By J P Gupta
New Delhi: In a move aimed at ensuring greater compliance with mandatory vehicle insurance laws, the Finance Ministry has proposed a new set of regulations that would require owners to have valid third-party insurance in order to re-fuel their vehicles, obtain FASTags, renew driving licenses, and even secure pollution certificates. This initiative comes as part of a broader effort to enforce insurance coverage for all vehicles, which has been a persistent challenge in India despite existing mandates.
According to a report by LiveMint, the proposal, still in the discussion phase, asks the Ministry of Road Transport and Highways (MoRTH) to implement these changes in coordination with state governments and union territories. The measures are expected to streamline the process of ensuring that every vehicle on Indian roads has valid third-party insurance, which is a legal requirement under the Motor Vehicles Act.
Tackling the Insurance Compliance Issue
India has long struggled with low compliance rates for mandatory third-party insurance, despite the clear requirement under the Motor Vehicle Act that all vehicles must have coverage for third-party bodily injury and property damage. A significant number of vehicles remain uninsured, either due to oversight, negligence, or the high cost of premiums. This lack of insurance not only exposes vehicle owners to financial risk but also places a burden on accident victims who are unable to recover damages from uninsured vehicles.
The Finance Ministry’s proposal aims to address this issue by making insurance a prerequisite for several essential vehicle-related transactions. The requirement to purchase insurance before re-fueling or obtaining a FASTag, for instance, is seen as a way to tie the purchase of insurance to routine vehicle maintenance activities that most car owners regularly engage in. This would create a more consistent and reliable means of ensuring that insurance coverage is up-to-date.
A New Approach to Linking Vehicular Data
This proposal is not the first time the Indian government has tried to integrate various aspects of vehicular data to ensure compliance with regulations. In 2023, Maharashtra’s state government floated the idea of linking outstanding traffic challans to a vehicle owner’s FASTag and motor insurance account. Under this system, when a user topped up their FASTag or paid for insurance, any outstanding fines would automatically be deducted from their account.
Additionally, in March 2023, the central government floated the idea of providing on-the-spot insurance for vehicles on highways. The scheme aimed to automatically check whether a vehicle had valid insurance through the government’s Vahan app. In this proposal, insurance premiums would be deducted from a vehicle’s FASTag account, simplifying the process for drivers and eliminating the need for separate payments.
Both of these initiatives highlight a growing trend towards leveraging technology to streamline vehicle-related transactions. The common thread in these proposals has been the use of FASTag, a system originally designed for toll payments on highways, as a platform for integrating multiple aspects of vehicle regulation.
How FASTag Could Be the Key to Compliance
FASTag, a digital toll collection system, has been widely adopted across India in recent years. Its infrastructure could serve as a convenient tool for enforcing the new insurance requirements. The government could require vehicle owners to link their insurance policies to their FASTag accounts, enabling automatic payments whenever premiums are due. This would ensure that insurance remains active without the need for manual renewal processes.
In practical terms, this could mean that vehicle owners would be required to pay for fuel or obtain pollution certificates through their FASTag accounts. Additionally, when renewing or obtaining a new driving license, owners would need to provide their FASTag number to the Regional Transport Office (RTO), further linking all vehicle-related data to a single platform. This would make it much easier for authorities to track compliance and ensure that all vehicles are properly insured.
The integration of insurance with FASTag could also simplify the process for drivers in remote areas or on highways, where access to insurance agents may be limited. By allowing insurance premiums to be deducted automatically, the system would ensure that coverage is always up to date, reducing the risk of driving without valid insurance.
A Step Toward Comprehensive Vehicle Regulation
Linking vehicle insurance with key transactions such as fuel purchases, FASTags, and driving licenses represents a bold step toward more comprehensive regulation of the Indian vehicle fleet. It could significantly reduce the number of uninsured vehicles on the road, improving safety and financial security for drivers and accident victims alike.
However, there are logistical challenges to implementing such a system. Integrating data from various sources, including FASTag accounts, insurance providers, and state governments, would require a robust technological framework and careful coordination. Privacy and data protection concerns will also need to be addressed, as linking personal and vehicle-related data across multiple platforms could raise issues around consent and security.
Nonetheless, the proposed measures reflect the Indian government’s increasing reliance on technology to modernize and streamline its regulatory processes. If successfully implemented, these initiatives could provide a model for other countries looking to improve compliance with vehicle insurance laws and ensure better safety for road users.
As the proposal moves through the bureaucratic process, it will be important to monitor how it evolves and whether it gains the support needed to become law. If passed, this policy could represent a major shift in how insurance is enforced and integrated into everyday life for Indian drivers.
