Pollution Under Control (PUC) Certificate Must For Renewal Of Motor Insurance Policies : IRDA Tells Insurers

The Insurance Regulatory and Development Authority (IRDAI) has issued a circular to insurance companies asking them to ensure that policy holders provide a valid Pollution Under Control (PUC) Certificate at the time of renewal of their motor insurance policy.

The circular issued on August 20, 2020 has advised general insurance providers to not renew any motor vehicle's insurance policy without the owner providing a valid PUC certificate, as per Supreme Court's Orders.

Not only has the insurance regulator asked insurers to generally abide by Supreme Court's Order, but specific emphasis has been laid on compliance in the National Capital Region of Delhi (Delhi-NCR).

"Central pollution control board (CPCB) has raised concerns regarding the status of compliance of above direction of Hon'ble Supreme Court of India in National Capital Region of Delhi (Delhi – NCR). Please ensure that the direction of the Supreme Court of India is followed scrupulously with a special focus on compliance in the National Capital Region of Delhi (Delhi-NCR)", reads the operative part of the circular which is addressed to all CEOs and CMDs of general insurance companies.

The Supreme Court, on August 10, 2017, had passed orders in the MC Mehta case mandating insurance providers to obtain valid PUC certificates for the vehicle while renewing its motor insurance policy. It was stipulated that vehicle owners who don't have a valid pollution certificate will not be able to renew the insurance of their vehicles.

The Top Court had issued this direction to all insurers in India with an aim to ensure that polluting vehicles could be kept off the roads.

The Order was issued after suggestions given by SC-appointed Environment Pollution Control Authority (EPCA).  EPCA had told court that the current enforcement strategy based on "onroad" checks and challans also did not ensure 100 per cent pollution certificate compliance.

EPAC recommended ensuring 100 per cent compliance by linking annual vehicle insurance with PUC certificates.

Expressing that the move might be "counter-productive", the Ministry of Road Transport and Highways said :

"While linkage of renewal of Insurance with PUC certificates may be desirable, it may be noted that the vehicle insurance renewal is an annual feature whereas the periodicity for PUC norms for any vehicle should be at shorter intervals. It has been observed with serious concern that the coverage of third party insurance for motor vehicles is very low at this stage. Linkage of PUC certificate with Insurance may be counter-productive to that extent. MoRTH is of the view that with the linkage of PUC Centres with VAHAN database and other enforcement measures, the PUC compliance by motor vehicle owners is likely to improve considerably".

However, a bench comprising Justices Madan B Lokur and Deepak Gupta ordered :

"There is now no dispute or disagreement about this. However, it is made clear that the Insurance Companies will not insure a vehicle unless it has a valid PUC certificate on the date of renewal of the insurance policy. This should be implemented at the earliest".

The Bench had also gone on to ask the Ministry of Road Transport and Highways to ensure that all fuel refilling centres in NCR have PUC centres. The Court went on to grant four weeks' time to the Centre to ensure that there are functional PUC centres in NCR to ensure that vehicles plying have PUC certificate.

As Delhi-NCR has been suffering due to the menace of air pollution year-on-year, and alarming levels of toxic emissions continue to harm its citizens, it appears that the Supreme Court's Orders were not complied with, prompting IRDAI to issue this new circular.