Want fuel, FASTag or driver license? You may have to prove your ride's insured
the Union finance ministry recently proposed several various measures to expand third-party insurance
Documents proving third-party insurance for your vehicle may soon become mandatory for renewal of your driving license, obtaining FASTag or even purchasing fuel.
In a bid to tackle the rising numbers of uninsured vehicles on Indian roads, the Union finance ministry recently proposed several various measures to expand third-party insurance, Livemint reported, quoting sources familiar with the matter.
The proposed measures include vehicle owners to prove they have valid third-party insurance before they can buy fuel, obtain a FASTag, renew their driving licenses, or even get their pollution control certificates.
The ministry also proposed that the government start sending text messages to uninsured vehicle owners.
The move comes as the Centre seeks to bridge the gap in India's insurance coverage, which remains concerning despite stringent penalties under the Motor Vehicles Act as more than half of the vehicles on Indian roads remain uninsured for third-party risks.
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Under the Motor Vehicles Act, 1988, all motor vehicles must compulsorily have an insurance policy covering third-party risks, and offenders can be jailed for as long as three months.
The road ministry is also likely to introduce stricter enforcement measures, with notifications expected soon to ensure all states and union territories enforce these rules effectively.
“These proposals are being worked out, and soon, the road ministry may make changes in rules governing the Motor Vehicles (MV) Act to link various vehicle-related compliances with third-party insurance cover and issue necessary notifications. Also, road ministry would issue necessary directions to all state governments and union territories for strict enforcement of the provisions of the MV Act that mandates compulsory third-party insurance cover," Livemint quoted one of the two sources as saying on the condition of anonymity.
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Currently, under the 1988 Motor Vehicles Act, third-party insurance is mandatory for all motor vehicles, with penalties including imprisonment of up to three months or fines for those caught without it.
Vehicle insurance coverage in India stands at 50%
According to data from the Insurance Regulatory and Development Authority of India, third-party insurance coverage in India was only around 50% of about estimated 350-400 million vehicles plying on Indian roads in 2024.
A recent parliamentary standing committee report also underlined the need to address this gap and sought measures to tackle the issue. The Panel also recommended that financial institutions issue auto loans only upon receiving proof of insurance coverage.
Experts on proposed measures on third-party insurance
Experts believe that the new proposal could significantly reduce the number of uninsured vehicles, Livemint reported.
"This policy seeks to set up an integrated system in which critical services are linked with adherence, through successful inroads for vehicle insurance within daily practices and substantially reducing the incidence of uninsured vehicles on the country's roads," said Rajat Mahajan, Partner and Automotive sector leader, Deloitte.
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The proposal might have benefits beyond just enforcement. It might connect a lot of services, such as toll payments, traffic violations, and insurance coverage, under one system, giving vehicle owners a more streamlined experience.
"If Aadhaar is integrated with these services, it would make it easier for vehicle owners to manage all their obligations in one place, improving compliance," said Haroon Asrar, a partner at the law firm Solomon and Co.