‘No vehicle insurance, no fuel’: Supreme Court asks Centre to launch pilot project

Writing for the bench, Justice Karol said: “As deliberated upon in court, the IRDA in consultation with the MoRTH to deliberate and evolve a pilot project whereby fuel for vehicles to be linked with valid insurance status. In the absence thereof, the vehicle concerned would be refused fuel at petrol pumps until such time that valid insurance is obtained.”

The court said “the benefit therein is two-fold” — it will assist in identification of uninsured or unregistered vehicles and also prompt the owners of these vehicles to ensure that they have valid insurance status. “Such projects would ensure ground-level compliance with the statutory mandate of Section 146 of the MVA,” said the bench.

The bench said this may be done through the use of ANPR (Automatic Number Plate Recognition) cameras and noted that “the Ministry of Petroleum and Natural Gas has, in principle, no objection to the same”.

The court further directed that “a pilot project be implemented allowing citizens to verify insurance status, and ultimately assist in the implementation of the statutory mandate under the MV Act”. The bench said this will allow citizens to know whether the vehicle they are travelling in or sending goods in or transporting employees has valid insurance and also allow for prompt reporting of uninsured vehicles.

The bench noted that though it had issued directions in July 2018 mandating purchase of third-party insurance for three years for new cars and five years for two wheelers at the time of purchase/registration of new vehicles, a large number of vehicles remained uninsured even though eight years had passed.

The court said it is “in the interest of road safety that the period be enhanced by one year” and “directed that henceforth, third-party insurance for four years for new cars and six years for new two-wheelers be required to be purchased”. It asked IRDA to immediately issue necessary directions.

The bench said: “It is shocking to learn that nearly 56% of vehicles plying on Indian roads remain uninsured as per the Report of the Standing Committee on Finance 2024–25, titled ‘Action taken by the Government on the Observations/Recommendations contained in Sixty Sixth Report on the subject – Performance Review and Regulation of Insurance Sector’, dated December 2024. In absolute terms, the stark figure of uninsured vehicles stands at 16.54 crore vehicles out of 30.48 crore vehicles.”

“The consequent effect is that the statutory safeguard of victim compensation is often delayed, if not defeated. The object behind mandatory insurance under Section 146 of the MVA is not just that victims of road accidents are compensated; it is also that they are not drawn into prolonged litigation,” the court said.

The bench said, “The result of vehicles remaining uninsured is that victims of accidents and their families have no recourse to adequate compensation within a reasonable time period. They often have to enter into prolonged litigation concerning the quantum as well as liability for compensation. The consequence is even more severe for families where the victim is deceased or has suffered permanent disability, as the financial impact on the family is significantly heightened.”

“This is further compounded by a number of vehicles not possessing valid or active registration. Therein, the process of tracing the identity of the driver/owner involved in the accident becomes improbable and time-consuming. Such circumstances defeat the very purpose and statutory mandate behind the MVA.”

The court said that “currently, ANPR cameras deployed on highways and roads are equipped with a mechanism to catch and penalise road safety violations such as high speed, red light jumping, driving on the wrong side of the road etc. Carrying this forward and as already deployed by the MoRTH in certain states, ANPR cameras are to be integrated with data from the Insurance Information Bureau (established under IRDA) and the VAHAN portal for issuance of automatic e-challans to uninsured vehicles, in furtherance of the SOP for Electronic Monitoring and Enforcement of Road Safety.”

The bench noted that “as on date, there is no uniform mechanism in place with state police to verify insurance status on the ground” and directed that the “state police be provided with handheld devices or downloadable apps, linked with the data from Insurance Information Bureau (established under IRDA) and VAHAN portal…to monitor real-time insurance status of vehicles and impose challans for violations, ensuring compliance with mandatory insurance on the ground”.

The court also said that third-party policy for private vehicles be provided with add-on options like “additional optional cover for the occupant(s)/pillion rider”, “personal accident cover for the owner, driver and any occupant(s)/pillion rider” and “own damage cover (for loss or damage to the insured vehicle itself)”.