SC mandates four-year third-party cover for new cars, six years for two-wheelers
The Supreme Court’s revised compulsory insurance tenure raises upfront vehicle purchase costs and directs tighter uninsured-vehicle enforcement through insurance-data links with VAHAN, ANPR systems and potential fuel-sale checks.
What happened
Supreme Court of India · The Supreme Court mandated four-year third-party cover for new cars and six-year cover for two-wheelers, raising purchase costs at
Key facts
- 4 years third-party insurance for new cars
- 6 years third-party insurance for new two-wheelers
- Previous requirement: 3 years for cars and 5 years for two-wheelers
- ₹10.005 lakh compensation
- Claims before March 31, 2022
- Compliance hearing on August 18, 2026
Why this matters
Insurers, dealer groups, lenders and mobility-data providers have an opening to partner on embedded long-tenure cover, VAHAN-linked verification and ANPR-enabled uninsured-vehicle enforcement tools.
What to watch
- Formal implementation date, transitional treatment for vehicles invoiced or registered around the effective date and state-level registration guidance.
- IRDAI or insurer circulars on premium structures, policy wording, cancellation refunds and dealer commission treatment.
- Changes in retail finance approval rates, average financed amount, down-payment levels and entry-segment booking cancellations.
- Evidence of VAHAN-insurer data integration, ANPR enforcement pilots or fuel-station insurance verification mandates.
- Dealer insurance attachment rates, customer complaints and mis-selling investigations after rollout.
- Used-car and used-two-wheeler demand growth if new-vehicle on-road prices rise materially.
- Reprice on-road quotations and EMI calculators to show mandatory multi-year third-party cover separately from optional own-damage and accessories.
- Renegotiate insurer and lender arrangements for bundled policies, premium financing, refund treatment and faster policy-document issuance.
- Audit dealership POS, VAHAN registration and insurance-data handoffs to prevent delivery or registration exceptions.
- Train sales staff on standardized disclosures so bundled cover is not represented as optional or confused with own-damage coverage.
- Develop affordability offers for entry-level segments, including lower down payments, premium financing and service/accessory bundles that preserve conversion.
- Prepare used-vehicle and renewal outreach programs as enforcement raises demand for policy reinstatement and transfer compliance.