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Supreme Court Makes Long-term Insurance Mandatory for Sale of Vehicles

July 21 2018

On Friday, the Supreme Court said that starting September 1, automobile companies cannot sell vehicles without a mandatory third-party insurance. Such an order was passed due to the court’s concern about the lack of compliance for third-party insurance of vehicles, which endangers all road users.

The Supreme Court Committee chaired by K. S. Radhakrishnan, the former apex court judge, asked the IRDA to offer a mandatory two-year policy for four-wheelers and a five-year policy for two wheelers at the time of sale and registration. This suggestion was endorsed by a bench led by Justice Madan B. Lokur.

A fine of up to ₹1,000 may be accompanied with a three-month jail term in case any vehicle is driven without third-party insurance. The regulation for long-term policy for vehicles is only for third-party insurance and not for the comprehensive cover.

According to sources, while third-party insurance is provided when four-wheelers and two-wheelers are bought for the first time, they are not carried over for the next year. Out of the registered 18 crore vehicles, only 6.5 to 7 crore vehicles have insurance, making half the vehicles on the road having no valid cover. A major share of these are two-wheelers.

The panel was also asked to develop a form of compensation mechanism for next of kin to pothole victims. Earlier, the states and union territories were mandated by the apex court to create a Road Safety Fund, which would be funded by the collected traffic fines.

Dr. S. Rajaseekharan, a Coimbatore-based orthopaedician filed a PIL, which prompted the order. He told the Supreme Court that the lack of an effective enforcement system of road safety rules and a lack of strict punishment for rule breakers was 90% of the reason of deaths due to road accidents.

*Source: Financial Express

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