New Delhi, August 5: In a significant move aimed at improving road safety and ensuring better compensation for accident victims, the Supreme Court has directed that all new cars must carry four years of mandatory third-party motor insurance, while new two-wheelers will require six years of compulsory cover. The directive extends the existing long-term insurance period by one year for each category.
Previously, new cars were required to have three years of mandatory third-party insurance and new two-wheelers five years, following the Supreme Court’s 2018 order. The latest decision seeks to reduce the number of uninsured vehicles on Indian roads and strengthen protection for road accident victims.
What Changes for Vehicle Buyers?
Under the revised rule:
- New private cars: Mandatory third-party insurance increased from 3 years to 4 years
- New two-wheelers: Mandatory third-party insurance increased from 5 years to 6 years
The extended policy period means buyers will pay a higher upfront insurance premium at the time of purchase but will not need to renew third-party insurance during the initial ownership period.
Why the Supreme Court Issued the Direction
The Court observed that a large number of vehicles continue to operate without valid third-party insurance despite legal requirements. Extending the mandatory insurance tenure is expected to reduce policy lapses and ensure continuous insurance coverage during the early years of vehicle ownership.
Industry experts believe the move will improve compliance and make it easier for accident victims to receive compensation, while also reducing disputes arising from expired insurance policies.
Push for Stronger Enforcement
Alongside the insurance directive, the Supreme Court has also proposed technology-driven measures to improve enforcement, including a pilot “No Insurance, No Fuel” initiative to discourage uninsured vehicles from operating on public roads.
Impact on the Insurance Sector
The decision is expected to benefit general insurance companies by increasing long-term third-party insurance premiums collected on new vehicle sales. Following the announcement, shares of several insurance companies gained as investors anticipated higher premium inflows.
Key Highlights
- New cars to require 4 years of mandatory third-party insurance.
- New two-wheelers to require 6 years of mandatory third-party insurance.
- Rule aims to reduce uninsured vehicles and improve accident compensation.
- Buyers may face a higher upfront insurance cost but fewer renewal hassles in the initial years.
- Supreme Court has also proposed stronger enforcement measures, including a pilot “No Insurance, No Fuel” framework.
