The Supreme Court has directed the Central Government to design a pilot project that could stop fuel stations from supplying petrol or diesel to vehicles that do not have valid third-party motor insurance. The proposal is aimed at improving compliance with mandatory insurance laws and ensuring that road accident victims receive timely compensation.
Supreme Court Expresses Concern Over Uninsured Vehicles
A Bench comprising Justices Sanjay Karol and Prashant Kumar Mishra observed that a significant number of vehicles on Indian roads continue to operate without valid third-party insurance, despite it being compulsory under the Motor Vehicles Act.Referring to the Parliamentary Standing Committee on Finance Report (2024–25), the Court noted that around 16.54 crore vehicles out of approximately 30.48 crore registered vehicles do not have valid insurance.
This means nearly 56% of registered vehicles are uninsured, a situation the Court described as serious because it often leaves accident victims without timely financial relief.
Pilot Project May Link Fuel Purchase to Insurance Status
To address the issue, the Supreme Court directed the Ministry of Road Transport and Highways (MoRTH) and the Insurance Regulatory and Development Authority of India (IRDAI) to jointly prepare a pilot project.Under the proposed model:Petrol pumps would verify whether a vehicle has valid third-party insurance.Vehicles without active insurance may be denied fuel until the required insurance is renewed.
The project is intended to encourage vehicle owners to maintain continuous insurance coverage while helping authorities identify uninsured vehicles. The Court noted that the Ministry of Petroleum and Natural Gas has reportedly not objected to exploring such a mechanism.
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Technology to Play a Key Role
The Supreme Court also suggested the use of technology to strengthen enforcement.According to the directions:
Automatic Number Plate Recognition (ANPR) cameras may be used to identify vehicles.These cameras could be integrated with the VAHAN database and the Insurance Information Bureau.Uninsured vehicles may be detected automatically without requiring manual inspections.
Automatic E-Challans for Uninsured Vehicles
The Court further instructed the authorities to develop a system for issuing automatic e-challans to vehicles found operating without mandatory insurance.In addition, state police departments have been asked to use handheld devices or mobile applications connected to the insurance and vehicle registration databases. This would allow officers to instantly verify whether a vehicle has valid insurance during roadside checks.
Third-Party Insurance Period Increased for New Vehicles
The judgment also modifies the earlier directions on mandatory long-term third-party insurance for newly purchased vehicles.The revised requirements are:
New cars: Four years of third-party insurance (previously three years).New two-wheelers: Six years of third-party insurance (previously five years).
The Supreme Court directed IRDAI to issue the necessary regulatory guidelines to implement these revised requirements.
Wider Insurance Choices for Vehicle Owners
The Court also instructed IRDAI to ensure that vehicle owners have access to a wider range of insurance products while maintaining compliance with the legal requirement for minimum third-party coverage.These products may include:
Third-party insurance
Own-damage insurance
Personal accident cover
Optional add-on insurance plans
The objective is to provide greater flexibility while ensuring every vehicle remains covered under the law.
Why the Supreme Court Issued These Directions
The directions were issued during proceedings relating to a motor accident compensation case. The Court observed that when vehicles operate without mandatory insurance, victims and their families often face delays or difficulties in receiving compensation after road accidents.By improving compliance with third-party insurance requirements, the Court aims to strengthen the compensation system established under the Motor Vehicles Act and reduce the number of uninsured vehicles on Indian roads.
Important Point to Remember
The “No Insurance, No Fuel” proposal is not yet a nationwide rule. The Supreme Court has directed the Central Government and IRDAI to prepare and implement a pilot project to test the feasibility of linking fuel supply with valid third-party insurance before any wider implementation is considered.