakh, whichever is lower, or in a total loss.

Alteration and abandonment: the insurer's written consent must be obtained before a loss if the trade or production process changes; if a change in use of the insured building, or the building holding the insured property, significantly increases the risk; or if that building stays unoccupied for more than sixty (60) days.

Change of ownership: (1) Except for inheritance under law, if ownership passes from the insured to another person or organisation the policy must be transferred within thirty (30) days. (2) On application the insurer must transfer it at once, free of charge.

Claims: (1) The insurer does not pay more than the sum insured. (2) After an event not excluded by the policy, the insured must at once try to reduce the loss, and report to the police if the loss is from fire, riot or terrorism, or a criminal act, or is suspected to be. (3) Within 35 days of informing the insurer, or any longer time it allows, the insured must provide: the origin, cause and circumstances of the event; a detailed claim based on the value of the damaged property at the time of loss (excluding any profit); evidence such as statements, plans, maps, account books, vouchers, copies and invoices; and details of any other insurance on the property. (4) On learning of a loss the insurer contacts the insured and helps with the claim. (5) Any number of claims can be made in one period; the insurer will not reject a claim because several have been made.

Excess: (a) for loss to insured property from earthquake and water-related perils, 5% of the assessed claim amount; (b) for loss from any other cause, 1% of the assessed claim amount. The excess is worked out separately for each insured item, not on the total claim. (c) No claim may be made for less than Rs 5,000.

Depreciation: (1) The insurer deducts depreciation when working out compensation. (2) For assessing claims: buildings 2% a year; household machinery 10% a year; other property as per rules. (3) Depreciation may never exceed 50% of the sum insured in total.

Insurer's rights: (1) After a loss the insurer may enter, take possession of or take charge of the damaged building or premises; take charge of any of the insured's property there or the damaged property, and examine, sort, arrange, remove or manage it; and sell or dispose of damaged property itself or through those concerned. (2) The insurer may choose to repair, replace or substitute the damaged property or any part of it, or pay cash, itself, through another company or with other insurers; but where the schedule sets a method of compensation, that method must be used. (3) When replacing or substituting, the insurer is not bound to make it exactly as before, but must try to restore it as far as possible.

Insured's duties: (1) comply with all conditions of the policy; (2) not abandon any property, whether or not the insurer has taken charge of it; (3) take reasonable care of the insured property (standard of care), maintain it and take suitable precautions against loss; (4) cooperate fully with the police, the insurer and other authorised bodies during claim inquiries, investigations or surveys; (5) inform the insurer on learning of any increase in risk; (6) gather the evidence needed to establish the claim.

Reinstatement of sum insured: (1) After each claim in the period, the sum insured for the rest of the period falls automatically by the claim amount. (2) If the insured wants to keep the full sum insured, they pay a premium proportionate to the claim amount, and the insurer restores the original sum insured at once.

Time limit: the policy ends at midnight on the stated expiry date.

Where this policy may not be issued: for risks covered under motor, marine, aviation, engineering, agriculture, livestock and herbs, cash and goods-in-transit, bankers' indemnity and other miscellaneous policies.

Dispute resolution: (1) The insured may complain to the Nepal Insurance Authority, with full details, within six (6) months if the insurer refuses to accept the claim application; refuses to pay the claim; the insured feels the amount offered is too low; the insurer pays or tries to pay someone other than the insured, policyholder or legal heir; or any other insurance or claim dispute arises. (2) If dissatisfied with the Authority's decision in the insurer's favour, the insured may appeal to the High Court within thirty-five (35) days of the decision.

In writing: (1) All notices, letters and correspondence between insurer and insured are in writing. (2) The insurer keeps one copy of the policy and gives one to the insured. (3) The insurer keeps proof that the insured received the policy safely with its own copy.