Having a valid third-party insurance is critical in improving road safety and in complying with Indian laws. Previously, it was mandatory to have three years third party cover for new cars and five for two wheelers. The Supreme Court (SC) has now directed to increase this to 4 years for cars and six for two-wheelers. This will affect all buyers. Enforcement will also be made stricter. The apex court has also proposed a a system in which vehicles without a valid third-party insurance may be denied fuel at petrol pumps. It has directed the central government to develop a pilot project linking fuel supply with insurance validity. This is expected to address the alarming number of uninsured vehicles on Indian roads.
The court’s directions came while hearing a motor accident claim case. During the proceedings, it highlighted a key issue in India’s road safety system. Despite having clear legal provisions, compliance with insurance requirements remains weak. As a result, victims of road accidents and their families often struggle to receive compensation. The lack of insurance creates unnecessary delays and financial hardship.
The top court has now revised rules related to insurance coverage for new vehicles. In 2018, it had made it mandatory for new cars to have three years of third-party insurance and five years for new two-wheelers at the time of purchase.
Now, the Supreme Court has ordered an increase in this duration. New cars will require four years of third-party insurance, while new two-wheelers must have six years of coverage.
The IRDA (Insurance Regulatory and Development Authority) has been instructed to issue the necessary guidelines immediately. Although insurance bodies had suggested not extending the duration, the court stated that the change is necessary in the interest of road safety.
To address this issue, the court has asked the Insurance Regulatory and Development Authority (IRDA) and the Ministry of Road Transport and Highways (MoRTH) to work together on a pilot project.
Under this proposal, fuel stations would check whether a vehicle has valid insurance before supplying petrol or diesel. If the vehicle is uninsured, fuel would be denied until the owner renews the policy.
The court noted that this system could serve two key purposes. First, it would help identify uninsured or even unregistered vehicles. Second, it would push vehicle owners to maintain valid insurance at all times. The Ministry of Petroleum and Natural Gas has reportedly agreed in principle to this idea.
The Supreme Court has suggested the use of Automatic Number Plate Recognition (ANPR) cameras to implement this plan. These can automatically read vehicle number plates and verify insurance status in real time.
The system would be integrated with databases such as the Insurance Information Bureau and the VAHAN portal. This would allow authorities to track uninsured vehicles and take action quickly. This technology will first be tested on selected road corridors as part of the pilot programme.
The SC also pointed out that there is currently no uniform system across states to verify insurance status on the ground. To address this gap, it has directed authorities to equip traffic police with handheld devices or mobile applications. These will be connected to central databases, allowing officers to instantly check the insurance status of any given vehicle. The court believes this will improve enforcement and reduce violations.
It has also asked IRDA to offer a wider range of insurance options, including add-ons, personal accident cover, and own damage policies, along with the mandatory base third-party cover.
The Supreme Court has expressed serious concern over the large number of vehicles plying on Indian roads without valid third-party insurance policies. According to the Report of the Standing Committee on Finance for 2024-25, nearly 56 percent of vehicles in India do not have valid insurance. In other words, about 16.54 crore vehicles are uninsured. (India is said to have 30.48 crore registered vehicles)
The court described this situation as shocking, especially given that insurance is a legal requirement under Section 146 of the Motor Vehicles Act (MVA). The absence of it not only violates the law but also puts accident victims at risk, as compensation is often delayed or not paid at all.
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