Use E20 fuel? Your vehicle insurance claim might be denied
What's the story
ICICI Lombard General Insurance has warned that insurance claims for fuel-related damages could be rejected in certain cases. The warning particularly applies to owners of older vehicles using E20 petrol, a higher ethanol blend. The company said that if a vehicle wasn't designed for E20 fuel, its use could be considered "improper use" or "negligence," possibly affecting claim admissibility.
Policy implications
What about insurance on E20 use?
The Indian government has clarified that using E20 fuel doesn't void a motor insurance policy. However, ICICI Lombard points out this doesn't guarantee approval for all damage claims related to E20 use. Standard motor insurance policies usually exclude "consequential damage," which occurs gradually rather than from a sudden accident. The company also said engine protection add-ons typically cover issues like water ingress or oil leakage but not chemical corrosion from fuel.
Compatibility concerns
Shift to E20 raises concerns for older vehicle owners
The shift to E20 as the standard petrol blend in India has raised concerns for owners of older vehicles. Many cars on Indian roads today were manufactured before the mandatory introduction of E20-compatible vehicles in April 2023 under BS-VI Phase II emission norms. This raises questions about potential wear and tear from ethanol-related damage and whether car insurance will cover such incidents.
Insurance coverage
Ethanol's impact on non-compatible vehicles
ICICI Lombard has said that damage linked to E20 fuel use in non-compatible vehicles may be treated as "improper use" or "negligence," potentially affecting insurance claims. The company acknowledges that ethanol burns cleaner than conventional petrol but has different combustion characteristics and can be more corrosive than pure petrol. This raises concerns over the long-term impact of E20 fuel on vehicles not built for it, possibly degrading rubber seals, damaging fuel lines, and wearing down engine parts gradually.
Company response
ICICI Lombard's stance on E20 fuel use
In response to the concerns, ICICI Lombard clarified that their motor insurance policies remain fully valid with the use of E20 fuel. The company doesn't consider using E20 fuel in older vehicles as negligence and views it as a progressive, eco-friendly step. They further clarified that claims are admissible based on insured perils like vehicle accidents or theft, not the type of fuel used in the vehicle.