Third Party Insurance Of 3 Yrs For Cars & 5 Yrs For Two Wheelers Mandatory For Vehicles Sold From Sept 1 : SC [Read Order]

The Bench also observed that number of deaths caused by potholes was “frightening”

The Supreme Court has ordered that third party insurance coverage of three years for cars and five years for two wheelers should be mandatory for all vehicles sold from September 1. The order was issued by a bench of Justice Madan B. Lokur and Justice Deepak Gupta, while considering a public interest litigation seeking guidelines for improving road safety filed by S. Rajaseekaran, Chairman & Head of Orthopedic Department, Ganga Hospital, Coimbatore,

The direction is issued on the basis of decisions taken by the Supreme Court Committee on Road Safety, headed by former SC judge Justice K. S Radhakrishnan. The bench noted that in a meeting held by Committee on 26th March, 2018, it was recorded that there are about 18 crore vehicles plying on the road and only about 6 crore vehicles have the mandatory third party cover, which meant that 66% of the vehicles were plying without third party insurance. To get over the problem being faced by persons who are legal representatives of victims of fatal road accidents due to lack of insurance coverage for the offending vehicle, the Committee had detailed discussions with IRDA, General Insurance Council, Ministry of Road Transport and Highways and Department of Financial Services, Ministry of Finance, Government of India. On the basis of the meeting, the Committee took the following decisions.

i) It shall be mandatory for all General Insurance Companies to issue a three year third party insurance cover for new cars and five year third party insurance cover for new two wheelers as a separate product or as part of a comprehensive insurance product. IRDA should issue instructions accordingly to all General Insurance Companies.

ii) The GIC and IRDA should ensure that the legacy insurance data is also shared with MoRTH as soon as possible for its integration with Vahan data.

iii) IRDA should ensure that all General Insurers follow its directions dated 01.01.2018 advising them to make available the third party insurance cover to all proposers on online channels; liaise with police authorities to facilitate issue and renewal of third party insurance cover and ensure its easy availability.

The Court observed that the decisions of the Committee were “eminently reasonable”, which should be implemented. Therefore, the Court directed:

"We make it clear that the third party insurance cover for new cars should mandatorily be for a period of three years and for two-wheelers, it should mandatorily be for a period of five years. This may be taken and treated as a separate product. We leave it to the insurance companies to deal with comprehensive insurance policies on a separate footing and it would be at the option of the owner of the vehicle to decide which policy should be taken except that the third party insurance is mandatory. The decision should be implemented from 1st September, 2018 on the policies sold".

Issue Concerning Potholes.

The Court also adverted to the issue concerning potholes, which were causing fatal accidents in cities. The Court took notice of a newspaper report that the number of deaths as a result of accidents due to potholes were more than the number of deaths due to terrorists’ attack. The report was described as “frightening”.

“There is little doubt that those who are obliged to maintain the roads under the municipal laws are not doing their job as effectively as they should. It is as a result of this that fatal accidents are taking place and the families are facing distress.”, said the bench.

Therefore, a direction was issued to the Supreme Court Committee on Road Safety to look into the matter at the earliest and give a report in that regard.

On November 30, 2017, the same bench in the same PIL had issued a slew of directions for increasing road safety, like formation of road safety councils at state and district levels, creation of road safety fund etc.

Read the Order