- The bench also hiked the mandatory third-party insurance requirement for new vehicles to four years for cars
- The term will be six years for two-wheelers
- The court observed that approximately 56 per cent of vehicles lack insurance coverage
Expressing its shock that 56 per cent of vehicles in India are operating without valid insurance, the Supreme Court has asked the Centre to launch a pilot 'no insurance, no fuel' project.
A bench of Justices Sanjay Karol and Augustine George Masih also extended the mandatory third-party motor insurance requirement for new vehicles to four years for cars and six years for two-wheelers.
The bench noted that the purchase of third-party insurance for three years for cars and five years for two-wheelers during the purchase or registration of new vehicles was mandated by the Supreme Court in 2018.
"We notice that despite eight years having passed from the said direction, a large number of vehicles remain uninsured. While the IRDAI (Insurance Regulatory and Development Authority) and GIC (General Insurance Council) have recommended that this period not be enhanced, we are of the view that it is in the interest of road safety that the period be enhanced by one year," it observed.
Citing a parliamentary committee report, the court observed that approximately 56 per cent of vehicles - 16.54 crore out of roughly 30 crore vehicles - lack insurance coverage.
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Terming this a significant issue linked to the Right to Life under Article 21 of the Constitution, the bench stated that the objective of mandatory third-party insurance under Section 146 of the Motor Vehicles Act is not merely to secure compensation for accident victims but also to spare them from protracted legal proceedings.
The bench directed the Ministry of Road Transport and Highways (MoRTH) and the IRDAI to formulate a pilot project exploring a system where fuel (petrol/diesel) is supplied to a vehicle only if it has valid insurance.
This, it said, will encourage vehicle owners to renew insurance on time and facilitate the identification of uninsured vehicles.
Compliance, Simplification
To ensure compliance with the 2018 directive and its new orders, the Supreme Court laid down several steps. It said Automatic Number Plate Recognition (ANPR) cameras installed on highways and roads should be linked to insurance databases and the VAHAN portal.
A system should be developed, it said, to check a vehicle's insurance status at petrol pumps so that the supply of fuel to uninsured vehicles can be restricted until insurance is renewed.
Police personnel should be provided with devices or mobile apps that allow them to verify a vehicle's insurance on the spot and issue challans (fines).
The court also endorsed a four-tier system to simplify motor insurance:
- Mandatory third-party insurance
- Optional legal liability cover for passengers/pillion riders
- Optional personal accident cover for the owner, driver, and passengers
- Optional cover for vehicle damage
It directed insurance companies to provide information to customers in simple language and offer the option to select additional covers.
Case Details
The case concerned the death of a man who was travelling in his insured vehicle when a road accident occurred.
The Supreme Court upheld the Telangana High Court's judgment, which had ordered the payment of Rs 10,00,500 as compensation, along with 7.5 per cent interest, to the man's family.
The court observed that a comprehensive motor insurance policy covers the vehicle owner as well, and an overly technical approach should not be adopted in such cases.
It directed all concerned parties to file compliance reports by August 14 and the next hearing will be held on August 18.
