As India moves towards higher ethanol blending in petrol, Zuno General Insurance has launched an add-on cover to protect vehicle owners against accidental engine and fuel-system damage due to the use of approved blended fuels, the insurer said in a statement on Wednesday.
Called Fuel Guard, the company describes it as an industry-first add-on that provides an additional layer of protection as the use of blended fuels expands.
However, the cover is available only for vehicles manufactured on or after 1 April 2023, and only where the manufacturer has approved the use of the specific blended fuel. A vehicle using E20, for example, must be approved by its manufacturer for E20 fuel.
The vehicle must also be serviced according to the manufacturer's prescribed maintenance schedule and should not have any unauthorised engine or fuel-system modifications.
“Every accidental damage is typically covered irrespective of the fuel. There is no confusion on that. There may, however, be situations in the future where a garage says that some damage is not because of an accident but because of fuel, which may have accumulated over time or caused damage. We want customers to drive without that anxiety,” said Shanai Ghosh, managing director and chief executive officer, Zuno General Insurance.
According to Pooja Yadav, chief product officer, Zuno General Insurance, the scope of the Fuel Guard add-on could be expanded as new blended fuels are introduced.
For a compact SUV such as a Kia Seltos that is around two years old, with an Insured Declared Value (IDV) of approximately ₹10 lakh, the Fuel Guard add-on would cost around ₹4,000-5,000, according to the insurer.
What it covers
The add-on covers repair or replacement of specified engine components, including the cylinder head, crankshaft, connecting rods, pistons, fuel injectors and fuel pump. It also covers certain fuel-delivery system components, including fuel lines.
There is, however, an important condition. The fuel-related damage must result in a breakdown, meaning the engine does not start or run. The add-on allows one admissible claim in a policy year.
It does not cover gradual deterioration, normal wear and tear, poor maintenance or a decline in mileage or fuel efficiency where there is no physical damage.
That said, vehicle owners should ensure that the petrol pump is dispensing the correct blended fuel for their vehicle. If the service centre finds during repair that the fuel composition is different from the approved blend, it could affect the admissibility of the claim under this add-on.
Damage that is already payable under the vehicle's warranty, a recall or the base motor policy is also excluded.
Fuel Guard can be purchased with the applicable private car package, standalone own-damage and bundled policies, including three-year long-term policies, according to Zuno.
Should you buy?
The launch comes amid a continuing debate over ethanol blending in petrol. While the government has been pushing E20 adoption, some vehicle owners and critics have raised concerns over mileage, performance and possible long-term effects on vehicle components.
Since the add-on is only for newer vehicles which are by design better prepared to handle that fuel, the key question remains whether this add-on will offer any meaningful coverage.
“It is useful, though for something more specific than the name implies. Compatibility with blended fuel is settled at the manufacturing and certification stage, not by an insurance policy. What a cover like this addresses is the accidental event, where the wrong fuel or a contaminated batch actually damages the engine. At ₹2,000-5,000, the premium is modest against a repair bill that can run into lakhs, and a standard motor policy usually declines such claims as mechanical damage. The cover responds to defined conditions, so customers should read those before buying,” said Saurabh Vijayvergia, founder and chief executive officer, CoverSure.