Motor Insurance: Sindh Makes Third-Party Vehicle Insurance Mandatory

KARACHI: The Sindh government has made third-party motor insurance compulsory for all registered vehicles in the province, introducing a measure aimed at providing financial protection for victims of road accidents.

The policy, launched with the support of the Securities and Exchange Commission of Pakistan (SECP), seeks to improve compensation for people affected by traffic crashes and expand insurance coverage across the province.

Official data shows that the number of third-party motor insurance policies has increased by 1,374% since the requirement came into effect. The total rose from around 11,000 policies to approximately 165,000 within three months.

Under the new regulations, vehicle owners must obtain valid third-party insurance before they can register or transfer a vehicle or pay its annual token tax.

The insurance scheme provides compensation of up to Rs700,000 in the event of death and up to Rs500,000 for permanent disability resulting from a road accident. It also operates under a no-fault compensation system, allowing victims or their families to receive payments without waiting for liability to be determined.

According to government figures, Pakistan records between 9,000 and 10,000 road traffic accidents each year. Officials say the mandatory insurance policy will help reduce the financial burden on victims and their families.

The Sindh government plans to extend the scheme in phases to cover around 2.6 million registered vehicles across the province. Authorities have also indicated that similar third-party motor insurance requirements are being prepared for Punjab and other provinces.