The case pertains to an insurance company refusing to pay compensation to the family of a man who was killed in an accident in his own insured car, citing technical aspects of the policy.

What the court found comes as a shock: about 50% of the registered motor vehicles in the country lack insurance. In a country with a registered base of 38.5 crore vehicles as of 2024 and also one of the worst road safety records, that figure represents a colossal failure of governance.

The court has now asked the insurance regulator, IRDAI, to work with 22 insurance companies to formulate a uniform policy and make consumers aware of the features of different motor vehicle policies, since the policyholders found their wordings confusing.

There are three main policy types, covering accident risk to third parties, comprehensive risk cover for vehicles and third parties, and standalone cover for own-damage to the vehicle. Yet, the policy wordings are different for the many insurers, leaving the consumer at a disadvantage.

In the case before the court, the National Insurance Company appealed against an order for Rs 10 lakh compensation for the family of the deceased on the ground that he was not covered by the comprehensive policy that he had purchased, and he could not be treated as a third party.

It is a sad commentary on the motor vehicle accident compensation system in India that the average claim languishes in the corridors of legal forums for eight to ten years.

The burden before tribunals and courts is staggering, considering that about 1.7 lakh people died in road crashes just during 2023, as per the last full count, and 26,770 lost their lives on national highways in the first six months of 2025 alone; injuries are multiple times more.

The insurance industry worldwide plays a major role in bringing pressure on the system by charging bad drivers a higher premium, encouraging manufacturers to enhance vehicle safety, and campaigning for stricter enforcement by the police and transport officials.

India is an outlier when it comes to risk reduction, with little effort by insurers to reward good practice and penalise recalcitrant drivers. The laissez-faire nature of enforcement is only too evident from the 50% coverage of motor vehicle insurance, with no active initiatives to seize those that are uninsured.

Judicial orders awarding liberal and enhanced compensation to families of the dead and the injured could bring greater pressure on the industry to work with the bureaucracy for stricter enforcement of laws. Reducing risk should lead to lower premiums and universal insurance cover.