A Supreme Court Bench comprising Justices Sanjay Karol and Prashant Kumar Mishra has extended the compulsory third-party (TP) motor insurance duration for newly purchased vehicles by one additional year.
The move is aimed at tackling the “shocking” number of uninsured vehicles operating on Indian roads—estimated at 56% (16.54 crore out of 30.48 crore registered vehicles)—which leaves road accident victims and their families without timely legal or financial recourse.
Key Highlights of the Supreme Court Directives
1. Extension of Mandatory Third-Party Cover
Overriding recommendations by the IRDAI and General Insurance Council (GIC) to maintain the status quo, the Court modified its previous 2018 ruling (S. Rajaseekaran v. Union of India):
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New Private Cars: Third-party cover extended from 3 years to 4 years.
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New Two-Wheelers: Third-party cover extended from 5 years to 6 years.
2. Proposed “No Insurance, No Fuel” Pilot Scheme
To improve compliance and prevent uninsured driving, the Court asked the Ministry of Road Transport and Highways (MoRTH) and IRDAI to examine a pilot project linking fuel sales to insurance status. Under the proposal:
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Petrol pumps will verify insurance validity prior to dispensing fuel.
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Uninsured or unregistered vehicles will be denied fuel until valid coverage is acquired.
3. Real-Time Tech & Database Integration
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ANPR Integration: Automatic Number Plate Recognition (ANPR) highway cameras will be linked directly to the Insurance Information Bureau of India (IIB) and the VAHAN vehicle database to generate automatic e-challans.
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Handheld Police Verification: Traffic police officers will be equipped with mobile apps connected to IIB and VAHAN to verify vehicle insurance on the spot.
Standardized Four-Tier Motor Insurance Framework
To simplify purchasing decisions and ensure adequate coverage, the Court directed insurers to offer a structured four-tier policy model to new vehicle buyers:
| Tier | Policy Component | Status |
| Tier 1 | Compulsory Third-Party Liability | Mandatory |
| Tier 2 | Coverage for Passengers / Pillion Riders | Optional |
| Tier 3 | Personal Accident Cover for Owner, Driver & Passengers | Optional |
| Tier 4 | Own Damage (OD) Cover for Vehicle Damage/Loss | Optional |
Note: IRDAI and the Centre will regulate premiums for Tier 1 mandatory cover, while insurers are free to set rates for Tiers 2–4 under uniform terms.
Legal Context & Next Steps
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Case Origin: The judgment arose from an appeal by National Insurance Co. Ltd. challenging a ₹10 lakh compensation award granted by the Telangana High Court to the family of a deceased vehicle owner. Dismissing the appeal, the Court emphasized that tribunals must avoid a “hyper-technical approach” in road safety compensation claims.
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MACT Expediting: Police authorities were instructed to file Detailed Accident Reports (DAR) for cases prior to March 31, 2022, to clear the backlog before Motor Accident Claims Tribunals (MACT).
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Compliance Deadline: Stakeholders must submit compliance affidavits by August 14, 2026, with the next review hearing set for August 18, 2026.
