Owners of cars purchased before April 2023 now face growing concern over E20 petrol usage.
ICICI Lombard, a major private insurer, issued a warning regarding potential claim rejection risks.
The company noted that ethanol-blended fuel damage in older cars may be treated as negligence.
Consequently, insurance claims linked to such damage could face rejection under policy terms.
E20 Petrol Compatibility Gap in Indian Vehicles
Automobile industry began selling E20-compatible vehicles only after April 2023 rollout.
Therefore, most vehicles currently running on roads lack full high-ethanol fuel compatibility.
Meanwhile, E20 petrol supply has expanded across fuel stations nationwide.
As a result, ethanol-free or E10 petrol availability has become extremely limited.
Ethanol Impact on Older Engine Systems
Ethanol offers environmental benefits but behaves differently inside older engine systems.
ICICI Lombard explains ethanol carries corrosive properties that can gradually damage components.
Rubber seals, fuel lines, and internal engine parts may slowly degrade over time.
Additionally, ethanol contains lower energy compared to petrol, slightly affecting mileage performance.
Such gradual damage becomes difficult to detect during insurance claim assessments.
Insurance Policy Limitations and Claim Challenges
Government clarified that E20 petrol usage does not cancel insurance policies directly.
However, insurers typically exclude consequential damage occurring gradually over extended periods.
Moreover, engine protection add-ons mainly cover water ingress or oil leakage cases.
They do not necessarily include chemical reactions or corrosion-related engine damage.
Therefore, both insurance claims and manufacturer warranties may face rejection risks.
Premium Fuel and Policy Alternatives
ICICI Lombard suggested premium fuels like XP95 for older engine safety.
Such fuels contain lower ethanol levels and suit non-compatible vehicles better.
However, this option increases fuel costs significantly for vehicle owners.
Policy Shift and Financial Pressure
Meanwhile, government continues promoting ethanol-blended fuels across the country.
After global tensions, petrol prices rose by ₹7.5 per litre recently.
Additionally, excise duty on higher ethanol blends like E22 to E30 was removed.
Therefore, old vehicle owners now face a difficult balance between cost and engine safety.
