The Supreme Court of India has mandated longer compulsory third-party motor insurance periods for new cars and two-wheelers to curb uninsured vehicles.
This ruling addresses a critical gap in road safety compliance and financial protection for accident victims. By extending the mandatory cover period, the court aims to ensure that a larger portion of the vehicle population remains insured against third-party liabilities.
Under the new requirements, all new cars must carry third-party insurance cover for a period of four years [1]. For new two-wheelers, the mandatory cover period has been extended to six years [1]. These measures are designed to prevent vehicle owners from allowing their policies to lapse shortly after the initial registration period.
The move comes as India struggles with significant compliance issues regarding motor insurance. Data indicates that over 50% of vehicles in India lack the mandatory third-party insurance required by law [3]. This lack of coverage often leaves victims of road accidents without a clear path to financial recovery, placing a burden on the state and the individuals involved.
Third-party insurance is a legal requirement in India that covers the insured vehicle's liability for death, bodily injury, or property damage caused to a third party. By locking in longer terms at the point of purchase, the court seeks to automate compliance and reduce the administrative burden of tracking annual renewals for millions of drivers.
Legal experts said that this mandate will likely lead to a shift in how insurance premiums are structured for new vehicles. While it increases the upfront cost for the consumer, it ensures that the legal safety net remains intact for a longer duration without the risk of owner negligence.
“New cars must now carry four years of cover and two-wheelers six years”
This ruling represents a systemic shift toward 'forced compliance' to address India's road safety crisis. By extending the insurance mandate to four and six years, the judiciary is attempting to bypass the high rate of policy lapses that occur after the first year of ownership. This will likely increase the initial cost of vehicle acquisition but will provide a more stable pool of funds for accident compensation, reducing the legal hurdles victims face when seeking damages from uninsured drivers.
