The Supreme Court of India, in a recent judgment, has declared that third-party insurance is compulsory for every new four-wheeler and two-wheeler that’s sold in India after September 1, 2018. The ruling was made to provide relief to victims involved in vehicular accidents.
The Supreme Court Committee on Road Safety met on March 26, 2018 and noted that there were about 18 crore vehicles plying on the road in India, of which only about six crore vehicles had the mandatory third-party insurance cover. This means 66 percent of vehicles were running on the road without any third-party insurance cover; and the victims of accidents (including those who have died and their legal representatives) ended up getting nothing because the vehicle was not insured.
The Committee had detailed discussions with the Insurance Regulatory and Development Authority (IRDA), General Insurance Council, Ministry of Road Transport and Highways and Department of Financial Services, Ministry of Finance and the government of India.
“The recent order of Supreme Court that every new car sold should have a three-year third-party liability insurance cover and every new two wheeler sold should have a five year third party liability insurance cover is a welcome verdict," said K G Krishnamoorthy Rao, managing director and CEO, Future Generali India Insurance Company, while commenting on this new order. "As of now a significant percentage of cars and two wheelers are not insured for the mandatory third-party insurance, because of which many times the common man who meets with a road accident involving such vehicles do not get adequate compensation. The challenge for the insurance industry to implement the order from September 1 is the readiness of the product and pricing to be approved by the regulator and time required for making changes in the IT systems of the companies.”