One extra year of motor insurance?
Every vehicle on an Indian road is legally required to carry Third Party (TP) liability insurance under Section 146 of the Motor Vehicles Act, 1988. This is non-negotiable. Third party insurance protects other road users, pedestrians, and property from the consequences of your vehicle being involved in an accident.
If your vehicle hits someone, it is the third party policy that pays their medical bills and compensation. You, the driver, are the “first party.” Your insurer is the “second party.” Everyone else is the “third party.”
What third party insurance does not cover is any damage to your own vehicle. For that, you need Own Damage (OD) cover, a separate, optional layer of protection that pays for repairs or replacement of your vehicle from accidents, fire, theft, floods, or other causes.
Together, third party and own damage coverage combine to form what is known as a Comprehensive Policy, the complete form of motor insurance available. Most people who care about protecting their vehicle, not just their legal obligation, buy a comprehensive policy.
The Supreme Court… on 4 August 2026
If you own a new vehicle, you probably already know that it came mandatorily insured for third party liability (three years for four-wheelers, and five years for two-wheelers.) This requirement, originally introduced following a Supreme Court direction in 2018, was designed to ensure that new vehicles start life with meaningful protection before owners have a chance to let their policies lapse.
On 4 August 2026, the Supreme Court extended that mandatory period by one year each.
The Bench of Justices Sanjay Karol and Prashant Kumar Mishra issued the direction explicitly over the objections of IRDAI and the General Insurance Council, who had both recommended against the extension. The court’s reasoning was that road accident victims and their families deserve better protection, and one extra year of mandatory cover advances that goal.
The court also directed IRDAI to:
- Introduce a four-tier insurance policy to be offered at the point of sale; covering mandatory TP, optional pillion/occupant liability, optional personal accident cover, and optional own damage
- Integrate ANPR cameras on highways with insurance databases and the VAHAN vehicle registration portal for real-time detection of uninsured vehicles
- Explore a pilot project denying fuel at petrol pumps to vehicles without valid insurance
These measures represent the most ambitious enforcement push in the history of Indian motor insurance.
Does this apply to Own Damage / Comprehensive cover? No. The Supreme Court’s direction applies only to third party liability cover. Own damage insurance remains optional. You can choose whether to buy it and for how long. This is unchanged.
Why this direction from the SC?
The Report of the Parliamentary Standing Committee on Finance 2024–25 answers that question completely.
56% of vehicles currently on Indian roads are uninsured. That is 16.54 crore vehicles out of 30.48 crore registered vehicles. That’s because the initial policies lapsed and were never renewed. The General Insurance Council of India has noted that approximately 60% of automobiles, particularly two-wheelers, carry no valid insurance at all, a figure that has barely moved in a decade despite numerous regulatory interventions.
The Supreme Court itself stated: “The result of vehicles remaining uninsured is that the victims of the accident and their families have no recourse to adequate compensation within a reasonable time period. They often have to enter into prolonged litigation concerning quantum as well as liability. The consequence is even more severe for families where the victim is deceased or has suffered permanent disability.”
India recorded over 1.68 lakh road accident deaths in 2022, making it the country with the most road fatalities globally. When over half the vehicles involved in accidents carry no insurance, the families of victims bear a financial catastrophe on top of a personal one.
Will the one extra year help?
The mandatory long-term TP cover has existed since 2018. And yet, 56% of vehicles on Indian roads remain uninsured. The history of long-term mandatory cover in India is a history of good intentions meeting indifferent enforcement.
One extra year of mandatory cover at the point of sale helps new vehicles start with longer protection. But the core problem is that vehicles become uninsured over time, after the initial policy ends, and enforcement is too weak to catch them.
This is why the fuel denial pilot and the ANPR-insurance database integration are more significant than the extension. Enforcement is the problem and without enforcement, even a ten-year mandatory period would eventually produce the same result.
What you, the policyholder, should know…
If you are buying a new vehicle: The mandatory TP cover is your legally minimum cover and that your own vehicle is not protected unless you also buy OD cover.
If you own a vehicle already: Check your policy’s expiry date. If your TP cover has lapsed, even by a day, you are driving illegally and any accident victim has no insurance pool to draw from and you personally might be liable to pay their damages and compensation. Renewing is straightforward; letting it lapse is not.
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