Agriculture and Livestock Insurance in Nepal

The Insurance board has finally introduced the most awaited directive on agriculture and livestock insurance. This is the first time agricultural insurance policy has been introduced in the country and it has been mandatory for all the non-life insurance companies to introduce policies in these sectors.

In the directive, the Insurance Board has  introduced six insurance products on paddy, vegetables, potato, poultry (chicken and duck), fruits (orange and junar) and livestock.

As per the directive, crops insurance covers the production cost incurred till the crops/horticulture are ready for the harvest. This includes cost involved in purchase of seedlings and fertilizers, and labor charge, among others. However, the directive says, insurance coverage will not be provided in case plantations are done on less than eight aanas (2,738 sq ft) of land in hilly region and one kattha (3,645 sq ft) of land in the Terai.

Meanwhile, livestock and poultry insurance will provide coverage to all types of cows, oxen, buffalos, yak, female yak, sheep, goat, swine, chicken and ducks based on sum insured fixed by the Insurance Board. Maximum sum insured for high-breed dairy cow and buffalo are Rs 150,000 and Rs 125,000, respectively. Similarly, sum insured for water buffalo and ox raised for reproductive purpose has been fixed at Rs 70,000, while insurance coverage for water buffalo's and oxen used for transportation purpose has been fixed Rs 40,000. Likewise, sum insured for sheep and goat raised for meat production cannot exceed Rs 8,000, while maximum insurance coverage for different types of chicken and duck have been fixed at Rs 1,200 and Rs 700, respectively.

Except in the case of commercial poultry where they annually pay 6% of the sum insured, farmers can buy the insurance policies by paying 5% of the sum insured and the policy agents can charge the commission up to 15%. But, if the insurant buys the policies in a group or by being a member then 15% discount is provided.

But in case the insured plant, animal or fowl has a life span of less than a year, then the premium amount will be calculated based on production cycle. The directive also says claim settlement process should be wrapped up within 30 days of first reporting the event.


The directive can be found in this link