Supreme Court Orders Probe: Fuel Sales Linked to Vehicle Insurance in India

The Supreme Court has directed the Insurance Regulatory and Development Authority (IRDA) to examine the feasibility of connecting fuel purchases at petrol pumps with valid vehicle insurance. This directive comes in response to data indicating that approximately 56% of vehicles on Indian roads lack insurance coverage.

Out of 30.48 crore registered vehicles, 16.54 crore remain uninsured, according to a December 2024 report from the Standing Committee on Finance. The court noted that 22% of all road accidents involve vehicles without proper insurance.

Addressing the Uninsured Vehicle Crisis

This high rate of uninsured vehicles undermines the mandatory third-party insurance requirement under Section 146 of the Motor Vehicles Act. It also leaves accident victims without timely financial compensation, highlighting a critical flaw in the current system.

• 56% of Indian vehicles are uninsured.
• This amounts to 16.54 crore vehicles out of 30.48 crore registered.
• 22% of road accidents involve uninsured vehicles.

To tackle this challenge, a bench comprising Justices Sanjay Karol and Prashant Kumar Mishra ordered the IRDA and the road transport ministry to initiate a pilot project. This project would explore denying fuel to vehicles lacking valid insurance, a measure that the Ministry of Petroleum and Natural Gas has indicated no objection to in principle.

Enhancing Enforcement and Coverage

Beyond the fuel sales link, the court also mandated the integration of Automatic Number Plate Recognition (ANPR) cameras already deployed on highways with data from the Insurance Information Bureau and the VAHAN portal. This integration aims to facilitate the automatic issuance of e-challans for uninsured vehicles.

• Integrate ANPR cameras with Insurance Information Bureau and VAHAN portal data.
• Equip state police with handheld devices or applications for on-the-spot insurance verification.

State police forces will additionally be equipped with handheld devices or specialized applications to verify vehicle insurance status instantly. These technological interventions are designed to bolster enforcement capabilities across the country.

In a related ruling, the court extended the mandatory third-party insurance period for new vehicles at the point of purchase or registration. This period has been increased from three to four years for new cars and from five to six years for new two-wheelers.

• New cars: mandatory third-party insurance extended from three to four years.
• New two-wheelers: mandatory third-party insurance extended from five to six years.

These directives were issued during proceedings for an appeal by National Insurance Co Ltd, which originated from a 1996 accident case. All parties involved are required to submit compliance affidavits by August 14, with the next hearing scheduled for August 18.