The Supreme Court of India directed the Ministry of Road Transport and Highways (MoRTH) and the Insurance Regulatory and Development Authority of India (IRDAI) to launch a pilot project linking fuel dispensing to valid motor vehicle insurance.
The ruling aims to enforce compliance with Section 146 of the Motor Vehicles Act, 1988, after court records revealed that 56% of vehicles in India (16.54 crore out of 30.48 crore) operate without mandatory third-party insurance.
Key Directives & Policy Changes
1. Extension of Mandatory Multi-Year Third-Party Cover
Building on its 2018 mandate, the Supreme Court added one additional year of mandatory third-party insurance for newly purchased vehicles:
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New Private Cars: Increased from 3 years to 4 years.
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New Two-Wheelers: Increased from 5 years to 6 years.
2. Tech-Driven Enforcement Mechanisms
To track and penalize non-compliant vehicles in real-time, the bench ordered:
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ANPR Integration: Linking Automatic Number Plate Recognition (ANPR) highway cameras with the Insurance Information Bureau (IIB) and VAHAN databases to automatically issue e-challans.
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Petrol Pump Integration: Feasibility testing of automated checks at fuel stations to restrict fuel dispensing to uninsured vehicles until coverage is renewed.
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Handheld Police Verification: Providing traffic police officers with real-time app access to check insurance validity during spot inspections.
Proposed Standardized Four-Tier Motor Insurance Structure
To give vehicle owners clearer choices while maintaining foundational protection, the Court endorsed a simplified four-tier coverage model:
| Layer | Coverage Type | Requirement Status |
| Tier 1 | Compulsory Third-Party (TP) Liability | Mandatory |
| Tier 2 | Legal Liability Cover for Passengers / Pillion Riders | Optional |
| Tier 3 | Personal Accident Cover for Owner, Driver & Occupants | Optional |
| Tier 4 | Own Damage (OD) Cover for Vehicle Loss/Damage | Optional |
Legal Context & Next Steps
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Bench Composition: Justices Sanjay Karol and Prashant Kumar Mishra (upholding a Telangana High Court judgment in a motor accident compensation case).
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Constitutional Basis: The Supreme Court framed uninsured driving as an issue impacting the Right to Life under Article 21, emphasizing that lack of insurance delays or denies compensation to accident victims and their families.
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Timeline: All concerned central agencies, state governments, and insurance regulators are directed to file compliance reports by August 14, with the next review hearing scheduled for August 18.
