The Supreme Court on Tuesday proposed a pilot project under which fuel would be supplied only to vehicles with valid insurance to curb the growing number of uninsured vehicles and ensure timely compensation for road accident victims, according to a report by Bar and Bench.
“In the absence thereof, the vehicle concerned would be refused fuel at petrol pumps until such time that valid insurance is obtained,” the Bench ordered, noting that the Ministry of Petroleum and Natural Gas had, in principle, raised no objection to the proposal.
A Bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra issued several directions, including linking Automatic Number Plate Recognition (ANPR) cameras with insurance databases to automatically issue e-challans to uninsured vehicles. It also called for handheld devices to be provided to traffic police to check insurance status on the spot, longer mandatory third-party insurance for new vehicles, and faster disposal of pending motor accident compensation cases.
Hearing the case National Insurance Co. v. Smt. Thungala Dhana Laxmi & Ors., a Bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra noted that nearly 56% of vehicles on Indian roads do not have valid insurance. The court said this weakens the purpose of compulsory motor insurance and often leaves accident victims waiting years for compensation.
Observing that a large number of vehicles remain uninsured, the Bench said the statutory safeguard for compensating road accident victims was often “delayed, if not defeated”, forcing victims and their families into lengthy legal battles.
“The object behind mandatory insurance under Section 146 of the Motor Vehicles Act is not just that victims of road accidents are compensated, it is also that they are not drawn into prolonged litigation,” the court was quoted as saying by Bar and Bench.
The court said such a system would help identify uninsured and unregistered vehicles while encouraging owners to keep their insurance active. It suggested using Automatic Number Plate Recognition (ANPR) cameras for the project.
The Bench also directed that ANPR cameras already installed on highways and city roads be linked with the Insurance Information Bureau database and the VAHAN portal. This would allow authorities to automatically issue e-challans to uninsured vehicles. It further asked States to provide traffic police with handheld devices or mobile apps connected to these databases so they can instantly check a vehicle's insurance status and issue challans on the spot.
The court also directed strict implementation of the proposed amendment to Section 196 of the Motor Vehicles Act, which provides for higher penalties for driving uninsured vehicles once the Centre notifies the changes.
In a major relief for road safety, the Bench directed IRDAI to increase the mandatory third-party insurance period for new private cars from three years to four years and for new two-wheelers from five years to six years. The court said it was extending the insurance period by one year despite IRDAI and the General Insurance Council advising against the move, saying it was necessary in the interest of road safety.
The direction builds on the Supreme Court's 2018 ruling in S Rajaseekaran vs Union of India, which had made long-term third-party insurance compulsory at the time of registration of new vehicles.
The judgment also approved a new four-layer motor insurance framework proposed by IRDAI. It includes a mandatory third-party insurance policy, an optional legal liability cover for occupants and pillion riders, an optional personal accident cover for the owner, driver and occupants, and an optional own-damage cover.
To help buyers make informed choices, the court directed that every motor insurance customer, whether buying online or offline, should receive a standard option form to choose additional covers. Buyers must also be given an easy-to-understand information sheet explaining which parts of motor insurance are mandatory and which are optional.
The Bench further directed IRDAI, along with the General Insurance Council and insurers, to prepare standard policy wordings for optional insurance covers while allowing companies flexibility in pricing and product design.
Insurance companies have also been asked to clearly display the benefits of comprehensive motor insurance policies on their websites in a simple and easy-to-understand format.
Kanishka Singharia is a Senior Content Producer at Mint with a passion for news, trends, and the stories shaping the digital world. She specialises in spotting viral narratives by constantly tracking social media platforms and turning them into engaging, reader-friendly stories. Her work ranges from fast-paced breaking updates to sensitive human-interest features, blending speed with clarity. <br><br> With over four years of experience in news and trend reporting, Kanishka has worked with leading organisations such as Hindustan Times and Times Now. She moves seamlessly between profiling business leaders and telling the stories of everyday people, covering national developments just as effortlessly as the memes and conversations that dominate online culture. <br><br> She also reports on real estate developments and civic challenges in major urban hubs like Bengaluru, Delhi, and Gurugram. Her coverage frequently explores the struggles of startup founders, inspiring journeys of CEOs, and the experiences of candidates dealing with the complexities of visa processes. <br><br> Kanishka holds an undergraduate degree in Journalism from Delhi University and a diploma from the Indian Institute of Mass Communication. Rarely offline, she spends much of her time scrolling through X, LinkedIn, Reddit, Instagram, and Facebook in search of the next big story. When she finally logs off, she enjoys binge-watching shows and exploring cafes in pursuit of good food and better conversations.
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Facts Only
* The Supreme Court proposed a pilot project where fuel supply would be restricted only to vehicles with valid insurance.
* Vehicles without valid insurance would be refused fuel at petrol pumps until insurance is obtained.
* A Bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra issued several directions regarding the issue.
* Directions included linking ANPR cameras with insurance databases to automatically issue e-challans to uninsured vehicles.
* Handheld devices were directed to traffic police to check insurance status on the spot.
* Longer mandatory third-party insurance was mandated for new vehicles.
* Pending motor accident compensation cases are to be disposed of faster.
* The court noted nearly 56% of vehicles on Indian roads do not have valid insurance.
* The court stated the objective of mandatory insurance is to prevent prolonged litigation for victims and aid in identifying uninsured vehicles.
* IRDAI was directed to increase the mandatory third-party insurance period for new private cars from three years to four years and for new two-wheelers from five years to six years.
* A new four-layer motor insurance framework was approved, including mandatory third-party insurance and optional covers.
Executive Summary
The Supreme Court proposed a pilot project to supply fuel only to vehicles with valid insurance to reduce uninsured vehicle numbers and ensure faster compensation for accident victims. The court ordered that vehicles lacking insurance would be refused fuel at petrol pumps until insurance is obtained, although the Ministry of Petroleum and Natural Gas raised no objection in principle. Several directives were issued, including linking Automatic Number Plate Recognition (ANPR) cameras with insurance databases to automatically issue e-challans to uninsured vehicles. Other directions included providing handheld devices to traffic police for on-spot insurance checks, mandating longer third-party insurance periods for new vehicles, and speeding up the disposal of pending motor accident compensation cases.
The court noted that nearly 56% of vehicles on Indian roads lack valid insurance, which weakens the purpose of compulsory motor insurance and causes delays in compensation for accident victims. The primary objective behind mandatory insurance was intended to prevent prolonged litigation for victims. The proposed system aims to identify uninsured vehicles while incentivizing owners to maintain insurance. Furthermore, the court directed an extension of the mandatory third-party insurance period for new private cars to four years and for new two-wheelers to six years to enhance road safety. Finally, the court approved a four-layer motor insurance framework, requiring standard option forms for customers and clear information regarding mandatory versus optional covers.
Full Take
The movement toward linking vehicle registration, insurance status, and enforcement via technology represents a systemic attempt to shift the burden of compliance from passive regulation to active, automated verification. The proposal moves beyond mere penalty imposition to fundamentally restructure the relationship between the state, vehicle owners, and accident victims by leveraging infrastructure (ANPR) for proactive identification and financial facilitation. A critical tension exists between the goal of administrative efficiency—faster compensation and reduced litigation—and the implications for individual autonomy and procedural fairness, particularly when mandating changes like extending insurance terms against advice from industry bodies.
The focus on ANPR and real-time checks suggests a paradigm shift where physical presence and documentation become instantly digitized mandates, creating an environment where non-compliance is immediately flagged by ubiquitous infrastructure. The implication is that the system privileges the state’s ability to monitor compliance over the individual's right to procedural navigation. Furthermore, mandating insurance extensions, even in the name of road safety, forces a re-evaluation of risk assessment within the policy framework and whether regulatory mandates are optimally calibrated against practical realities for diverse vehicle classes. The structure attempts to resolve systemic inertia by introducing immediate, visible consequences backed by technological linkage, but the resulting system requires scrutiny regarding who controls the data flow and how this automated enforcement impacts vulnerable populations.
Bridge Questions: If technology successfully identifies uninsured vehicles and automates challans, what safeguards are necessary to prevent misuse of this integrated data stream against individual privacy? How can the implementation of extended insurance periods truly mitigate risk without overburdening smaller operators or increasing financial insecurity for vehicle owners? What metrics should be used to assess whether the goal of reduced litigation is being achieved alongside increased operational efficiency?
Sentinel — Human
The core legal analysis is structured like human reporting on a Supreme Court judgment, but the inclusion of detailed biographical data strongly suggests post-generation human intervention or compilation.