The Supreme Court on August 4 extended the mandatory third-party (TP) motor insurance coverage for new vehicles by one year, directing that new cars be sold with four years of third-party cover (up from three) and new two-wheelers with six years (up from five). A bench of Justices Sanjay Karol and Prashant Kumar Mishra said the extension was in the interest of road safety, overriding the IRDAI and General Insurance Council's recommendation not to enhance the period.
Delivering its verdict in National Insurance Co. Ltd. v. Smt. Thungala Dhana Laxmi & Ors. (2026 INSC 793), the court cited a Standing Committee on Finance report showing nearly 56% of vehicles on Indian roads — 16.54 crore of 30.48 crore registered vehicles — operate without valid insurance, leaving accident victims with no recourse to timely compensation. The court observed that despite its 2018 direction in S. Rajaseekaran v. Union of India mandating three-year car and five-year two-wheeler TP cover, compliance has remained poor.
The court also directed IRDAI to immediately issue necessary directions on the extended cover period, and ordered technology-driven enforcement: Automatic Number Plate Recognition (ANPR) cameras are to be integrated with the Insurance Information Bureau (IIB) and VAHAN databases for automatic e-challans, and state police must be equipped with handheld devices or apps for real-time insurance verification.
Compliance affidavits from all stakeholders are due by August 14, with the matter listed for review on August 18.
Sources: The Hindu, Economic Times, Bar and Bench (August 4, 2026)