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Supreme Court extends mandatory third-party motor insurance cover

ICICIdirect Research 07 Aug 2026 DISCLAIMER

The Supreme Court has mandated an increase in the compulsory third-party (TP) motor insurance cover for new vehicles to 4 years for private cars (from 3 years) and 6 years for two-wheelers (from 5 years), aiming to curb the high level of uninsured vehicles in the country. The Court noted that nearly 56% of vehicles (~16.5 crore out of 30.5 crore) remain uninsured despite the existing multi-year insurance mandate.
The Court has also proposed linking fuel purchases to valid insurance and directed enforcement agencies to use VAHAN-linked handheld devices for real-time verification. We view the move as a structural positive for motor insurers, as higher policy persistency and improved compliance should support premium growth, benefiting players such as ICICI Lombard, Go Digit, New India Assurance and Bajaj Finserv (via Bajaj Allianz General Insurance).

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