56% Vehicles Uninsured: Supreme Court Seeks Govt, IRDA Plan to Fix Compliance

The Supreme Court has sought responses from the Ministry of Road Transport and the Insurance Regulatory and Development Authority (IRDA) on steps that can be taken to ensure that all vehicles on Indian roads possess a valid insurance policy.

A bench of Justices Sanjay Karol and Prashant Kumar Mishra recorded that more than 50% of vehicles currently plying in the country do not have valid motor-vehicle insurance, and described the situation as one of “utmost concern".

Court referred to the Government of India’s answer in the Lok Sabha on March 20, 2023, which stated that 16.54 crore out of 30.48 crore registered vehicles were uninsured. It also noted that the 2024–25 report of the Standing Committee on Finance pegged the percentage of uninsured vehicles at nearly 56%.

“The ignorance of a statutory mandate results in motor accidents involving uninsured vehicles, which directly cause innocent victims having to run from pillar to post for compensation. Therefore, in furtherance of public interest, this court seeks the response of the Ministry of Road Transport and the IRDA on what steps can be taken to ensure that all vehicles have a valid insurance policy,” the bench said.

The bench was hearing a civil appeal filed by National Insurance Company Limited and observed that the matter raised substantial issues concerning the interests of motor-vehicle policyholders. “The legislative mandate regulating motor-vehicle insurance is ultimately directed towards safeguarding the policyholders and to ensure that the sector grows in an orderly manner,” it added.

Two issues, court said, arose for consideration. The first was the widespread non-compliance with Section 146 of the Motor Vehicles Act, 1988, which requires every vehicle to have a valid insurance policy covering third-party risks. The second was whether there should be a uniform motor-vehicle policy structure that mandatorily covers all occupants of a private vehicle, beyond the statutory third-party coverage.

On the second issue, court examined the scheme of the IRDA Act, which was enacted to “protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto". The IRDA was constituted under Section 3 of the Act, while Section 14 sets out its duties, powers and functions.

Section 14(2)(b) provides that the Authority’s functions extend to “protection of the interests of the policy-holders in matters concerning assigning of policy, nomination by policy-holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance". Section 26 empowers the Authority to frame regulations consistent with the Act. “From a reading of the provisions, it is clear that the IRDA has been tasked with the protection of consumer interest when it comes to matters involving insurance,” the bench observed.

Court also sought responses from the IRDA, the General Insurance Council of India, and impleaded insurance companies on why a uniform policy should not be prescribed to ensure mandatory coverage for all occupants of private vehicles, in addition to third-party risks.

Further, the bench asked the authorities to clarify within two weeks whether an act-only policy or a comprehensive-coverage policy is presented to consumers first at the point of sale.

The matter has been posted for further consideration on December 9, 2025.

Case Title: National Insurance Company Limited v. Smt Thungala Dhana Laxmi & Ors

Order Date: November 18, 2025

Bench: Justices Sanjay Karol and Prashant Kumar Mishra