Using E20 Fuel In An Older Car? This Insurer Says Claims Could Be Rejected

Owners of older petrol vehicles could face complications when filing insurance claims for damage linked to E20 fuel use. ICICI Lombard has stated that claims arising from E20-related damage in non-compatible vehicles may be treated as cases of improper use or negligence, potentially resulting in claim rejections.

The clarification comes as E20 petrol, a blend of 20 percent ethanol and 80 percent petrol, has become the standard fuel available across India. While vehicles manufactured from April 2023 onwards were developed to handle E20 fuel, millions of older cars and two-wheelers currently on Indian roads were not originally designed for higher ethanol blends.

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ICICI Lombard Flags Potential Claim Rejections

In a blog post published on June 9, 2026, ICICI Lombard highlighted the insurance implications of using E20 fuel in vehicles that are not E20-compatible. The insurer warned that policyholders may face difficulties when claiming for damage linked to prolonged use of the fuel in older vehicles.

The insurer stated, "Using a fuel your vehicle was not made for can be treated as improper use or negligence. Insurers may review these claims from that angle, and rejection is possible."

According to the company, fuel-related damage claims often exist in a grey area that many policyholders only discover when they attempt to file a claim. With E20 now widely available and lower-ethanol alternatives becoming harder to find, concerns among owners of older vehicles have grown significantly.

Why Older Vehicles Could Face Problems

The Indian automotive industry started introducing E20-compatible vehicles from April 2023 under BS6 Phase 2 norms. Vehicles sold before that period were largely engineered for lower ethanol blends and may not be fully compatible with E20 fuel.

ICICI Lombard noted that most vehicles currently on Indian roads predate the April 2023 compatibility threshold. At the same time, the nationwide rollout of E20 petrol is largely complete, while premium alternatives such as XP95 remain considerably more expensive.

The insurer explained that ethanol burns cleaner than petrol but behaves differently inside an engine. While the impact on fuel efficiency may be relatively minor, the long-term effects on vehicle components are a greater concern.

"Ethanol is corrosive. In vehicles not built for it, it can degrade rubber seals, damage fuel lines, and wear down engine parts gradually. The damage may not be immediate. It builds quietly, which makes it harder to catch and easier to dispute at claim time," the insurer warned.

Insurance Validity And Claim Approval Are Different

ICICI Lombard also highlighted an important distinction between insurance policy validity and claim approval. While the government has clarified that using E20 fuel does not automatically void an insurance policy, that does not guarantee acceptance of every claim related to fuel-induced damage.

The insurer stated, "The government has confirmed that using E20 fuel does not void your insurance policy. But that is not the same as saying every damage claim linked to E20 will be approved."

It further noted that standard motor insurance policies generally exclude consequential damage. Such damage develops gradually over time rather than resulting from a sudden incident such as an accident.

"Standard policies usually exclude consequential damage, which is damage that builds up over time rather than happening in a single incident, like an accident," the insurer explained.

According to the company, engine protection add-ons may also offer limited help in such situations because most are designed to cover water ingress, lubricant leakage or mechanical failures rather than chemical corrosion caused by fuel.

Manufacturer Warranty Concerns Remain

Apart from insurance complications, vehicle owners may also encounter warranty-related issues. ICICI Lombard cautioned that manufacturers may reject warranty claims if damage occurs in vehicles that were not approved for E20 fuel use.

"If your car is not E20-compatible and damage occurs, the manufacturer may reject the claim. It is best to check your manual or confirm with the dealer," the insurer said.

The insurer also suggested that premium-grade fuels may help reduce risk in some cases. "Premium fuels often have lower ethanol content, which is easier on older engines. It is not a full fix, but it helps," it added.

Government Continues Ethanol Push

The development comes as the government continues expanding the use of ethanol-blended fuels. In its latest move, excise duty has been waived on petrol blends including E22, E25, E27 and E30, signalling a continued push towards higher ethanol concentrations in the future. E85 was recently launched in Delhi and Minister of Road Transport and Highways of India Nitin Gadkari has also approved E100 (oure Ethanol).

As ethanol blending levels increase, compatibility concerns surrounding older vehicles are likely to remain an important issue for vehicle owners, insurers and manufacturers alike.

DriveSpark Thinks

ICICI Lombard's warning raises an important question that extends beyond insurance policies. If E20 fuel is becoming the default option at fuel stations across India, can vehicle owners alone be held responsible for compatibility-related issues in older vehicles?

Millions of pre-April 2023 cars and two-wheelers remain on Indian roads today, and many owners have little practical choice but to use the fuel available at local pumps. While manufacturers, insurers and regulators may point to compatibility requirements, lower-ethanol alternatives are becoming increasingly difficult to find in many regions.

As India's ethanol blending programme gathers pace, there is a growing need for clear and consistent guidance from the Government, OEMs, fuel retailers, insurers and policymakers. Without a coordinated approach, consumers risk being caught between government policy, fuel availability and the possibility of disputed insurance or warranty claims.

ICICI Lombard Issues Clarification

ICICI Lombard General Insurance has issued the following response to the article above:

"ICICI Lombard General Insurance reaffirms that motor insurance policies remain fully valid by the use of E-20 fuel. We further clarify that we do not treat usage of E-20 fuel in older vehicles as a negligence and we consider E-20 fuel program as a progressive environment friendly step .
Our insurance policies are designed to cover accidental damages, theft, personal accident for owner-drivers and co-passengers, as well as third-party liabilities, depending on the covers opted by the insured.

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."