India’s Vehicle Insurance Fuel Rule may soon become a key enforcement tool after the Supreme Court proposed a pilot scheme that links fuel supply to valid motor insurance. The Court noted that nearly 56% of vehicles on Indian roads operate without active third-party insurance. It asked the Ministry of Road Transport and Highways (MoRTH) and the Insurance Regulatory and Development Authority of India (IRDAI) to develop the pilot project. The Ministry of Petroleum and Natural Gas has also expressed in-principle support for the proposal.
Supreme Court Suggests Fuel Restriction for Uninsured Vehicles
The Court proposed that petrol pumps supply fuel only to vehicles with valid insurance under the pilot project. It said this step could improve compliance with mandatory third-party insurance requirements. The judges also highlighted the need for better coordination between government agencies before implementing the system nationwide.
ANPR Technology to Enable Automated Enforcement
The Court directed authorities to connect Automatic Number Plate Recognition (ANPR) cameras with the VAHAN database and the Insurance Information Bureau. This integration will help authorities identify uninsured vehicles and issue e-challans automatically. The Court also asked State Governments to equip traffic officers with mobile applications or handheld devices for real-time insurance verification.
The Bench further instructed authorities to enforce the revised penalties under the amended Motor Vehicles Act after notification. First-time offenders may face a fine of up to three times the annual premium or ₹5,000. Repeat offenders may have to pay up to five times the annual premium or ₹10,000.
Longer Mandatory Third-Party Insurance for New Vehicles
The Supreme Court also approved longer mandatory insurance periods for newly registered vehicles. Private passenger cars will require four years of third-party insurance instead of three years. Newly registered two-wheelers will require six years instead of five years. The Court said these longer terms will reduce lapses in insurance coverage while authorities develop the proposed Vehicle Insurance Fuel Rule enforcement system.
Standard Four-Tier Insurance Framework
The Court approved a four-layer insurance framework for private vehicles. Mandatory third-party insurance will remain the base cover. Buyers can also choose optional legal liability coverage for occupants or pillion riders, personal accident insurance for owners and drivers, and own-damage protection.
The Court asked IRDAI to work with insurers to create uniform policy wording for these optional covers. It also directed insurers to provide clear option forms in digital and printed formats. Consumer information sheets must explain the difference between mandatory and optional coverage. In addition, the Court proposed a public verification portal that would allow citizens, employers, and commuters to check a vehicle’s insurance status easily.
