Car Insurance Grey Zone: Will Your Policy Cover E20 Fuel Damage?

All petrol vehicles in India now run on E20 petrol, a blend of 20 per cent ethanol and 80 per cent petrol. However, there's an intense debate over how this blended fuel is affecting the engine's longevity.

More importantly, insurance policies remain mostly unclear on whether potential damages caused by this fuel mix will be honoured. This ambiguity is sparking anxiety among car owners, dealers, and insurers alike.  

The E20 Rollout Hiccups  

The Government of India had announced a phased rollout of E20 fuel as part of its strategy to cut oil imports and reduce vehicular carbon emissions. Though praiseworthy in intent, the rollout has shown practical problems. 

Automobile forums are filled with cases of overheating, reduced fuel economy, and suspected long term wear in engines that were not originally designed to handle high ethanol content.  

Manufacturers have assured newer car buyers that post 2023 models are calibrated for E20 compatibility. Yet, complaints are already surfacing. 

A Pune-based service advisor explained, "We are seeing walk in issues from customers who used E20 in slightly older cars. The warranty clauses do not fully protect them, and then begins the tussle with insurers."  

Most Insurers Evade Direct Answers  

Motor insurance providers are in an especially sensitive position. Comprehensive policies promise protection against accidental damages, but most exclude consequential damages or problems arising from fuel quality. This leaves a grey zone when it comes to E20 related complaints.  

When contacted, HDFC Ergo’s spokesperson declined to provide a definitive stand. The spokesperson said, "Given the evolving nature of the fuel policy and the absence of specific regulatory direction, we are not in a position to issue a concrete response on claims related to E20 damage. It remains a deeply sensitive matter."  

ICICI Lombard also avoided committing to a position. A company representative remarked, "Policy interpretation around E20 fuel compatibility is still vague. We are actively monitoring how the situation develops, but at this stage, we cannot provide any categorical clarification."  

Acko’s Deleted Tweet & Clarification 

The E20 insurance debate gained attention when Acko Insurance, sister company to Acko Drive, took a firm stance. 

Responding to a customer query on X, the insurer stated that its current motor insurance policy excludes damages from E20 fuels, which sparked immediate backlash. Social media users criticised the company for seemingly opposing government initiatives.

However, an Acko Insurance senior official has clarified to Acko Drive that the policy consistently covers only physical or accidental mechanical damage, irrespective of the fuel type used in the car. 

Non-accidental engine damage is generally attributed to poor maintenance. In other cases, it typically falls under the manufacturer’s warranty, a principle unchanged since before E20’s introduction in India.

The Road Ahead  

For now, the pumps are primed for E20, but the insurance desks remain unprepared. Until policies explicitly mention ethanol blend fuels, the fine print of motor insurance contracts will continue to be the Achilles heel of India’s clean energy transition.  

At stake is not merely the cost of repairs but also public trust in the resilience of policy frameworks that aim to transform the way India drives.  

Also read: Supreme Court Halts Age-Based Car Ban; Here’s What It Means for You