The Supreme Court has issued a series of significant directions to strengthen compliance with the statutory requirement of motor vehicle insurance, including automatic e-challans for uninsured vehicles, real-time insurance verification by State Police and an extended mandatory third-party insurance period for newly purchased vehicles.

A Bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra issued the directions while deciding National Insurance Co. Ltd. v. Smt. Thungala Dhana Laxmi & Ors., Civil Appeal No. 14369 of 2025. The judgment was pronounced on August 4, 2026.

The Court was examining, among other issues, the widespread non-compliance with Section 146 of the Motor Vehicles Act, 1988, which mandates insurance coverage against third-party risks, and whether there should be a uniform structure for covering occupants of motor vehicles.

Nearly 56% Vehicles Found Uninsured

Taking note of the seriousness of the issue, the Court recorded that nearly 56% of vehicles plying on Indian roads remain uninsured, amounting to approximately 16.54 crore uninsured vehicles out of 30.48 crore vehicles.

The Court observed that the absence of insurance leaves accident victims and their families without an effective and timely mechanism for securing compensation and often forces them into prolonged litigation.

The judgment also noted that India recorded 4,87,705 road accidents in 2024, compared with 4,80,583 in 2023 and 4,61,312 in 2022.

ANPR Cameras to Detect Uninsured Vehicles

The Supreme Court directed that Automatic Number Plate Recognition (ANPR) cameras deployed on highways and roads be integrated with the databases of the Insurance Information Bureau (IIB) and VAHAN.

The integrated system will facilitate the issuance of automatic e-challans to vehicles found to be uninsured.

The Court further directed that State Police be provided with handheld devices or downloadable applications linked to the IIB and VAHAN databases so that officers can verify the insurance status of vehicles in real time and issue challans for violations.

New Cars to Require 4-Year Third-Party Insurance

In a significant modification to the existing regime, the Court directed that third-party insurance purchased for new private cars shall be valid for four years, instead of the earlier three-year requirement.

For new two-wheelers, the mandatory third-party insurance period has been increased from five years to six years.

The Court directed IRDA to immediately issue necessary directions to implement the extended insurance periods.

Four-Layer Insurance Structure for Private Vehicles

The Court also approved a broad four-layer insurance structure for private vehicles.

The structure comprises:

1.  Third-Party Only Policy – The mandatory minimum cover under Section 146 of the Motor Vehicles Act.

2.  Optional Occupant/Pillion Rider Cover – Additional cover for occupants or pillion riders, other than the owner, driver and specified family members.

3.  Personal Accident Cover – Cover for death or permanent disability of the owner, driver and occupants/pillion riders.

4.  Own Damage Cover – Optional cover for loss or damage to the insured vehicle.

The Court directed that every customer purchasing motor insurance must be provided a “customer option form”, enabling them to specifically opt for the additional covers and understand the premium payable for each.

A consumer-friendly information sheet explaining the mandatory and optional covers has also been made mandatory for the sale of motor vehicle insurance, whether conducted offline or online.

Fuel Supply May Be Linked to Valid Insurance

The Court also directed the IRDA, in consultation with the Ministry of Road Transport and Highways, to deliberate and develop a pilot project linking fuel supply to valid insurance status.

Under the proposed mechanism, a vehicle without valid insurance could potentially be refused fuel at petrol pumps until valid insurance is obtained.

The Court said such a mechanism could assist in identifying uninsured and unregistered vehicles and encourage vehicle owners to comply with the statutory insurance requirement.

Directions on Pending Motor Accident Claims

The Supreme Court also addressed delays in motor accident compensation proceedings.

For cases relating to accidents that occurred before March 31, 2022, the State Police have been directed to promptly file Detailed Accident Reports (DARs) along with relevant documents, including FIRs, MLCs, post-mortem reports, insurance policies and permits, before the concerned Motor Accident Claims Tribunal.

Police have further been directed to assist in the prompt service and production of witnesses to facilitate speedy disposal of such cases.

Supreme Court Upholds Compensation Under Comprehensive Policy

The appeal itself arose from a motor accident involving a Maruti 800 in which the deceased owner was travelling. The High Court had awarded Rs. 10,00,500 with 7.5% interest per annum to the claimants.

The Supreme Court upheld the High Court's reasoning, holding that under a comprehensive/package insurance policy, the insurance company was liable to compensate an occupant of the vehicle in accordance with the applicable IRDA circular.

The Civil Appeal was accordingly dismissed on that aspect.

The Court directed all stakeholders to comply with the directions and file their responses by August 14, 2026, with the matter listed for consideration of compliance affidavits on August 18, 2026 at 2 PM.

Case: National Insurance Co. Ltd. v. Smt. Thungala Dhana Laxmi & Ors.
Citation: 2026 INSC 793
Civil Appeal No.: 14369 of 2025
Judgment Date: August 4, 2026
Bench: Justice Sanjay Karol and Justice Prashant Kumar Mishra.

Representation:-

For Appellant(s) :- Ms. Meenakshi Midha, Adv. Mr. Garv Singh, Adv. Ms. Muskaan, Adv. Ms. Sindhoora Ravindran, Adv. Mr. Chander Shekhar Ashri, AOR

For Respondent(s) :- Mr. Vamsikrishna Thota, Adv. Mr. T. Vishwarupa Chary, Adv. Ms. Munisha Anand, Adv. Mr. Neeraj Kumar Sharma, Adv. Mr. Vikas Kumar, Adv. Mrs. Alisha Parvin, Adv. Mr. Anil Kumar, AOR Mr. Kamaldeep, Adv. Mr. Karunakar Mahalik, AOR Mrs. Saloni Sharan, Adv. Mr. Vishal Meghwal, AOR Mr. Abhishek Kumar Gola, Adv. Mr. Nikhil Jain, AOR Ms. Divya Jain, Adv. Mr. Anshul Mehral, Adv. Mr. Siddharth, AOR Mr. Gopal Singh, AOR, Mr. Rajeev Maheshwaranand Roy, AOR, Mr. Gautam Jha, AOR Ms. Sweta Jha, Adv. Mr. Mukesh Kumar, AOR Mr. Abhay Kumar, AOR Mr. Rajat Khattry, Adv. Mr. N Venkataraman, Sr. Adv. Mr. Ravinder Agarwal, AOR Mr. Manish Kumar Singh, Adv. Mr. Vasu Agarwal, Adv. Mrs. Archana Pathak Dave, A.S.G. Mr. Nachiketa Joshi, Sr. Adv. Mr. Raj Bahadur Yadav, AOR Mr. Avinash Dave, Adv. Mr. Prasant Singh Ii, Adv. Mr. Advitya Awasthi, Adv. Mr. Kamal Rattan Digpaul, Adv. Mr. Arun Kumar Yadav, Adv. Mr. Jagdish Chandra Solanki, Adv. Mr. Vishal Meghwal, Adv. Mr. Aishwarya Singh, Adv. Mr. Kamlesh Kumar, Adv., Mr. N.Venkataraman, ASG Mr. Ravinder Agarwal, AOR Mr. Manish Kumar Singh, Adv. Mr. Vasu Agarwal, Adv. Mr. Jagidsh Chandra Solanki, Adv. Mr. Vishal Meghwal, Adv. Ms. Aishwarya Sinha, Adv. Mr. Kamlesh Kumar, Adv. Mr. Joy Basu, Sr. Adv. Mr. Rajeev M. Roy, Adv. Mr. Nilesh Kumar, Adv. Mr. P. Srinivasan, Adv