ICICI Lombard Clarifies E20 Fuel Use Will Not Invalidate Motor Insurance

Owners of older vehicles have been worried about whether using E20 petrol can affect their motor insurance claims. The concern came after questions were raised over whether damage in older, non-compatible vehicles could be treated as negligence by insurers.

According to a report by Mint, there was concern that if an older vehicle not designed for E20 fuel suffered damage, the claim could be examined closely by the insurer. E20 is petrol blended with 20 per cent ethanol. It is now being sold more widely across India as part of the government’s ethanol blending programme.

However, ICICI Lombard General Insurance has now issued a clarification, stating that motor insurance policies remain fully valid even when E20 fuel is used.

“ICICI Lombard General Insurance reaffirms that motor insurance policies remain fully valid with the use of E-20 fuel. We further clarify that we do not treat the usage of E-20 fuel in older vehicles as negligence, and we consider the E-20 fuel program as a progressive, environment-friendly step,” the company said.

The insurer also clarified that its motor insurance policies are designed to cover accidental damages, theft, personal accident for owner-drivers and co-passengers, and third-party liabilities, depending on the covers opted for by the insured.

According to experts, if the manufacturer hasn't certified your older car for E20, you are taking a big risk with your insurance. If your engine breaks down, the insurance company isn't going to look at it as an accident. They will simply categorize it as improper fuel usage. Since standard policies only cover sudden, accidental mishaps, any damage caused by putting the wrong fuel into a non-compatible engine will result in a rejected claim.

“For example, if you are driving a 2016 petrol car that's not rated for E20 and you keep pumping it anyway, you are going to ruin the engine. When it finally breaks down, and you file a claim, the insurer will look under the hood and see it wasn't an accident - you just used the wrong fuel over time. They will simply deny it on the grounds of improper usage,” says Atrey Bhardwaj, Chief Growth Officer (CGO) – Probus Insurance.

Fuel Type Not A Deciding Factor

ICICI Lombard said the type of fuel used in the vehicle is not a determining factor in claim admissibility. This includes petrol, diesel, CNG, and other fuel types.

“Claims are admissible based on the occurrence of insured perils such as vehicle accidents or theft. The type of fuel used in the vehicle, such as Petrol, Diesel, CNG & so on, is not a determining factor in claim admissibility. Accordingly, if a claim is admissible with conventional fuel, it is equally admissible with E-20 fuel, and ICICI Lombard does not reject claims merely on the basis of fuel usage,” the company said.

Motor insurance policies usually cover specific risks such as accidents, theft, fire, natural calamities, third-party liability, and personal accident cover, depending on the type of policy and add-ons purchased. Claim settlement depends on the nature of the loss, the policy terms, and the cover opted for by the vehicle owner.

Why E20 Raised Concerns

E20 petrol contains 20 per cent ethanol. While newer vehicles are being made with this fuel in mind, some older vehicles may not have been originally designed for higher ethanol blends. This had led to concerns among vehicle owners about possible effects on rubber seals, fuel lines, and other fuel-system components over time.

The concern was also linked to the availability of E20 petrol at fuel stations. As the blend becomes common, many owners of older cars and two-wheelers may end up using it even if they are not fully sure about vehicle compatibility.

For policyholders, the larger point remains that claims are assessed on the basis of policy terms and the cause of loss. If the claim arises from an insured event, such as an accident or theft, the type of fuel used will not by itself decide whether the claim is admissible.

What Government Of India Said

The government of India has clearly established that simply filling up with E20 petrol does not invalidate or cancel your active motor insurance policy. Your third-party liability and standard accidental damage covers remain fully intact. However, there is a distinct line between a policy being 'valid' and a specific claim being 'payable'. If a non-compatible older vehicle suffers an internal engine breakdown directly linked to prolonged high ethanol usage, the insurer can decline that specific component claim on grounds of mechanical mismatch or improper fuel use.

“For example - think of it this way - if you fill your older car with E20 and end up in a crash that breaks your bumper and headlights, your insurance will still pay to fix that body damage. The fuel you used doesn't change the fact that you had an accident. But if your engine starts acting up a few weeks later because that E20 fuel ruined the parts inside, the insurer will say no to that specific engine claim,” explains Bhardwaj.

What Vehicle Owners Should Keep In Mind

The very first thing that vehicle owners need to check is their car manual. If your vehicle isn't rated for E20, using it is considered a known risk, and that can easily lead to a rejected claim down the line if things go wrong. It’s also smart to look over your policy and see if you have an engine protector add-on. While it won't cover gradual fuel damage, it's a safety net you want. At the end of the day, just sticking to the right fuel is the easiest way to protect both your car and your insurance.

For example, say someone with a 2018 petrol car checks the manual first. If it says E20 is fine, they can fill up without worrying about ruining the engine. Since they followed the manufacturer's rules, there’s no risk of engine trouble or insurance issues.

Owners should also maintain regular service records and keep policy documents safely. This can help if there is any dispute or query at the time of claim settlement.

“The owners of older cars should take steps to prevent damage to vehicles due to E20 usage, which includes upgrading fuel system components to ethanol-grade materials, using specialized fuel additives, and other steps recommended by the vehicle manufacturers,” says Hari Radhakrishnan, expert, Insurance Brokers Association of India (IBAI).

India’s shift towards ethanol-blended petrol is likely to continue. The government has been encouraging greater use of ethanol-blended fuel as part of its cleaner fuel and energy security goals. For vehicle owners, the clarification from ICICI Lombard helps address one key concern: using E20 fuel will not, by itself, invalidate motor insurance or lead to rejection of an otherwise admissible claim.

FAQs

1. Does using E20 petrol make motor insurance invalid?

No. ICICI Lombard has clarified that motor insurance policies remain valid even if E20 fuel is used. The insurer has said it does not reject claims merely on the basis of fuel usage.

2. Can an E20-related engine problem still lead to a claim dispute?

Yes. Experts say if an older vehicle is not E20-compatible and suffers gradual engine or fuel-system damage, the insurer may not treat it as accidental damage. Such claims may be examined under policy terms and exclusions.

3. What should owners of older vehicles do before using E20 fuel?

They should check the vehicle manual or ask the manufacturer whether the vehicle is E20-ready. They should also keep service records and review policy clauses on engine damage, wrong fuel, and mechanical breakdown.