ICICI Lombard, India’s largest private general insurance company, has said that car insurers may reject E20 fuel damage claims in older, non-compatible cars sold before April 2023.

“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,” ICICI Lombard said in blog post published on June 9, 2026.

This comes after several vehicle owners took to social media to express concerns about E20 causing issues in non-compatible cars and two-wheelers. The Indian automobile industry started selling E20-compatible vehicles from April 2023. Vehicles sold prior to that were large not compliant with E20.

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ICICI Lombard said the bigger concern is what E20 fuel impact on car components can look like over time. “Ethanol is corrosive. In vehicles not built for it, it can degrade rubber seals, damage fuel lines, and wear down engine parts gradually. The damage may not be immediate. It builds quietly, which makes it harder to catch and easier to dispute at claim time,” it warned.

While the government last year clarified that using E20 fuel does not void insurance policy, ICICI Lombard said that is not the same as saying every damage claim linked to E20 will be approved.

“Standard policies usually exclude consequential damage, which is damage that builds up over time rather than happening in a single incident, like an accident,” the private insurer said.

Even though engine protection add-ons offer some coverage, but most are designed for water ingress or oil leakage, not chemical corrosion from fuel, the blog post said.

“If your car is not E20-compatible and damage occurs, the manufacturer may reject the claim. It is best to check your manual or confirm with the dealer,” said ICICI Lombard.

For older vehicles, the risks are worth understanding before damage shows up at a service centre and a claim gets disputed, the private insurer cautioned.

Sunderdeep Singh, a Ludhiana-based car reviewer who goes by ‘Volklub’ on X, told Business Today that E20 mandate is damaging turbo petrol cars with advanced Gasoline Direct Injection engines. Singh, who owns three cars of European brands, said he was facing spark plug and electronic power control light issues for the last two years. While one of his cars is from 2013, the other two were purchased in 2021 and 2022, respectively. “Since my cars are out of warranty, I bear the expenses from my pocket,” he said. “If you read the manual of E10 cars, it says you should not use ethanol-blended petrol above E10. If this is what the manual says, how can anyone assume these cars will not face problems due to E20?” he asked.

Published on: Jun 14, 2026 12:56 PM IST