A general term for insurance made mandatory by law; for example, automobile insurance.
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Any form of Insurance which is required by law or directives of the Government. Like compulsory Insurance for death of or bodily injury to third parties arising out of the use of Motor Vehicles on the public highway is as per mandatory provisions of the Motor Vehicles Act. Similarly, National Agricultural Insurance (NAIS) is compulsory for Loanee (borrowing) farmers.
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UK: Insurance that has to be effected to comply with the law. Failure to comply is a criminal offence. The aim is to ensure that an injured person does not have to rely upon the defendant’s wealth to secure his compensation. Examples of compulsory insurance legislation include the Road Traffic Act 1988 and the Employers’ Liability (Compulsory Insurance) Act 1969. Obligations to insure may arise under contracts as with the Joint Contract Tribunal, or the rules of professional institutions or regulatory bodies, e.g. FSA.