Supreme Court on Mandatory Motor Insurance

Context

The Supreme Court has given landmark orders to bolster the mandatory third-party motor insurance, with a view to improving road safety standards, securing timely compensation for accident victims, and digital enforcement in the country.

Key Highlights

• The Supreme Court of India has given detailed guidelines to enhance the implementation of compulsory motor insurance policy under the Motor Vehicles Act, 1988.
• The Court noted that very close to half of the vehicles (16.54 crore) registered on Indian roads are uninsured, and thus the accident victim suffers a delay in compensation and extended litigation.
• It is a judgment which is relevant to the UPSC GS Paper II and III as it speaks of the promotion of road safety, digital governance, insurance compliance, and victim-centric justice.

Background

• Mandatory Third-Party Insurance

  • Third-party motor insurance is mandatory for all motor vehicles on public roads as stipulated in the Motor Vehicles Act, 1988, Section 146.
  • It is for the liability of injury, death, or damage to property of a third party and not for damage to the owner’s car.
  • The Supreme Court pointed out that compulsory insurance is a social welfare measure, with the aim of ensuring timely compensation to road accident victims.

• Why Did the Supreme Court Intervene?

  • Road safety is a high priority public policy concern in India, with more than four lakh road accidents occurring in the country every year.
  • Some 22% of accidents are caused by uninsured vehicles, and victims are left without immediate money relief.
  • The Court said that victims should not be subjected to unnecessary and extended litigation because vehicle owners don’t meet the insurance requirements.
  • It stressed the importance of insurance as an item of protection of right to life and dignity under Article 21.

Key Directions Issued by the Supreme Court

• Technology-Based Enforcement

  • The traffic police will deploy a handheld gadget and a mobile app connected with the VAHAN portal and Insurance Information Bureau.
  • Immediate action will be possible for uninsured vehicles as they will be verified in real time.

• Integration of ANPR Cameras

  • Renting cameras to automatically read license plates will be linked to insurance records.
  • Uninsured vehicles will automatically be issued with e-challans which will increase the efficiency of enforcement.

• Extension of Mandatory Insurance

  • The period of third-party insurance for new cars has been increased from three years to four years.
  • A 5-year period is now changed to 6 years for new 2-wheelers.
  • The Insurance Regulatory and Development Authority of India (IRDAI) has been instructed to put the new norms into effect.

• Standardised Insurance Structure

  • The Court laid out a four-tiered insurance structure, which consisted of:
    • Mandatory third-party cover.
    • Optional occupant/pillion cover.
    • Personal accident cover.
    • Own damage cover.
  • The insurance companies have to supply basic information sheets and the form for customer options.

• More efficient Motor Accident Claims

  • Police authorities have been directed to promptly submit Detailed Accident Reports.
  • Motor Accident Claims Tribunals (MACTs) have been the focus of special attention in a bid to fast-track long pending cases.

Significance of the Judgment

• Improves the enforcement of the Motor Vehicles Act.
• Enhanced financial protection for the injured in a vehicle accident.
• Fosters technology-based governance and enforcement practices.
• Makes insurance products more transparent.
• Helps the government’s overall road safety efforts.

Challenges

• Large number of uninsured vehicles.
• The enforcement of the ordinance is weak in rural areas.
• Lack of public understanding about compulsory insurance.
• States’ digital infrastructure disparities.
• Pros and cons for proposed fuel verification through insurance.

Way Forward

• Improve the integration of data between VAHAN, Police and Insurance data.
• Carry out national awareness programmes on compulsory insurance.
• Enhance digital infrastructure for enabling seamless enforcement.
• Make insurance products available at a lower price to enhance coverage.
• Shorten pendency in Motor Accident Claims Tribunals in terms of speeding up the process and digitalizing the processes.
• Promote stronger intergovernmental, insurance provider and transport operator collaboration to secure universal insurance coverage.

Conclusion

• The Supreme Court’s decision is a game-changer in India’s road safety ecosystem, ensuring enhanced compliance with the enforcement of mandatory motor insurance.
• The directions aim to increase the speed of compensation, decrease the number of legal proceedings and foster responsible vehicle ownership through technology-enabled governance, legal compliance, and victim-centric reforms.
• To make roads safer and ensure everyone is covered, implementation and awareness will be key.

Source: The Indian Express

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