Does Car Insurance Covers E20 Damage?

India took a bold leap this April when petrol pumps across the country switched to E20 fuel a blend of 80% petrol and 20% ethanol. The move, originally slated for 2030, came five years ahead of schedule. 

The government calls it a win for energy independence, farmer welfare, and lower carbon emissions. But for millions of car owners, especially those driving older models, the rollout has been anything but smooth.

Also Read-A List Of All The E20 Compatible Cars On Sale
 

Why Drivers Are Worried

Ethanol isn’t new, but E20 is stronger than what most vehicles on Indian roads were designed to handle. Compared to the older E10 blend, E20 carries less energy, meaning lower fuel efficiency. 

The bigger worry is ethanol’s corrosive nature. Rubber seals, fuel lines, and carburetors in cars built before April 2023 when E20 compatibility became mandatory under BS6 Phase 2 are vulnerable. 

“Using E20 in vehicles not designed for it can cause premature wear and tear,” Toyota India has cautioned in an email to Cartoq,  warning owners of models like the Hyryder and Innova Hycross that warranties could be voided.

Rural drivers have reported higher maintenance costs and more frequent breakdowns. Despite repeated government assurances that “E20 will not affect warranties,” as stated by the Ministry of Petroleum and Natural Gas, real-world stories suggest otherwise.

The Insurance Grey Area

If car owners weren’t already anxious, insurers have added another layer of uncertainty. Policies don’t clearly state whether damage from E20 in non-compatible cars will be covered.

Digital insurer ACKO told The Economic Times: “If the vehicle manual prescribes E10 and the owner uses E20, any resulting damage may not be covered, as it falls under negligence.” Even add-on engine protection covers, which many buy for peace of mind, exclude damage caused by using the wrong fuel.

Yet the government maintains insurance validity is unaffected. This contradiction has led to confusion, with scattered reports of claims being denied over ethanol-related corrosion. 

In September 2025, a Public Interest Litigation questioning the rollout was dismissed by the Supreme Court, which sided with the broader national interest of energy independence.

Caught Between Costs and Risks

For owners of older vehicles, the dilemma is real. With E10 and ethanol-free fuels phased out, their only option is premium fuel like IndianOil’s XP100 a low-ethanol, 100-octane petrol that costs nearly ₹160 per litre compared to E20’s ₹97–100. That’s a 50% jump in running costs, making it unaffordable for most daily commuters.

NITI Aayog had once recommended keeping E10 available for older vehicles, but the suggestion was dropped. Now, drivers must choose between risking long-term damage from E20 or swallowing higher fuel bills.

Also Read- A Full List Of E20 Compliant Bikes and Scooters in India

What Carmakers Are Saying
 

• Maruti Suzuki says all its models built after April 2023 are E20-compliant.
   
• Hyundai reassures buyers that most of its 2023 and newer models can run on E20, but urges owners to double-check manuals.
   
• Tata Motors admits mileage drops are real but insists E20 is “safe for all compatible vehicles.”
   
• Mahindra confirms its latest SUVs are compliant, though it recommends premium fuels for turbocharged engines.
   
• Volkswagen and Skoda assure BS6-era cars made after 2023 are safe, with warranties intact.
   
• Renault India and partner Nissan also claim their recent models face no issues.

The consensus, echoed by the Automotive Research Association of India (ARAI), is that E20 is safe if your car is designed for it. But as Toyota bluntly put it: “Using E20 in non-compatible vehicles will cause engine damage and void warranty.”

Nobody Will Like The Answer To This Question

So as a car/bike owner your option is to use ethanol (specifically E20) blended fuel in non-compatible vehicle as petrol without ethanol is not available at any pump. 

Everyone from BP, Indian Oil to HP is mixing some amount of Ethanol ranging from 10 to 20 percent in all types of petrol. 

Doing so means that you are using non-compatible fuel and a solid cause for insurance companies to deny your insurance claim. This is a lose-lose situation for consumer unless ethanol free/E10 fuel is availed as an option at least for the next 15 years at which point all of non E20 compatible cars will be past their registry.