SC extends mandatory third-party motor cover for new cars and two-wheelers
New cars will require four years of third-party insurance and two-wheelers six years, increasing the upfront insurance component of vehicle purchases and adding compliance demands for dealers, insurers and registrars.
What happened
Supreme Court of India · The Supreme Court extended mandatory third-party insurance for new cars to four years and two-wheelers to six years, raising upfront
Key facts
- New cars: mandatory third-party cover extended from 3 years to 4 years
- New two-wheelers: mandatory third-party cover extended from 5 years to 6 years
- Accident claims before March 31, 2022 covered by MACT disposal directions
- Next compliance hearing: August 18
Why this matters
Insurers, lenders and dealer-tech providers have an opportunity to partner on bundled financing, compliance automation and digital policy issuance for mandatory long-term cover.
What to watch
- Changes in new-vehicle retail volumes and booking-to-delivery conversion after implementation, especially for entry cars and two-wheelers.
- Average on-road price increase by vehicle segment and insurer premium revisions.
- Growth in financed share, average loan tenure and dealer subvention spending.
- Insurance attachment rates, dealer commission income and insurer/dealer partnership announcements.
- Used-vehicle transaction growth, exchange offers and demand for older low-ticket two-wheelers.
- Reports of registration or delivery bottlenecks tied to proof-of-insurance compliance.
- Bundle insurance into advertised on-road pricing and clearly separate mandatory third-party cover from optional own-damage and accessory products.
- Expand lender partnerships, zero/low-down-payment offers and EMI messaging to neutralize the higher upfront insurance component.
- Audit dealership policy-issuance workflows, insurer APIs, documentation controls and RTO handoffs to prevent delivery delays.
- Use the larger compulsory insurance transaction to cross-sell service packages, roadside assistance, extended warranty and renewal reminders.
- Recalibrate entry-model inventory and promotional budgets in markets with high cash-purchase and two-wheeler exposure.