Third-Party Motor Insurance in Pakistan 2026: Sindh’s Mandatory Rule, What It Covers and What It Blocks

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Third-party motor insurance pays other people for the harm your vehicle causes them. In 2026 Sindh tied it to vehicle registration, ownership transfer and token tax. This guide explains what third-party motor insurance in Pakistan covers, what changed in Sindh, where Punjab stands, and what to check before you buy a policy.

Last checked: 13 November 2026. Rules and enforcement can change, so confirm with your excise office and your insurer before you act. This page is general information, not legal or financial advice.

What third-party motor insurance is

It is the basic motor policy. If your vehicle injures or kills another person, or damages their property, the policy covers your legal liability to them. The “third party” is the other person. You are the first party and the insurer is the second.

It does not pay for:

  • repairs to your own vehicle;
  • theft of your vehicle;
  • fire, flood or other damage to your vehicle.

For those you need comprehensive cover, which includes third-party liability and adds protection for your own vehicle.

What changed in Sindh in 2026

On 7 March 2026 the Securities and Exchange Commission of Pakistan (SECP) announced that Sindh had amended its motor vehicle law. The Motor Vehicles (Amendment) Act, 2026 added a new Section 67-H to the Provincial Motor Vehicles Ordinance, 1965. The SECP release describes the requirement as applying to all vehicles registered in the province.

According to the SECP, a vehicle without a valid policy covering third-party risks cannot:

  • be registered;
  • be transferred to a new owner;
  • pay its annual token tax.

The same amendment sets compensation on a no-fault basis, paid to victims or their legal heirs:

  • Rs. 700,000 for death;
  • Rs. 500,000 for permanent disability.

Policies are checked through the Motor Insurance Repository, a central electronic database of motor policies issued by SECP-registered insurers. The SECP says it allows digital verification of a policy at the time of registration.

How far it has spread

On 1 July 2026 the SECP said active third-party policies in Sindh had risen from 11,200 in March to 165,064 by the end of June. It also said Sindh has nearly 2.6 million registered vehicles, so most vehicles were still not covered at that point.

Which vehicles are covered

The reports do not fully agree. The SECP release of March 2026 says the requirement covers all vehicles registered in Sindh. A PakWheels report from August 2026 on a later Sindh cabinet decision describes it as applying to four-wheel private and commercial vehicles. We have not seen the official notification, so if you own a motorcycle, ask the Sindh Excise, Taxation and Narcotics Control Department how the rule applies to you.

The same PakWheels report says Sindh lowered the provincial sales tax on third-party motor insurance from 15% to 5%. We have not confirmed that figure with an official source.

Where Punjab and other provinces stand

Punjab has not, as far as the sources we checked show, passed a rule like Sindh’s for private cars and motorcycles. What Punjab did on 1 April 2026 was narrower: with the SECP, it linked its route permit system to the Motor Insurance Repository. Public transport vehicles in Punjab now need valid third-party insurance to get or renew a route permit.

The SECP has said it is working with Punjab and other provinces on wider reforms. In September 2026 its chairman said an estimated 97 percent of vehicles in Pakistan were running without insurance cover.

Third-party cover is also a long-standing legal requirement. The Motor Vehicles Act, 1939 says a motor vehicle may not be used in a public place without a policy that meets the Act’s requirements. The SECP’s own position is that this was weakly enforced, which is why the Sindh model links insurance to registration and token tax.

Third-party or comprehensive: which do you need?

  • Third-party only meets the legal requirement and protects other people. It leaves your own vehicle uncovered.
  • Comprehensive also covers your own vehicle, usually for accident damage and theft, subject to the policy terms. Banks normally require it on a financed vehicle. Check your financing agreement.
  • Takaful is the Shariah-compliant alternative offered by takaful operators and by window takaful operations of insurers. Ask the provider what the contract covers, in the same way you would for a conventional policy.

We do not list premiums here. The SECP releases give no price, and prices differ by insurer, vehicle and cover. To see how a premium is worked out from a rate you are quoted, use our vehicle insurance and takaful calculator.

How to avoid a fake policy

The SECP has warned in the past about bogus third-party certificates. Before you pay:

  1. Check that the company is on the SECP’s “List of Active Insurers”, published on secp.gov.pk.
  2. Buy from the insurer, its authorised agent or its official website or app.
  3. Ask for the policy document, not just a slip, and read the cover, the period and the vehicle details.
  4. In Sindh, make sure the policy is recorded so that the excise office can verify it when you pay token tax or transfer the vehicle.

What to do next

If your vehicle is registered in Sindh, arrange a valid policy before your next token tax payment or transfer. You can estimate the tax itself with our vehicle token tax calculator. To see insurance next to fuel, servicing and instalments, use the vehicle ownership cost calculator.

Third-party motor insurance FAQs

Is third-party motor insurance mandatory in Pakistan?

The Motor Vehicles Act, 1939 requires it for vehicles used in public places. In Sindh, since the 2026 amendment, it is also needed to register or transfer a vehicle or pay token tax.

Can I pay token tax in Sindh without insurance?

According to the SECP and the Sindh government’s announcements, no. A valid policy covering third-party risks is required.

Is it mandatory for private cars in Punjab?

Punjab’s April 2026 step applies to public transport vehicles through route permits. We found no rule linking private vehicle registration or token tax to insurance in Punjab as of 13 November 2026.

Does third-party insurance cover my own car?

No. It covers your liability to other people. Your own vehicle needs comprehensive cover.

How much compensation does the Sindh law set?

Rs. 700,000 for death and Rs. 500,000 for permanent disability, on a no-fault basis, according to the SECP.

How much does a third-party policy cost?

We do not quote a price because the official sources give none. Ask at least two SECP-registered insurers for a quote.

Sources