Statutory and Compulsory Insurance Obligations for Indian Companies in 2026: The Post-New-Laws Compliance Checklist

For two decades the list of insurances an Indian company was legally forced to buy stayed almost static: motor third-party under the Motor Vehicles Act 1988, public liability for hazardous-substance handlers under the Public Liability Insurance Act 1991, and a scattering of state factory-rule requirements. A cluster of new and amended statutes has now reset that map, and a compliance officer working from a 2022 register will miss obligations that carry personal-liability and prosecution consequences.

Four changes matter most. The four labour codes were brought into force on 21 November 2025, replacing 29 legacy Acts and, through the Code on Social Security 2020, introducing a fresh compulsory-insurance duty for gratuity. The Boilers Act 2025 replaced the century-old 1923 Act and rewired the plant-inspection regime that engineering cover attaches to. The Coastal Shipping Act 2025 was notified on 9 August 2025, carving coastal trade out of the Merchant Shipping Act. The Bharatiya Vayuyan Adhiniyam 2024 came into force on 1 January 2025, replacing the Aircraft Act 1934 and re-basing aviation liability rules.

This post is a reference checklist, not a coverage explainer. For each statute below it names the Act, the operative section that triggers the duty, and the minimum commercial cover that discharges it. It separates two categories that risk registers routinely conflate: covers that are compulsory to insure (the law forbids operating without the policy) and statutory liabilities where the exposure is created by law but the decision to insure sits with the board. Getting that distinction wrong produces either an illegal operating position or an over-bought programme. Both are avoidable with a clean statute map.

Section 146 of the Motor Vehicles Act 1988 makes third-party insurance the single insurance no Indian company may operate without. Any vehicle used in a public place, owned by the company or on its books through a lease, must carry a policy covering third-party death, bodily injury and property damage. Driving or permitting the use of an uninsured vehicle is an offence under Section 196, and the liability the policy answers for is statutorily unlimited for death and injury.

For a fleet operator the checklist item is not merely "buy motor insurance". Section 147 fixes the minimum scope the policy must contain, and the statutory third-party limit for property damage sits at INR 7.5 lakh. Own-damage and higher liability limits are commercial choices layered on top. The compulsory core is the third-party section alone.

The live 2026 issue is pricing and structure rather than existence of the duty. The third-party premium remains regulated, and IRDAI has been consulting on reform of the commercial third-party rating that fleets have depended on for predictable budgeting. Brokers placing large logistics or bus fleets should read the IRDAI motor third-party reform and commercial fleet analysis before assuming last year's rate structure holds.

For a motor insurance programme, the compliance test a risk manager should run quarterly is simple: does every registered vehicle map to a live certificate of insurance whose third-party section has not expired.

The Public Liability Insurance Act 1991 is the second genuinely compulsory-to-insure statute, and it reaches far more companies than its name suggests. Section 4(1) requires any owner handling a hazardous substance above the quantities notified under the Environment (Protection) Act to take out an insurance policy before starting to handle it. "Owner" is defined broadly, and "hazardous substance" pulls in a long schedule of chemicals, fuels and industrial inputs, so warehouses, cold chains and process plants often fall inside the net without realising it.

The cover is a no-fault public liability policy. It pays scheduled relief to third parties for death, injury and property damage caused by an accident involving the hazardous substance, without the victim proving negligence. Two figures anchor the checklist: the policy sum insured must be at least equal to the paid-up capital of the undertaking, capped at INR 50 crore per accident, and the owner must pay a contribution to the Environment Relief Fund equal to the premium, doubling the effective outlay.

Because it is no-fault and statute-priced, the policy behaves differently from a commercial general-liability wording, and the two are not substitutes. A company that carries a large commercial GL tower but no PLIA policy is non-compliant, even though the GL limit dwarfs the statutory relief scale.

Hazardous-substance handlers should treat this as an operating licence, not an optional risk transfer. The mechanics of scheduled relief, the fund contribution and what handlers actually pay out are set out in no-fault claims under the Public Liability Insurance Act and the Public Liability Insurance Act compliance guide.

The commencement of the four labour codes on 21 November 2025 changed the employer-liability checklist in two ways. First, it re-based the wage definition that drives compensation quantum; second, and more concretely for this checklist, the Code on Social Security 2020 introduced a fresh compulsory-insurance duty that did not exist in the legacy regime.

Under the Social Security Code, employers other than those belonging to or controlled by the Central or State Government are required to obtain compulsory gratuity insurance from an IRDAI-regulated insurer (or run an approved gratuity fund). This converts a balance-sheet provision that many mid-market companies previously self-funded into an insured obligation. It is a genuine addition to the list of covers a private employer must arrange.

Employees' compensation sits in a different category and is frequently misfiled. The liability under the Employees' Compensation Act 1923, now folded into the Social Security Code, is statutory and strict, but the Code does not universally compel the employer to insure it. In practice most employers carry a workers-compensation policy, and several state factory rules make it a licence condition, but the national duty is to pay the compensation, not necessarily to buy a policy. Treating the two duties, insured gratuity and compensable injury liability, as one line item is a common register error.

The wage-definition change compounds both. Because statutory dues are now benchmarked to at least 50% of total remuneration, gratuity and compensation quantum rise, and any policy sum insured pegged to the old wage base is under-set. Brokers should re-rate employer-liability programmes against the four labour codes and employer liability re-basing before renewal.

Engineering and property statutes rarely compel a company to insure, but they create inspection, certification and liability duties that determine whether the engineering insurance it does carry will respond. The 2025 rewrites make this category worth a fresh read.

The Boilers Act 2025 replaced the Indian Boilers Act 1923, India's first overhaul of boiler law in a century. It retains the core registration and periodic-inspection regime: a boiler cannot lawfully be operated without a valid certificate from the competent authority. The Act itself does not mandate a machinery-breakdown or boiler-explosion policy, so this is a statutory-duty item, not a compulsory-cover item. The practical link is that a lapsed statutory inspection certificate can hand an insurer a clean declinature under the policy's compliance-with-statute condition. The interaction is covered in the Boilers Act 2025 and machinery breakdown cover analysis.

The same logic runs through the Static and Mobile Pressure Vessels Rules, the Electricity Act 2003 and the Explosives Act 1884: each sets a physical-safety or licensing condition whose breach can void the machinery-breakdown or fire policy the company relies on. None of them compels the purchase of a policy.

Contractors carry a parallel duty. Public-works contracts and the Building and Other Construction Workers Act routinely require contractors-all-risks and workmen cover as a contractual pre-condition, which is a contract obligation dressed as a statutory one and belongs in a separate column.

The 2024-2025 transport statutes reset the compulsory-cover position for companies that move goods or operate vessels and aircraft, and they sit outside the risk registers of most non-transport firms that nonetheless ship product.

The Coastal Shipping Act 2025, notified on 9 August 2025, carved coastal trade out of the Merchant Shipping Act 1958 and built a dedicated licensing and vessel-operation regime for the coasting trade. Operators of coastal vessels should re-read their hull-insurance and protection-and-indemnity arrangements against the new framework, since the Act reworks the licensing and Director-General powers that liability cover attaches to.

The Bharatiya Vayuyan Adhiniyam 2024, in force from 1 January 2025, replaced the Aircraft Act 1934 and re-based the rule-making power over aircraft operation, including third-party and passenger liability requirements that flow through into aviation cover conditions. Aircraft and drone operators should confirm that their liability limits meet the requirements set under the new Act and its rules rather than the superseded 1934 framework.

For the far larger population of companies that simply move cargo, the compulsory element is usually contractual rather than statutory. Letters of credit, carriage contracts and Incoterms allocate who must insure the goods in transit, and a marine-cargo or transit-insurance policy discharges that allocation. The statutory layer for road carriage runs back to the Motor Vehicles Act third-party duty on the carrying vehicle, not to the cargo. Keeping the cargo duty (contractual) and the vehicle duty (statutory) in separate columns stops brokers from over-selling a compulsory-cover story where none exists, and from missing the vehicle third-party gap where one genuinely does.

A compliance checklist only works if it is maintained as a live register rather than a renewal-time spreadsheet. Three columns keep it honest. The first lists covers that are compulsory to insure and where operating without the policy is an offence: motor third-party under the Motor Vehicles Act 1988, public liability under the PLI Act 1991 for hazardous-substance handlers, and the new gratuity-insurance duty under the Code on Social Security 2020. The second lists statutory liabilities the board may choose to insure but is not compelled to: employees' compensation, most engineering and plant exposures. The third lists contractual insurance duties that masquerade as statutory ones: contractors-all-risks on public works, cargo cover under carriage terms.

Each row needs an owner, a triggering section, a current sum insured and a next-review date tied to the statute rather than the policy anniversary, because Acts and their notified thresholds now change mid-year. The 2025 wave proved that a register keyed only to renewal dates will lag the law by up to twelve months.

The recurring failure point is not the existence of a cover but its policy wording. Two motor or public-liability policies that satisfy the same statute can differ sharply on the compliance-with-statute condition, the definition of hazardous substance, or the sum-insured basis, and those differences decide whether a claim is paid.

This is where Sarvada fits. Rather than reading each insurer's wording in isolation, brokers and risk managers use Sarvada's searchable policy-wordings intelligence to compare, across insurers, exactly how a compulsory cover is defined, conditioned and limited, so the statute checklist maps to wordings that actually respond. To see how the compulsory-cover map reads against live insurer wordings, request access.