E20 Fuel and Car Insurance: What You Should Know
As E20 fuel becomes more widely available across India, you may have questions about howRead more
What is E20 Fuel and How is it Different From Other Petrol Blends?
E20 fuel is petrol blended with 20% ethanol and 80% petrol. Ethanol is a renewable fuel commonly produced from agricultural feedstock such as sugarcane and maize. The number after "E" indicates the percentage of ethanol mixed with petrol. Here are some common ethanol fuel blends available in India:
| Fuel Type |
Ethanol Content |
Common Usage in India |
| E5 |
Up to 5% |
Standard low-ethanol petrol blend (largely phased out). |
| E10 |
Up to 10% |
The previous standard blend that most pre-2023 cars were built to handle. |
| E20 |
Up to 20% |
The new baseline petrol introduced across India to cut emissions and oil imports. |
| E85 |
Up to 85% |
Used strictly in purpose-built flex fuel vehicles (currently entering the Indian market). |
Higher ethanol blends, like E85, require specialised flex fuel engines and corrosion-resistant fuel lines that can handle higher ethanol concentrations safely. Currently, E20 is the most relevant ethanol blend for most Indian car owners.
Why is the Government Encouraging the Use of E20 Fuel?
The government has been promoting higher ethanol blending in petrol as part of its long-term energy and sustainability goals. Have a look at the reasons behind the growing availability of E20 fuel in India:
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To Reduce Dependence on Crude Oil Imports
India imports a significant portion of its crude oil requirements. By increasing ethanol blending, the country can reduce its dependence on imported fossil fuels over time.
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To Support Domestic Ethanol Production
Higher ethanol demand can support industries involved in ethanol manufacturing, including sectors linked to agriculture and biofuel production.
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To Promote Cleaner Fuel Alternatives
Ethanol is considered a renewable fuel source. Increasing its share in petrol can contribute to broader efforts aimed at reducing emissions from the transport sector.
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To Strengthen Energy Security
By diversifying fuel sources, India can reduce its reliance on a single energy source and support long-term energy security objectives.
Myth: "Using E20 Fuel Will Make my Car Insurance Useless"
Fact: No, it will not.
In most cases, you should know that using E20 fuel does not invalidate car insurance policies. The coverage continues to apply as per policy terms regardless of the ethanol content of the fuel being used.
What Continues to Be Covered Under Car Insurance?
If you have a comprehensive car insurance policy, the following coverage will continue to apply as per policy terms:
- Accidental damage
- Theft of the vehicle
- Fire-related damages
- Natural disasters (floods, cyclones, inundation)
- Damage due to riots and strikes
- Third-party liabilities
- Total loss of the vehicle (damage beyond repair)
- Personal accident cover (if opted)
The introduction of E20 does not change these coverages under car insurance.
Common Exclusions Under a Standard Car Insurance Policy
While car insurance provides financial protection against several risks, there are certain losses that are generally not covered under standard policies. Have a look:
- Consequential damage
- Mechanical or electrical breakdown
- Driving under the influence of alcohol or intoxicated substances
- Damage when driving without a valid driver's licence
- Claim on a lapsed policy
- Damage outside India
- Wear & tear due to ageing
Are Engine Damages Covered and what is Engine Protection Add-on?
Many people assume that any damage to the engine is covered under car insurance. That's not always true. Motor insurance is designed to cover sudden and accidental damage, not mechanical breakdowns, electrical failures, consequential damage, or fuel-related wear & tear.
However, one add-on worth understanding is the Engine Protection Cover, which may help cover certain engine-related damages such as water ingress, hydrostatic lock, or lubricating oil leakage following an insured event, subject to policy terms. However, it does not cover manufacturing defects, fuel-related damage, lack of maintenance, driving despite warning signs, or gradual deterioration.
Here's an example to better understand the inclusions and exclusions under the engine protect cover:
Covered:
- Car gets submerged during heavy rainfall
- Water enters the engine
- Engine seizes
Potentially Excluded:
- Ignoring the engine warning light for an extended period
- Vehicle continues to be driven without inspection or repairs
- Engine eventually fails due to the underlying issue
Insurers treat these cases as maintenance-related issues rather than an insured event.
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Will E20 Fuel Increase Your Car Insurance Premium?
At present, E20 fuel usage is not generally treated as a standalone rating factor for premium calculation. Generally, insurers calculate car insurance premiums based on the following factors.
- Car age and model
- Insured Declared Value (IDV)
- Vehicle registration location
- Claims history
- Type of policy selected
- Add-ons chosen
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Does E20 Fuel Affect New and Older Cars Differently?
Many newer cars (post-2023 models) are designed to run on E20 fuel, while some older models may have different fuel compatibility requirements. If you are unsure whether your car supports E20 fuel, you should contact the manufacturer or an authorised service centre.
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Why Should You Follow Manufacturer Guidelines?
Following your car manufacturer's recommendations ensures proper maintenance and performance. If you have questions regarding fuel compatibility, you should refer to the manufacturer's advisories.
Policybazaar Expert View
E20 fuel is a part of India's broader ethanol blending program that aims to reduce crude oil imports and promote alternate fuel alternatives. Vehicle owners should note that the use of E20 fuel does not generally change the coverage provided under a car insurance policy. Claims continue to be assessed based on policy terms, coverage, and the circumstances of the loss. As with any motor insurance policy, exclusions relating to wear & tear, negligence, maintenance-related issues, and consequential losses may continue to apply.
