No insurance claim for E20 fuel damage? Here's what ICICI Lombard said

ICICI Lombard, one of India's largest private-sector general insurance companies, on Monday said that motor vehicle insurance policies remain fully valid with E-20 fuel use, and the company does not reject claims merely on the basis of fuel usage.

The clarification comes after a blog post by the company on 9 June 2026 (and later edited on 14 June 2026) sparked concerns that damage due to E20 fuel in older, non-compatible vehicles may be treated as ‘negligence’ and lead to insurance claim rejection.

“We further clarify that we do not treat usage of E-20 fuel in older vehicles as a negligence and we consider E-20 fuel program as a progressive environment friendly step (sic),” the private insurer said in an official statement today in response to the concerns among vehicle owners.

Type of fuel cannot determine claim admissibility

The company also noted in the statement that its policies are designed to cover accidental damage, theft, personal accident for owner-drivers and co-passengers, as well as third-party liabilities, depending on the covers opted for by the insured.

The earlier blog stated that even though engine protection add-ons offer some coverage, most are designed to address water ingress or oil leakage, not chemical corrosion from fuel.

However, ICICI Lombard issued a clarification on that point and said claims are admissible based on the occurrence of insured perils such as vehicle accidents or theft. It added that the type of fuel used in the vehicle, such as petrol, diesel, CNG (compressed natural gas), among others, is not a determining factor in claim admissibility.

“Accordingly, if a claim is admissible with conventional fuel, it is equally admissible with E-20 fuel and ICICI Lombard does not reject claims merely on the basis of fuel usage,” the company said in the statement.

E20 or petrol blended with 20% ethanol is the most widely available at fuel pumps in the country, owing to its mandatory use from 1 April 2026.

Government waives excise duty on several ethanol-blended fuels

In its latest push for ethanol-blended fuels, the central government, led by Prime Minister Narendra Modi, has waived excise duty on several variants, including E22, E25, E27, and E30. This means that excise duty will be 'nil' on petrol with 22%, 25%, 27% and 30% ethanol blend.

The waiver is aimed at encouraging customers to move towards ethanol-blended petrol at a time when petrol and diesel prices have increased by a cumulative ₹7.5 per litre since the escalation of the West Asia conflict.

Note: This story was published on 14 June 2026 based on the content of a blog by ICICI Lombard published on 9 June 2026. The said blog was later edited and the company issued a clarification.