Road Safety Week 2026: Why Mandatory Third-Party Insurance Is Your Best Financial Shield On Indian Roads

To improve road safety and strengthen compliance, the Insurance Regulatory and Development Authority of India (Irdai) is working with insurers to address the growing number of uninsured vehicles on Indian roads, according to Irdai press statement. Despite being mandatory, more than half of all vehicles reportedly operate without Third Party Motor Insurance. A nationwide awareness drive will now run until January 2026, coinciding with National Road Safety Week.

Why Third-Party Insurance Matters

Third-party motor cover is mandatory under Indian law and exists to protect people who get hurt or suffer damage in an accident caused by someone else’s vehicle. The idea is simple: if a pedestrian, another driver, or a bystander is injured or their property is damaged, they are entitled to compensation without having to chase the offending vehicle’s owner through lengthy disputes.

“Third-party motor insurance is a mandatory cover under the Motor Vehicles Act that protects vehicle owners from legal and financial liabilities arising from accidents involving third parties,” says Niharika Singh, executive director – marketing, IFFCO-TOKIO General Insurance.

Financial Protection For Owners

Third-party insurance is designed to protect victims of an accident, but it also shields vehicle owners from potentially large compensation claims. Without third-party insurance ownders are liable to make payouts which may be even in crores if the accident is very severe.

“At the time of an accident involving third-party injury or damage, third-party insurance acts as a financial shield for the vehicle owner. Instead of bearing the compensation burden personally, the insurer steps in to handle claim settlements as per legal provisions,” says Singh.

Singh clarifies that the policy does not cover damage to the insured vehicle. “Its focus is entirely on compensating the affected third party,” she says.

Pushing Awareness On The Ground

Irdai member (non-life) Deepak Sood has directed general insurance companies to increase public outreach through digital campaigns, branch displays, and coordination with traffic police and fuel stations. The aim is to reduce non-compliance. That can attract heavy penalties and even imprisonment in some cases.

“The law ensures compensation is available irrespective of the at-fault driver’s financial capacity,” Singh adds.

Uniform Pricing, Long-Term Options

Premiums for third-party insurance are fixed by regulation and remain uniform across insurers. For example, a private car up to 1,000 cc attracts an annual premium of about Rs 2,094, while a two-wheeler between 75 cc and 150 cc costs roughly Rs 714. Insurers also offer long-term policies to ensure compliance.