Government Doubles Third-Party Motor Insurance Coverage Limit to Rs 1 Million

Kathmandu — The government has doubled the coverage limit for third-party motor insurance as part of the budget for fiscal year 2026/27.

Presenting the budget in Parliament, Finance Minister Swarnim Wagle announced a 100 percent increase in the maximum compensation limit under third-party vehicle insurance.

With the revision, the coverage ceiling has been raised from Rs 500,000 to Rs 1 million, providing greater financial protection to victims of road accidents.

While the measure is expected to strengthen compensation benefits for injured parties and accident victims, it is also likely to increase the risk exposure of insurance companies.

Industry observers note that the higher liability limit could lead insurers to revise premium rates upward to reflect the additional risk. If premiums increase, the impact is expected to be felt most by owners and operators of public transport vehicles, including buses, microbuses, taxis and trucks, which are already subject to relatively high insurance costs.

The policy forms part of the government’s broader effort to enhance road safety and improve insurance protection for the public, while expanding the role of insurance in managing transportation-related risks.