Long Term Motor Insurance for Third Party Liability

Introduction:

The Supreme Court, by way of an order in S Rajaseekaran v Union of India and Ors [Writ Petition (Civil) No 295/2012] of 20th July 2018 (Order), has made it mandatory to provide long term third party liability insurance cover with respect to new vehicles sold from 1st September 2018. Under the extant statutory and regulatory framework, insurance cover for third party liability is mandatory for all new vehicles at the time of purchase. However, the policy is renewed on a yearly basis. 

The Court has now extended the term of mandatory insurance cover for new vehicles beyond the one year period, to three years for cars and five years for two-wheelers. The implications of the Order will be on General Insurers, who are now mandatorily required to issue three year third party insurance policies for new cars, and five year third party insurance policies for new two wheelers at the point of sale, either as a standalone product or a part of a comprehensive