The directions came after the court uncovered a pattern in which the same vehicle was allegedly shown as being involved in multiple accidents for insurance.

Updated on: Sep 7, 2026, 16:24:07 IST

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The Supreme Court has ordered every state and Union territory to constitute a special investigation team (SIT) to crack down on fraudulent motor accident compensation claims, warning insurance companies that their top management will be held accountable if suspicious claims are selectively withheld from investigators.

The directions came after the court uncovered what it described as a fraud of “enormous proportion” involving a fixed pattern in which the same vehicle was allegedly shown as being involved in multiple accidents to secure compensation from insurers.

SC asks states to investigate fraudulent claims

A bench of justices Ahsanuddin Amanullah and Prasanna B Varale expanded the scrutiny from individual claims in Odisha and Tamil Nadu to a nationwide exercise, bringing the insurance regulator, the Union finance ministry, the road transport ministry and the General Insurance Council within the ambit of its proceedings.

The bench further asked the states to disclose the procedure adopted by them for investigating such fraudulent claims.

The court made it clear that the responsibility does not rest solely with the police. It specifically warned insurance companies against adopting a “pick and choose” approach in referring suspicious claims to the SIT.

“If there has been selective forwarding” of cases, the topmost management of the concerned insurance company would be held accountable, the bench said. It further directed insurers to act departmentally against their officials if an SIT recommendation or FIR indicates that they had facilitated a fraudulent claim. The court also directed insurers to conduct an in-house investigation wherever a Motor Accident Claims Tribunal (MACT) rejects a claim on grounds of fraud or collusion, and immediately send details of such cases to the SIT in the state where the claim was made.

Odisha case gains momentum

The proceedings began with a seemingly narrow dispute before the Supreme Court over whether a vehicle shown in a compensation claim was actually involved in the accident.

The case arose from an appeal by Oriental Insurance Company against a compensation award in an Odisha case. The insurer had alleged that the vehicle had been shown as the offending vehicle merely because it had valid insurance, despite being involved in multiple accidents.

The court’s February order recorded that an investigation ordered in Odisha had found the vehicle was indeed involved in the accident in the case before it. But the probe also found that the same vehicle figured in four other accident cases. More significantly, the Odisha authorities told the court that they had found a “wide racket” in which several stakeholders could be involved and that arrests had already taken place.

The revelations prompted the bench to look beyond the individual case. On March 18, it brought all states and UTs, through their directors general of Police, into the proceedings, asking Odisha to place before the other states its model of investigation.

The matter will next come up on September 23, when the states, insurance companies and newly formed authorities are expected to submit a report on steps being taken in this regard.

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