E20 petrol (a blend of 20% Ethanol and 80% petrol) has become standard in India. All bunks now retail E20. This has also created concerns among people who own petrol cars, as the corrosive nature of Ethanol is said to cause issues in the long run in non-compatible vehicles. Adding more fuel to these worries, ICICI Lombard, a major in the insurance space, has now come up with a shocking statement. It said that car insurers may reject claims for damages caused by E20 petrol in older cars, attributing them as ‘improper use’ or negligence.
India achieved its E20 target well ahead of the original 2030 deadline. The nationwide rollout of 20% Ethanol-blended petrol was completed by April 2026. You want it or not, you can only buy E20 petrol now. There is no option to choose lower blends.
The use of E20 petrol is said to cause various side effects in the long run. The corrosive nature of Ethanol could potentially damage components of the engine and fuel systems. Additionally, fuel efficiency is also expected to be lower (1-6 percent drop likely) due to the lower energy density of Ethanol.
Users are more worried about the damage to vehicle components than the drop in fuel efficiency. This is where ICICI Lombard’s remark stands relevant. It was made in a blog post published on June 9, 2026. ICICI Lombard is in fact, India’s largest private general insurance company. The post referred specifically to the use of E20 petrol in older, non-compatible cars.
It further said that car insurers may reject E20 fuel damage claims on older vehicles. ‘Old vehicles’, in this case, refers to vehicles sold before April 2023, which are not compatible with the fuel type. Use of E20 petrol in non-compatible engines will cause issues in the long run.
“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”- says the blog post. It further explains that the insurance claims related to fuel damage sit in a grey area. Most policyholders only discover those details only when they have to actually make a claim.
Whether the insurer approves fuel-related claims depends on the compatibility of the vehicle. The insurance will cover fuel damage caused by the use of E20 in compatible models. This is because the use of E20 fuel in E20-compatible vehicles is considered normal use and the policy remains valid.
In the case of older, non-compatible vehicles, the claim may be rejected, citing ‘improper use’ or ‘negligence’ as reasons. Using E20 fuel in non-compatible vehicles may be considered as improper use. The insurer may review the claims from that angle and even reject them.
This may get many worried. However, the government had previously mentioned that using E20 fuel would not void insurance policy. That doesn’t guarantee that every claim would be approved, either. Also, standard insurance policies do not often cover consequential damage- the damage that is caused over time.
In many cases, opting for engine protection add-ons can be of help. Usually, these are designed for damages caused by water ingress or oil leakage. It remains unclear if damages caused by chemical corrosion are covered by these. The best way to find out is to carefully read all the terms, conditions and exclusions while buying the policy. Do not just assume your coverage and its scope.
After this story went live, ICICI Lombard reached out to us with an official statement. It says:
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.