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India's Uninsured Roads: A Looming Crisis
24 Nov
Summary
- Nearly half of India's 18 crore vehicles lack mandatory third-party insurance.
- Uninsured drivers risk personal liability for accident damages and injuries.
- Compliant policyholders indirectly subsidize uninsured vehicle owners.
In India, a substantial portion of vehicles, estimated at nearly half of the 18 crore total, operate without the compulsory third-party (TP) liability insurance. This situation leaves accident victims and their families vulnerable, as uninsured drivers would bear the full cost of damages, injuries, or fatalities. The Supreme Court has directed the IRDAI to explore measures to enhance motor insurance coverage, particularly for TP policies.
The persistent issue of non-compliance has been noted for decades, with various proposed solutions, including fuel cesses and lifetime premium collection, failing to fully resolve the problem. Even multi-year insurance mandates at registration have seen policies lapse, exacerbating the coverage gap.
This widespread lack of insurance not only endangers others but also imposes financial burdens on responsible vehicle owners. When total claims exceed collected premiums, TP rates are revised upward, meaning those who diligently renew their policies end up subsidizing the uninsured. The need for enforcement strategies and policy reforms is urgent.
