Supreme Court Orders Nationwide Overhaul of Motor Insurance, Mandates Four-Layer Coverage

The Supreme Court of India has issued a landmark directive to overhaul motor insurance enforcement nationwide. The order requires all insurers to adopt a standardized four‑layer policy framework for vehicle coverage.

Under the new framework, insurers must provide coverage for third‑party liability, vehicle damage, theft, and a fourth layer that covers additional risks such as natural disasters or accidental damage. The court emphasized that the four‑layer structure will ensure comprehensive protection for motorists.

The directive is expected to bring uniformity to the motor insurance market and reduce gaps in coverage. Insurers will need to revise their policy terms and adjust premiums accordingly.

The Supreme Court has directed that the changes take effect immediately, with a monitoring mechanism to enforce compliance across all states.