The Supreme Court (SC) has mandated four-year third-party insurance for new cars and six-year coverage for new two-wheelers to improve road safety, reduce uninsured vehicles, strengthen Motor Vehicles Act compliance, and introduce technology-driven enforcement with enhanced consumer-friendly insurance policy options.
The Supreme Court of India has issued a landmark directive aimed at strengthening road safety and improving compliance with the Motor Vehicles Act (MVA), mandating that all new cars sold in the country must carry four years of compulsory third-party insurance while all new two-wheelers must be covered for six years at the time of purchase.
The ruling, delivered on Tuesday by a Bench comprising Justices Sanjay Karol and P.K. Mishra, extends the existing mandatory insurance period by one year. Previously, new cars were required to have three years of third-party insurance, while new two-wheelers needed five years of coverage. The court observed that despite the earlier directions remaining in force for nearly eight years, a significant proportion of vehicles continue to operate without valid insurance, undermining the objectives of the Motor Vehicles Act.
The Bench emphasized that compulsory third-party insurance is a critical safeguard for road accident victims and their families. According to the judgment, nearly 56 percent of vehicles on Indian roads remain uninsured, a situation the court described as “shocking” and contrary to the purpose of mandatory insurance laws.
The court noted that uninsured vehicles create serious challenges for accident victims, who often face lengthy legal battles to secure compensation for injuries, disabilities, or loss of life. By extending the insurance tenure at the time of vehicle purchase, the apex court believes compliance with statutory insurance requirements will improve significantly.
The case arose from an appeal filed by National Insurance Company Ltd., which challenged a Telangana High Court judgment awarding compensation to the legal heirs of a deceased vehicle owner. While disposing of the appeal, the Supreme Court expanded its examination to larger issues surrounding non-compliance with Section 146 of the Motor Vehicles Act, which mandates third-party insurance for all motor vehicles.
Although the Insurance Regulatory and Development Authority of India (IRDAI) and the General Insurance Council (GIC) recommended against extending the mandatory insurance period, arguing that longer-tenure policies could increase insurance premiums without significantly reducing the number of uninsured vehicles, the Supreme Court disagreed.
Justice Sanjay Karol, speaking for the Bench, stated that public interest and road safety outweighed the concerns raised by insurance regulators. The court directed the IRDAI to issue the necessary regulatory instructions immediately to implement the revised insurance duration.
In another significant reform, the Supreme Court approved a comprehensive four-layer insurance framework for private vehicles. Under the new structure, every vehicle insurance policy will include mandatory third-party insurance while offering consumers additional optional coverage.
The optional components include legal liability coverage for occupants or pillion riders, personal accident insurance for owner-drivers and passengers, and own-damage insurance to protect the insured vehicle. The court directed insurers to provide a mandatory customer option form, allowing buyers to select these additional covers through a simple checkbox mechanism.
The apex court also instructed the IRDAI to prepare uniform policy wordings for all optional insurance products. It further directed insurers to provide every policyholder with a consumer-friendly information sheet that clearly distinguishes mandatory insurance from optional coverage, enabling customers to make informed decisions.
Recognizing the growing role of technology in law enforcement, the Supreme Court introduced several digital measures to improve insurance compliance across the country.
The judgment directed authorities to integrate Automatic Number Plate Recognition (ANPR) cameras with the Insurance Information Bureau and the VAHAN database. This integration will enable authorities to automatically identify uninsured vehicles and generate electronic challans without manual intervention.
Additionally, the court instructed state police departments to equip enforcement officers with handheld devices or mobile applications connected to insurance databases. This would allow real-time verification of a vehicle’s insurance status during roadside inspections and traffic enforcement operations.
The Supreme Court also called upon the IRDAI and the Ministry of Road Transport and Highways to launch pilot projects enabling citizens to verify vehicle insurance status digitally. It further suggested exploring the feasibility of linking fuel purchases at petrol pumps with valid insurance records to encourage greater compliance with mandatory insurance laws.
Describing technology-driven enforcement as the need of the hour, the Bench stressed that traditional offline mechanisms must be integrated with modern digital systems to ensure effective implementation of insurance regulations across the country.
On the specific dispute before it, the Supreme Court dismissed the appeal filed by National Insurance Company Ltd. and upheld the Telangana High Court’s decision awarding compensation to the family of the deceased vehicle owner. The Bench ruled that a comprehensive insurance policy covered the owner while travelling as an occupant of his own vehicle and cautioned courts against adopting an overly technical interpretation in motor accident compensation cases.
| Also Read: RSS Chief inspires youth at I.I.M.U.N. anniversary conference |
The apex court directed all stakeholders, including the IRDAI, insurers, and relevant government authorities, to implement its directions promptly and submit compliance affidavits by August 14. The matter has been scheduled for further hearing on August 18 to review compliance with the court’s comprehensive directives.
The judgment is expected to significantly reshape India’s motor insurance landscape by increasing insurance coverage, strengthening consumer awareness, improving road safety, reducing the number of uninsured vehicles, and ensuring faster compensation for accident victims through a more robust and technology-enabled regulatory framework.
