Supreme Court Flags Motor Insurance Crisis: 56% Vehicles Uninsured, Seeks Govt and IRDAI Action Plan
Court warns lack of insurance undermines road safety and compensation system for accident victims
IRDAI, Transport Ministry asked to propose reforms including uniform policies and stricter enforcement
By Our Legal Correspondent
New Delhi: November 27, 2025:
The Supreme Court of India has raised alarm over the country’s motor insurance crisis, noting that 56% of vehicles on Indian roads are uninsured. The apex court has directed the Ministry of Road Transport and Highways and the Insurance Regulatory and Development Authority of India (IRDAI) to submit a detailed plan to fix compliance and ensure that all vehicles carry valid insurance policies.
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The Court’s Concern
A bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra observed that the situation is of “utmost concern.” The judges highlighted that uninsured vehicles not only violate statutory mandates but also leave accident victims without compensation.
The court referred to government data presented in the Lok Sabha in March 2023, which revealed that 16.54 crore out of 30.48 crore registered vehicles were uninsured. The Standing Committee on Finance (2024–25) pegged the figure at nearly 56%, underscoring the scale of the problem.
Why Insurance Matters
Motor insurance is mandatory under the Motor Vehicles Act, 1988, primarily to protect accident victims. Without insurance, victims and their families face long legal battles and financial hardship.
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The Supreme Court noted that ignorance of this statutory mandate results in motor accidents involving uninsured vehicles, leaving victims uncompensated and undermining public trust in the justice system.
Uniform Policy Proposal
The bench also asked why a uniform insurance policy covering all occupants of a vehicle should not be made mandatory. Currently, policies often exclude certain categories of passengers, leading to disputes during compensation claims.
- Legal experts believe that a uniform policy could simplify claims
- Reduce litigation
- Ensure fair compensation for all victims
The Trigger Case
The issue came to light during a motor accident compensation case dating back to 1996, where an insurance company refused to pay compensation to the family of a man killed in his own insured car, citing technicalities in the policy.
This prompted the court to examine the broader state of motor insurance in India, exposing the shocking reality that half of India’s vehicles remain uninsured despite legal requirements.
Industry Response
The insurance industry has long struggled with low penetration rates. Despite India having over 38 crore registered vehicles as of 2024, insurance coverage has stubbornly remained around 50%.
- Lack of awareness among vehicle owners.
- High renewal default rates.
- Weak enforcement by authorities.
- Perception of insurance as an unnecessary expense.
IRDAI’s Role
The Supreme Court has asked IRDAI to explore policies that improve coverage. Suggestions include:
- Mandatory long-term insurance at the time of vehicle purchase.
- Digital monitoring systems to track uninsured vehicles.
- Stricter penalties for non-compliance.
- Awareness campaigns to educate vehicle owners.
Government’s Responsibility
The Ministry of Road Transport has been tasked with proposing enforcement mechanisms. Options under consideration include linking insurance validity with vehicle registration and fitness certificates, ensuring that uninsured vehicles cannot legally ply on roads.
Public Safety at Risk
India has one of the worst road safety records globally, with thousands of fatalities each year. The absence of insurance exacerbates the crisis, leaving victims without financial support.
The Supreme Court stressed that public safety and justice demand immediate corrective measures.
Expert Opinions
- Insurance is not just a legal requirement but a social safety net.
- Uniform policies would reduce disputes and litigation.
- Stronger enforcement is essential to protect vulnerable road users.
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However, some industry voices caution that mandatory long-term policies could increase upfront costs for buyers, potentially discouraging compliance.
Looking Ahead
- Uniform insurance policies covering all occupants.
- Integration of insurance with registration systems.
- Awareness drives targeting rural and semi-urban areas.
- Technology-driven enforcement, such as AI-based monitoring of uninsured vehicles.
Conclusion
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The Supreme Court’s warning highlights a critical gap in India’s road safety framework. With over half of vehicles uninsured, millions of accident victims remain vulnerable. By demanding a compliance plan from the government and IRDAI, the court has signalled that motor insurance is not optional—it is essential for justice, safety, and accountability.
The coming months will reveal whether policymakers can rise to the challenge and ensure that every vehicle on Indian roads carries valid insurance.
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