New Delhi: In a significant move aimed at improving road safety and ensuring timely compensation for accident victims, the Supreme Court has directed the Central government to develop a pilot project linking the supply of fuel at petrol pumps with the insurance status of vehicles. The court observed that nearly 56 per cent of vehicles on Indian roads do not have valid insurance, calling the situation “shocking” and a serious violation of the Motor Vehicles Act.
A Bench comprising Justices Sanjay Karol and P. K. Mishra issued the directions while hearing an appeal concerning the implementation of Section 146 of the Motor Vehicles Act, 1988, which makes third-party motor insurance mandatory for all vehicles. The court also examined the need for a more comprehensive and uniform motor insurance framework that protects not only third parties but also occupants of private vehicles.
In its judgment, the Bench directed the Ministry of Road Transport and Highways (MoRTH) and the Insurance Regulatory and Development Authority of India (IRDAI) to jointly formulate a pilot project under which petrol pumps would verify a vehicle’s insurance status before dispensing fuel. Vehicles found without valid insurance could be denied fuel until the owner obtains a valid policy.
According to the court, the proposed mechanism would serve two important objectives. First, it would help authorities identify uninsured and even unregistered vehicles operating on public roads. Second, it would encourage vehicle owners to comply with the legal requirement of maintaining valid insurance coverage, thereby strengthening enforcement of the Motor Vehicles Act.
The Supreme Court noted that the Ministry of Petroleum and Natural Gas has expressed no objection in principle to such a proposal. The Bench suggested that the pilot project could make use of Automatic Number Plate Recognition (ANPR) cameras already installed at several locations to verify insurance details in real time.
The court also directed the authorities to launch a separate pilot project that would allow citizens to verify the insurance status of vehicles. Such a system would enable passengers, employers and businesses transporting goods to confirm whether a vehicle carries valid insurance. It would also facilitate prompt reporting of uninsured vehicles to the authorities.
Expressing concern over the growing number of uninsured vehicles, the Bench referred to the Standing Committee on Finance’s 2024-25 report, which revealed that around 16.54 crore vehicles out of 30.48 crore registered vehicles do not possess valid insurance coverage. The judges described these figures as alarming and warned that they undermine the very purpose of compulsory third-party insurance.
The court observed that the absence of valid insurance often leaves accident victims and their families struggling for compensation. Instead of receiving timely financial relief, victims are frequently forced into prolonged legal disputes over liability and the amount of compensation. The impact becomes particularly severe when accidents result in death or permanent disability, placing immense financial hardship on affected families.
The Bench further pointed out that the problem is aggravated by vehicles operating without valid registration. In such cases, identifying the owner or driver responsible for an accident becomes difficult and time-consuming, defeating the objective of the Motor Vehicles Act, which seeks to provide quick and effective compensation to victims.
To strengthen enforcement, the Supreme Court directed that ANPR cameras currently used to detect traffic violations such as speeding, red-light jumping and wrong-side driving should also be integrated with data from the Insurance Information Bureau established under IRDAI and the VAHAN database. This integration would enable authorities to automatically issue electronic challans to uninsured vehicles in line with the Standard Operating Procedure for Electronic Monitoring and Enforcement of Road Safety.
The court also highlighted the lack of a uniform mechanism for police personnel across states to verify insurance status during routine checks. It directed that state police forces should be equipped with handheld devices or mobile applications connected to the Insurance Information Bureau and the VAHAN portal. Such tools would allow officers to instantly verify insurance details and issue penalties against violators on the spot.
In another important direction, the Supreme Court enhanced the mandatory duration of third-party insurance required at the time of purchase of new vehicles. Revising its 2018 directions, the court ordered that buyers of new cars must now purchase four years of third-party insurance instead of three, while purchasers of new two-wheelers must obtain six years of coverage instead of five. The IRDAI has been instructed to issue the necessary directions for implementation without delay.
Additionally, the Bench recommended that third-party insurance policies for private vehicles should include optional add-on covers. These may include insurance for occupants or pillion riders, personal accident cover for owners, drivers and passengers, and own-damage cover for losses suffered by the insured vehicle.
If implemented successfully, the proposed measures could significantly reduce the number of uninsured vehicles, strengthen legal enforcement and ensure faster financial relief for road accident victims across the country.
