Will Ethanol-Blended Petrol Burn A Hole In Your Insurance Budget?

E20 fuel adoption is unlikely to impact car insurance premiums currently

As India accelerates its transition to greener fuels, the introduction of E20 fuel, a blend of 20% ethanol and 80% petrol, has raised questions about its impact on vehicle maintenance and motor insurance premiums. While concerns are particularly high among owners of older vehicles, industry experts clarify that, for now, E20 fuel is not expected to influence insurance costs.

Motor insurance premiums are determined primarily by factors like claims history, vehicle type, location and coverage options, rather than the type of fuel used. Insurers currently see no conclusive data suggesting that E20 fuel increases the likelihood of accidents or engine failures, meaning premium rates remain unchanged.

E20-compliant engines, which are standard in newer vehicle models, are specifically designed to handle ethanol-blended fuel without compromising performance or durability. Tests have shown that ethanol does not adversely impact metal-based engine components in modern cars. However, vehicles manufactured under earlier emission standards, such as BS-IV, may not be fully optimised for E20 fuel due to ethanol’s slightly corrosive properties and moisture absorption tendencies.

Experts note that any potential damage linked to long-term ethanol use would likely take over a decade to manifest, making it irrelevant for current insurance risk assessments. For older vehicles, issues like reduced fuel efficiency or starting difficulties have been reported but these are not significant enough to prompt insurers to revise premium structures.

Instead, industry professionals recommend focusing on comprehensive coverage, including add-ons like engine protection. This optional coverage is particularly useful in cases where fuel contamination, water ingress or ethanol-related moisture could cause engine damage, events not typically covered under standard motor policies.

In the evolving fuel landscape, car owners are advised to ensure their vehicles are E20-compatible and to consider protective add-ons for better coverage. Regular maintenance and proper refuelling practices remain the most effective ways to avoid damage and safeguard against unexpected repair costs.