The Supreme Court has directed the Centre to launch a 'no third-party insurance, no fuel' pilot project to address widespread non-compliance with mandatory vehicle insurance. According to The Times of India, a bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra issued the direction on Tuesday (August 4, 2026), stating that vehicles without valid insurance would be refused fuel at petrol pumps until such time that valid insurance is obtained. The court emphasized that this measure would have a two-fold benefit - assisting in identification of uninsured or unregistered vehicles and prompting owners to ensure valid insurance status. The Ministry of Petroleum and Natural Gas has reportedly given in principle no objection to the same, with the court noting that such projects would ensure ground-level compliance with the statutory mandate of Section 146 of the Motor Vehicles Act. The top court took note of the large number of road accidents on national highways and also the effect of long queues at toll plazas, directing the Centre to implement pilot projects on certain corridors, substituting the process of stopping at toll plazas with automatic detection of vehicles passing through toll points.
The Supreme Court has extended mandatory third-party motor insurance periods for new vehicles, requiring four years of coverage for new cars and six years for new two-wheelers. According to The Times of India, the court directed that third-party insurance henceforth be purchased for four years for new cars and six years for new two-wheelers, and directed IRDAI to issue the necessary directions immediately. The court observed that despite the statutory mandate, a 'shocking' number of vehicles continued to ply on Indian roads without third-party insurance, forcing accident victims and their families to 'run from pillar to post' to secure compensation. The direction extends the existing mandatory insurance period by one year for both categories of vehicles, building upon the Supreme Court's 2018 judgment in S. Rajaseekaran v. Union of India which required three-year third-party insurance for cars and five-year cover for two-wheelers. As reported by The Times of India, the court noted that nearly 56% of vehicles on Indian roads remain uninsured, with around 16.54 crore vehicles out of a total 30.48 crore vehicles found to be without valid insurance, describing the figure as 'stark'. The bench observed that while the IRDA and GIC have recommended that this period not be enhanced, it is in the interest of road safety that the period be enhanced by one year. According to industry estimates, consumers could face an additional upfront cost of around ₹800-1,000 for two-wheelers and ₹4,000-5,000 for private cars.
Industry experts have raised concerns about the impact of longer mandatory insurance periods on consumer costs and insurer commissions. Animesh Das, Managing Director and Chief Executive Officer of ACKO General Insurance, noted that commercial vehicles contribute to more than 60 per cent of TP claims, but there is no decision on that front. He explained that business lies with the dealership today and the commissions are very high there, with consumers likely to face higher costs as leverage remains with dealership channels. According to ACKO, renewals among two-wheeler owners drop sharply after the existing five-year mandatory policy, with only around 20-21 per cent of customers renewing in the sixth year. This has contributed to the problem of older vehicles remaining uninsured, as customers have little recall of the need to renew their insurance after the initial mandatory period. Paras Pasricha, business head — motor insurance at Policybazaar, emphasized that improving awareness around the importance of maintaining valid motor insurance is equally important. He noted that measures such as linking fuel purchases to insurance verification can act as both an effective enforcement tool and a reminder to keep policies active.
The Supreme Court has issued comprehensive directions aimed at improving enforcement capabilities through technological integration. According to The Times of India, the court directed that Automatic Number Plate Recognition (ANPR) cameras deployed on highways and roads to detect traffic violations be integrated with insurance data maintained by the Insurance Information Bureau of India (IIB) and vehicle registration data available on the VAHAN portal. The court also directed that IRDAI and MoRTH to deploy ANPR cameras in certain states, integrating them with data from the Insurance Information Bureau and the VAHAN portal to enable automatic issuance of e-challans to uninsured vehicles. Additionally, the court directed that state police be provided with handheld devices or downloadable applications linked to the Insurance Information Bureau and VAHAN data to verify the insurance status of vehicles in real time. The system is intended to monitor real-time insurance status of vehicles and impose challans for violations, ensuring compliance with mandatory insurance on the ground. As reported by The Times of India, there is no uniform mechanism in place with the state police to verify insurance status on the ground, and the court has directed that state police be provided with handheld devices or downloadable apps linked with the data from the Insurance Information Bureau (established under IRDA) and the VAHAN portal. The bench also directed that a system should be developed 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.
Despite concerns about consumer costs, the insurance industry has shown positive growth trends. According to General Insurance Council data, motor premiums collected rose by 14 per cent year-on-year (Y-o-Y) to ₹26,425.68 crore as of June 2026. Of this, motor TP premiums rose by 12.5 per cent Y-o-Y to ₹15,419.12 crore. Industry experts believe the move could boost insurance penetration and coverage, leading to higher motor TP premium growth. A motor insurance expert at a private insurance company noted that the extension in tenure is positive for the insurance industry — it should improve coverage and provide insurers with an additional year of premium upfront, while having limited impact on commissions and loss ratios. The main implication will be the higher upfront cost for customers and a marginal increase in third-party exposure, which might not act as a deterrent for vehicle purchase. The court has also directed all stakeholders to comply with its directions and file affidavits by August 14, and listed the matter for monitoring compliance on August 18.
