- Third-Party new vehicle insurance to be made mandatory from 1 September
- Insurance coverage for four-wheelers should be three years
- Insurance coverage for two-wheelers should be five years
A new Supreme Court ruling mandates that every new four-wheeler and two-wheeler sold in the country from 1 September 2018 should have a third-party insurance. The apex court has passed the ruling to ensure that the victims of road accidents receive compensation and also to encourage the insurance firms to look at it from a ‘human point of view’ and not from a commercial point.
The Supreme Court Committee on Road Safety observed that over one lakh people were dying in India every year in road accidents. In view of the situation, the committee headed by the former apex court judge Justice K S Radhakrishnan, it was recommended that at the time of sale of two or four wheelers, third party insurance should be made mandatory for a period of five and three years respectively instead of one year. The report further indicates that around 18 crore vehicles were plying on the roads of the country out of which only six crore have third party insurance, and victims of road accidents did not receive compensation as vehicles did not have a third party cover.
The Committee had held 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. Post discussions, the bench came to a conclusion that third party insurance should be made mandatory for four wheelers for a period of three years and for two wheelers, it should be done for a period of five years.
Speaking on the occasion, K.G. Krishnamoorthy Rao, Managing Director and Chief Executive Officer, Future Generali India Insurance Company Limited said, "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. 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 1st September 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.”