The Supreme Court of India has directed the central government to launch a pilot project restricting petrol pumps from selling fuel to vehicles that lack valid third-party insurance.
The bench of Justices Sanjay Karol and Prashant Kumar Mishra issued the directive on Tuesday during the hearing of a motor accident claim case. The court expressed serious concern over widespread non-compliance with mandatory insurance requirements under Section 146 of the Motor Vehicles Act, which leaves road accident victims and their families without prompt financial compensation and forces them into prolonged legal disputes.
Alarming Uninsured Vehicle Statistics
Citing findings from the Standing Committee on Finance 2024–25 report, the apex court noted that nearly 56 percent of vehicles on Indian roads operate without third-party coverage. In absolute terms, 16.54 crore out of 30.48 crore registered vehicles are uninsured.
To improve ground-level compliance, the court mandated an extension of the mandatory third-party insurance period required at the time of purchasing new vehicles. Building upon a 2018 ruling that required three years of coverage for new cars and five years for new two-wheelers, the bench increased both durations by one year. Buyers must now purchase four years of third-party insurance for new cars and six years for new two-wheelers. The Insurance Regulatory and Development Authority (IRDA) was instructed to issue relevant directives immediately.
Fuel Denial and Automated Traffic Fines
Under the planned pilot scheme, IRDA will collaborate with the Ministry of Road Transport and Highways (MoRTH) to link fuel sales at filling stations to valid insurance records using Automatic Number Plate Recognition (ANPR) camera technology. The court noted that the Ministry of Petroleum and Natural Gas has offered in-principle approval for the initiative, which aims to spot unregistered or uninsured vehicles while prompting drivers to maintain valid coverage.
The justices also instructed IRDA and MoRTH to install ANPR cameras across selected states. Integrated with data from the VAHAN portal and IRDA’s Insurance Information Bureau, the automated system will issue electronic challans directly to owners of uninsured vehicles.
Enhanced Police Verification and Highway Reforms
To address the absence of a uniform field verification process, the court directed that state police officers be equipped with handheld devices or downloadable mobile applications. These tools, connected to the VAHAN database and the Insurance Information Bureau, will enable real-time checking of insurance coverage and on-the-spot penalization of violators.
Addressing safety concerns and traffic congestion on national highways, the court further ordered pilot projects on specific corridors to replace physical stops at toll plazas with automated vehicle detection systems.
In additional instructions to the insurance regulator, the court directed IRDA to offer private vehicle owners various policy options beyond the statutory base cover, including personal accident cover, own damage cover, and add-on options.
