Summary of this article
Using E20 fuel in non-compatible vehicles can cause corrosion and engine damage.
Insurers may reject or reduce claims if damage is linked to non-recommended fuel.
Add-ons like Engine Secure won’t cover negligence; misfuelling cover may help.
Owners should verify E20 compliance, maintain records, and source fuel from trusted pumps.
If non-E20 vehicles are put to use for long, the problems of corrosion of the fuel system components, faster wear of rubber seals and gaskets, and decay of plastic components set in. “The higher alcohol content affects the performance of the engine, fuel efficiency, and the emission levels. Gradually, it may bring about serious harm to the engine and a swell in the maintenance costs,” says Surender Tonk, vice-president, Insurance Brokers Association of India (IBAI).
Insurance Implications Of Using Non-Recommended Fuel
“From an insurance perspective, if it could be proven that the damage was caused by fuel not recommended by the manufacturer, it may be deemed a breach of contract or improper use, thereby leading to some denial of full claim or lessened claims amount,” says Dinesh Mosamkar, senior VP, consumer underwriting, TATA AIG General Insurance.
At this stage, motor insurance claims are unaffected unless the insurance company can show that the damage was caused directly due to the use of fuel under the manufacturer's specifications. The standard motor policy does not mention ethanol blend ratios; however, they do generally includes references that exclude damage due to out of the manufacturer's compliance.
If it can prove that the damage resulted from the use of E20 fuel, which was not appropriate for the vehicle, the claim may be reduced or rejected due to the damage, similar to how insurers would deal with an accident or error whereby diesel fuel is put into a petrol car.
Does Engine Secure Add-On Provide Cover
Though “Engine Secure” provides wider coverage for engine repairs, it will not alter exclusions for damage associated with using incorrect or non-recommended fuel types.
Even with add-on coverage, if the cause of damage is negligence, such as using E20 fuel in a non-compliant vehicle, insurers may reject claims or limit payouts. Otherwise, complying with a manufacturer's guidance remains the best defense against claims ending in rejection. Also, having Misfuelling add-on may help in covering loss or damage to parts due to inadvertent misfuelling,” says Mosamkar.
What You Can Do
Owners of older or non-compliant vehicles can limit their risk exposure in several ways: by confirming compliance through the owner’s manual or manufacturer to ensure the vehicle supports E20 fuel; by maintaining detailed service records and any manufacturer advisories related to fuel use; by formally advising their insurer if the vehicle is using an alternative fuel mix before policy renewal, as informal advisories may not be recognized; and by sourcing fuel carefully from reputable pumps to avoid contamination, while keeping receipts for all fuel purchases.
“Additionally, broader measures such as Engine Control Unit (ECU) tuning, using ethanol-resistant materials, and transitional public policy mechanisms—including upgrade subsidies and phased implementation—can further help protect older vehicle owners,” says Mosamkar.
What Lies Ahead
This is still an ongoing process, and the government will not finalize anything before all the requirements are met and the requirements are made public. They will educate consumers about E20 compatibility, maintenance needs, and more, ensuring that neither older nor newer vehicles will be affected by the shift. “There is a chance that vehicles not originally designed for E20 may require some modifications or upgrades, such as a fuel pressure regulator, flex fuel sensors, and corrosion inhibitors, to help protect internal components.
However, from an insurance perspective, not only older cars, but also newer ones, should have fuel adulteration cover in addition to the existing add-on covers. It protects against engine and component damage resulting from contaminated or adulterated fuel,” says Subhasish Mazumder, head- motor distribution, Bajaj Allianz General Insurance.
