The Supreme Court has directed the central government to design and implement a pilot project to deny fuel to vehicles that do not have valid third-party insurance, after taking note of widespread non-compliance and road safety concerns. The bench observed that nearly 56 per cent of vehicles on the road lack third-party cover according to the Report of the Standing Committee on Finance 2024-25 and considered measures to improve compliance and victim compensation. The court asked the Insurance Regulatory and Development Authority (IRDA) to consult the Ministry of Road Transport and Highways (MoRTH) and other stakeholders to frame the pilot.

The proposed scheme is to link fuel dispensing at petrol pumps with a vehicle's insurance status, with fuel being refused until valid cover is obtained, and to use automatic detection on specified corridors to reduce toll plaza queues. The bench indicated that automatic number plate recognition (ANPR) cameras could be used to identify uninsured or unregistered vehicles and noted that the Ministry of Petroleum and Natural Gas had in principle no objection. It also asked for consideration of substituting manual toll stops with automatic detection to improve traffic flow.

The court directed an increase in the mandatory initial third-party insurance period by one year, noting earlier directions that required purchase for three years for new cars and five years for new two-wheelers at registration. Henceforth third-party insurance will be required for four years for new cars and six years for new two-wheelers and the IRDA was asked to issue necessary directions and offer various policy options including add-on covers and personal accident cover alongside a base policy. The bench highlighted that the stark figure of uninsured vehicles stands at 165.4 million out of 304.8 million, with adverse effects on timely compensation.

The court further directed deployment of ANPR integrated with the Insurance Information Bureau and the VAHAN portal to enable automatic e-challans for violations and real-time monitoring, and asked that handheld devices or downloadable applications linked to these databases be provided to state police. The measures are intended to ensure ground-level compliance with statutory mandates, reduce prolonged litigation for victims and strengthen statutory safeguards under the Motor Vehicles Act.