How To Apply For Insurance Claim After Accident? Where Does Licence Validity Come In? | Explained

The Punjab and Haryana High Court has clarified that a driving licence remains valid for 30 days after its expiry. If an accident occurs on the 30th and final day of this grace period, the insurance company is legally required to honour the claim.

According to The Tribune, the licence in the case under consideration expired on June 4, 2001. The 30-day grace period began on June 5, meaning the licence remained valid until July 4, 2001. The accident took place on July 4, 2001, at around 10:45 am, and as it fell within the grace period, the licence was deemed legally valid.

Insurance Claims In India: What The Law Says

The rules for insurance claims following a road accident differ depending on whether it is a third-party claim or an own damage claim.

Third-Party Insurance: Mandatory for All Vehicles

Under Section 146 of the Motor Vehicles Act,

1988, third-party insurance is compulsory for every vehicle in India. Third-party claims relate to:

• Injury or death of a third party
• Damage to third-party property

The Supreme Court has consistently ruled that even if the driver has no licence, an expired licence, a suspended licence or a licence of the wrong category, the insurance company must still compensate the victim or their family.

This obligation remains even if:

• The driver has no driving licence at all
• The licence has expired
• The licence is suspended
• The licence belongs to an incorrect vehicle category
• The driver only holds a learner’s licence

‘Pay and Recover’ Principle

The Supreme Court frequently applies the pay and recover principle:

• The insurer must first pay compensation to the victim.
• The insurer may then recover the amount from the vehicle owner.

In 2023, the Supreme Court reaffirmed that the victim must not suffer because the driver lacked a valid licence.

Own Damage Claims: Strict Rules Apply

The rules for own damage claims are entirely different. Every motor insurance policy clearly states that the driver must have:

• A valid driving licence
• A proper licence for the vehicle category

If, at the time of the accident:

• The driver had no licence, or
• The licence had expired, or
• The licence was not appropriate for that vehicle,

the insurance company will reject the own damage claim entirely.

This position was upheld by the Supreme Court in Dharmendra Goyal vs Reliance General Insurance (2022) and reaffirmed in multiple judgements between 2023 and 2025.

The National Consumer Commission (NCDRC) issued similar rulings in dozens of cases.

Grace Period And Licence Validity

If an accident occurs within the 30-day grace period after the licence has expired, insurance policies provide full coverage, both for:

• Third-party claims, and
• Own damage claims

This rule is applicable nationwide.

When Is Renewal Necessary?

According to Section 15 of the Motor Vehicles Act, 1988 and the Central Motor Vehicles Rules, 1989:

30-Day Grace Period

• The licence remains fully valid for 30 days after expiry.
• There is no penalty if renewed within these 30 days.

Penalties After The Grace Period

• After 30 days: Rs 300 fine, increasing to Rs 1,000 per year.
• After 1 year: The applicant must take the driving test again.
• After 5 years: A complete restart is required, including a new learner’s licence.

Renewal Made Easier (2025 Guidelines)

The Ministry of Transport’s 2025 guidelines confirm:

• The 30-day grace period applies across India.
• Driving licences can be renewed instantly online via the Parivahan.gov.in portal.