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Did you know most government buses are NOT insured?

Did you know most government buses are NOT insured?


Under the Motor Vehicles Act, 1988, it is mandatory for all vehicles on the road to have a Motor Insurance cover. For private vehicles, a mandatory third party Motor Insurance cover offers financial protection against damage to third party vehicles, personal property or physical injury to the person.

However, public buses owned by State Road Transport Corporations (SRTCs) are exempt from having Insurance.

Most premium AC and luxury buses are insured by SRTCs, simply because they are expensive. But when it comes to ordinary buses, there is often no protection.

These SRTCs have a bunch of reasons for not opting for motor insurance for their regular buses. You see, many insurance companies are hesitant to provide covers to public buses because of their high susceptibility to accidents. They argue that the claim amounts would be significantly higher than the premiums earned by them. On the other hand, SRTCs believe that paying compensation to the victims of accidents is cheaper than paying steep premiums for insurance.

To offer this compensation, SRTCs set aside special funds. However, in recent years many of them have suffered major losses, causing these funds to deplete. This has led victims of accidents to wait for years before they get any compensation. The kin of the deceased have been left financially drained in their grief because of the government-run undertakings’ inability to provide sufficient redressal.

But in August 2021, the Supreme Court raised concerns over exempting state buses from insurance requirements. The Union government was asked to :

  • Either withdraw the state buses’ exemption from the insurance rule altogether, making it mandatory for them to have third party coverage in order to compensate motor accident victims
  • Or design a mechanism that would ensure SRTCs have an ample pool of funds to provide compensation to victims.

Following this, the responsible parties collaborated with over 20 insurance companies for the purpose of this proposal’s execution.

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Further Reading

Motor Insurance may not be mandatory for government buses, but it is for all other commercial vehicles. Read about other Insurance policies that are mandatory for businesses here