Sindh Makes Third-Party Motor Insurance Mandatory For Vehicles

The Government of Sindh has introduced amendments to provincial motor vehicle legislation to make third-party liability insurance mandatory for all vehicles registered in the province, aiming to enhance financial protection for victims of road accidents.

The requirement has been incorporated through amendments under the Motor Vehicles (Amendment) Act, 2026, which inserts a new Section 67-H into the Provincial Motor Vehicles Ordinance, 1965.

Under the revised legal framework, a vehicle will no longer qualify for registration, transfer of ownership, or payment of annual token tax unless a valid third-party liability insurance policy is maintained.

Third-party motor insurance provides coverage for legal liabilities arising from road accidents that result in injury, death, or property damage to another individual.

The amendment also introduces a no-fault compensation mechanism establishing fixed compensation thresholds for accident victims. Under this framework, compensation of Rs700,000 will be payable in cases involving death, while Rs500,000 will be provided in cases involving permanent disability to the affected individual or their legal heirs.

Government officials stated that the reform is intended to strengthen financial safeguards for road users and ensure that victims of traffic accidents receive timely and structured compensation.

The development follows ongoing coordination between provincial authorities and the Securities and Exchange Commission of Pakistan to facilitate the nationwide enforcement of mandatory motor third-party insurance requirements.

To assist with compliance monitoring and verification, the regulator has implemented the Motor Insurance Repository, a centralized digital database designed to record motor insurance policies issued by insurers registered with the commission.

The repository enables regulatory authorities to electronically verify the validity of insurance coverage and ensure compliance with statutory requirements during vehicle registration and related administrative procedures.

Officials noted that the initiative is aimed at strengthening consumer protection measures and improving enforcement within the broader motor vehicle regulatory and insurance framework.