As India races towards its energy transition goals, the nationwide rollout of E20 fuel (a 20% ethanol, 80% petrol blend) has brought unintended consequences for vehicle owners. While the cleaner, greener fuel is a win for the environment, many motorists have reported drops in mileage, higher maintenance bills, and unexpected vehicle issues.
But will their motor insurance policies cover any damages from the new fuel or these increased maintenance costs?
It is unclear how insurance claims are going to be treated and there is a worry that a hidden cost may be looming: denied motor insurance claims.
Since the introduction of E20 in 2023, complaints have mounted. A LocalCircles survey (Oct 2025) revealed:
Ethanol is hygroscopic i.e. it absorbs water, which can corrode engine parts not designed for it. It also affects rubber seals and fuel lines, especially in vehicles made before April 2023, which are not E20-compliant.
Prolonged use can cause:
This damage is real, but will your motor insurance policy cover it?
Insurers generally classify such issues under:
Both are typically excluded from standard motor insurance policies.
Even engine protection add-ons may not help if E20 use is considered gross negligence (using incompatible fuel knowingly or unknowingly).
Most policy documents don’t yet mention E20 or ethanol-related risks and from this arises a lack of clarity. But vague clauses like “reasonable care” or exclusions for “improper fuel use” could allow insurers to deny claims.
There’s already concern that the rollout of E20 was too fast, leaving millions of owners of older vehicles exposed to disputes.
The government maintains that:
But since only vehicles made after April 2023 are fully certified for E20. That leaves over 230 million vehicles exposed if damage occurs.
Insurers may need to revise policy wordings to:
insurancepe recommends that until policy wordings evolve, you should take precautions:
Don’t assume your claim will be accepted. Document everything.
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