Will Insurance Cover E20 Fuel Damage in Older Cars? ICICI Lombard Clarifies Policy Validity Amid Growing Concerns

As India moves towards higher ethanol blending in petrol, concerns are mounting among owners of older vehicles over whether insurance companies will cover damage caused by E20 fuel. The debate intensified after ICICI Lombard published a blog suggesting that claims arising from E20-related damage in vehicles not designed for the fuel could face scrutiny.

In a subsequent clarification, ICICI Lombard stated that the use of E20 petrol does not invalidate motor insurance policies. The insurer said claim admissibility is not determined by the type of fuel used and that claims are not rejected solely because a vehicle was running on E20 fuel. Can Older Cars Using E20 Petrol Lose Insurance Coverage? ICICI Lombard Issues Clarification.

However, the clarification stops short of confirming whether damage directly linked to prolonged E20 usage in non-compatible vehicles will be covered. This remains a key concern for millions of motorists, especially since E20 became the standard petrol blend across India in April 2025, leaving vehicle owners with limited alternatives.

The insurer's earlier blog noted that not all E20-related damage claims would automatically be approved. Standard motor insurance policies generally exclude consequential damage, which refers to deterioration that occurs gradually over time rather than from a sudden accident or external event. Do Ants Love Ethanol in Petrol? Fact Check on E20 and Viral Video of Ants Swarming Fuel Tank.

Experts point out that higher ethanol content can absorb moisture and accelerate corrosion in older fuel systems. Components such as fuel tanks, rubber seals, gaskets and fuel lines may suffer long-term damage if the vehicle is not engineered to handle E20 fuel. Such issues are typically classified as wear-and-tear or consequential damage, categories that are often excluded from standard insurance coverage.

ICICI Lombard also indicated that common engine protection add-ons are primarily designed to cover risks such as water ingress or lubricant leakage and may not extend protection to chemical corrosion caused by ethanol-blended fuel.

The issue affects a significant number of vehicles on Indian roads. E20 compliance became mandatory for new vehicles only from April 2023 under BS6 Phase 2 norms. As a result, many older vehicles currently in operation were originally designed for E10 fuel or lower ethanol blends.

The concern could become even more significant if the government increases ethanol blending levels further. Reports indicate that authorities are evaluating the feasibility of E25 fuel, raising fresh questions about vehicle compatibility and future insurance coverage for ethanol-related damage.

(The above story first appeared on LatestLY on Jun 18, 2026 09:51 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).