What is the third-party insurance requirement?

What the Law Says

The Motor Vehicles Act, 1988 mandates third-party insurance for every vehicle used on Indian roads. This requirement ensures victims of accidents receive compensation regardless of fault.

Under Section 146 of the Motor Vehicles Act, 1988, no person shall use a motor vehicle in a public place unless there is in force a policy of insurance complying with the requirements of Chapter XI (Sections 145–164).

Section 147 defines the scope of coverage: the policy must cover liability for death or bodily injury to any person (including passengers, except in private vehicles), and liability for damage to property of a third party — up to ₹15 lakh for property damage; there is no upper limit for injury or death claims.

Failure to comply attracts penalties under Section 196: a fine of ₹2,000 for the first offence and ₹4,000 for subsequent offences, along with possible imprisonment up to 3 months.

Statutory Text

No person shall use a motor vehicle in a public place unless there is in force a policy of insurance complying with the requirements of this Chapter.

— Motor Vehicles Act, 1988, s. 146 — Use of vehicles without insurance

Statutory Text

The policy of insurance must cover the liability in respect of death or bodily injury to any person and damage to property of a third party.

— Motor Vehicles Act, 1988, s. 147 — Requirement of insurance against third party risks

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