New Delhi, August 4: The Supreme Court has ordered an extension of the mandatory third-party insurance period for new vehicles. Effective immediately, new cars will require four years of insurance coverage, while new two-wheelers will need six years. This decision aims to enhance compliance with the Motor Vehicle Act (MVA) and improve road safety.
A bench led by Justices Sanjay Karol and P.K. Mishra issued this directive while hearing an appeal from the National Insurance Company Limited. Despite a previous mandate for three years of insurance for new cars and five years for two-wheelers, many vehicles continue to operate without valid insurance.
Justice Karol’s bench noted, “Even after eight years of the earlier directive, a significant number of vehicles are uninsured. Although IRDA and GIC recommended against extending this period, we believe it should be increased by one year in the interest of road safety.”
The bench further stated, “From now on, it is mandatory to obtain four years of third-party insurance for new cars and six years for new two-wheelers. IRDA must issue the necessary directives immediately.”
The bench was addressing issues related to non-compliance with Section 146 of the Motor Vehicle Act, which mandates third-party insurance for all vehicles. They also discussed the need for a uniform motor vehicle insurance policy structure that covers not only third-party risks but also passengers in the vehicle.
In its ruling, the Supreme Court highlighted that approximately 56% of vehicles on Indian roads are uninsured, undermining the purpose of mandatory insurance under the MVA.
The ruling stated, “It is alarming that around 56% of vehicles on the country’s roads are uninsured.” It also noted that victims of road accidents and their families often face prolonged legal battles to obtain compensation.
During the hearings, IRDAI and the General Insurance Council argued that extending the mandatory insurance period would not serve the public interest. They contended that longer policy durations would increase premiums and would not significantly reduce the number of uninsured vehicles.
The Supreme Court emphasized that extending the insurance period is essential for broader road safety.
In a significant directive, the Supreme Court approved a four-tier insurance structure for private vehicles. This includes mandatory third-party policies, optional legal liability coverage for passengers, optional personal accident cover for the owner-driver and passengers, and optional ‘own-damage’ cover for vehicle damage.
Additionally, it mandated that every customer purchasing motor insurance, whether online or offline, must receive a mandatory ‘Customer Option Form’ to select additional coverage via checkboxes.
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