India Third-Party Car Insurance Requirement Explained

India third-party insurance: key facts

The legal basis: Section 146 of the Motor Vehicles Act

India's mandatory insurance requirement dates to the Motor Vehicles Act 1988, which consolidated and strengthened earlier motor legislation. Section 146 is unambiguous: no person shall use or allow another person to use a motor vehicle on a public road unless the vehicle is covered by at least a third-party liability policy issued by an insurer authorised under the Insurance Act 1938.

The Act applies to all vehicles on all public roads across India — including private cars, commercial vehicles, two-wheelers, and three-wheelers. Off-road or private land use does not require insurance, but any movement on a public road, including state and national highways, city streets, and government roads, requires cover.

What third-party insurance covers — and what it does not

Third-party insurance is liability cover only. It protects the policyholder from legal and financial claims made by parties who are injured or killed, or whose property is damaged, as a result of the insured vehicle being involved in an accident.

1. Covered: death or bodily injury to third parties (pedestrians, passengers in other vehicles, other road users). Claims are processed through the Motor Accident Claims Tribunal (MACT).
2. Covered: property damage to third parties up to ₹7.5 lakh.
3. Covered: owner-driver personal accident — a compulsory ₹15 lakh PA cover must accompany the TP policy.
4. Not covered: damage to your own vehicle.
5. Not covered: personal injury to the policyholder beyond the PA cover.
6. Not covered: theft of the vehicle.

For own-damage cover, a comprehensive policy is required. Comprehensive insurance includes all third-party benefits plus cover for the insured vehicle's damage from accidents, theft, fire, natural disasters, and more.

IRDAI-fixed premiums: what you pay

Unlike most insurance markets where premiums are set competitively by each insurer, TP motor insurance premiums in India are set and revised annually by the Insurance Regulatory and Development Authority of India (IRDAI). Every insurer charges the same base TP premium for a given vehicle category.

Premiums are structured by engine cubic capacity (cc) for private cars and two-wheelers, and by vehicle category and gross vehicle weight for commercial vehicles. As of early 2026, IRDAI and the Ministry of Road Transport and Highways (MoRTH) are reviewing a proposal to increase TP premiums by 10–25% for FY 2026–27, after rates were largely frozen for several years. Check the current IRDAI circular or your insurer for the latest approved rates.

Note: Figures are indicative based on IRDAI's FY 2025–26 rates. Rates for FY 2026–27 may differ — check irdai.gov.in for the current year's approved tariff.

Long-term TP policies for new vehicles

Following a 2018 Supreme Court directive, new vehicles sold in India must be covered by a long-term third-party policy at point of sale:

1. Private cars: minimum 3-year TP policy required at purchase.
2. Two-wheelers: minimum 5-year TP policy required at purchase.
3. Own damage (OD) cover: can be purchased as a separate annual policy or bundled into a comprehensive policy.

This requirement was introduced to ensure new vehicles enter the road with guaranteed minimum protection. Bundled long-term comprehensive policies are also available for new vehicles, though the OD portion may be for a shorter term.

Penalties for non-compliance

Traffic police and enforcement officers check insurance certificates during vehicle inspections and following accidents. The Motor Vehicles (Amendment) Act 2019 revised penalties:

1. First offence: fine of ₹2,000 or imprisonment up to three months, or both.
2. Repeat offence: fine of ₹4,000 or imprisonment up to three months, or both.
3. Vehicles without insurance involved in serious accidents may be impounded and the owner required to produce valid insurance before the vehicle is released.