E20 fuel troubles may trigger insurance disputes as car maintenance costs double

The LocalCircles survey, which gathered over 36,000 responses from petrol vehicle owners across 323 districts, found that eight in ten owners of vehicles purchased in 2022 or earlier reported a decline in mileage this year.

India’s cleaner E20 fuel push may be driving new challenges for motorists and potentially, for insurers, as petrol vehicle owners maintenance costs double in the past two months — from 28 percent in August to 52 percent in October.

For consumers already dealing with higher fuel prices, these costs have compounded financial stress, a LocalCircles survey, published on October 13, said.

Several respondents said that if E20 was made optional and priced 20 percent lower, they would support its use. “The sentiment is not anti-green,” the report said. “It is about the fairness of forcing vehicle owners to pay for a policy they weren’t prepared for.”

Insurance changes and grey areas 

Insurance practitioners are of the view that many of these issues fall into a grey zone between “wear and tear” and “mechanical breakdown”, which are typically excluded from motor insurance policies.

Moneycontrol reported earlier that vehicle insurance practitioners said damages cannot be covered by insurance if the damage has been caused by E20, since it is treated as chemical-induced corrosion or mechanical wear rather than accidental loss.

“Fuel-induced damage is not covered under comprehensive policies unless it results from an insured peril, like a fire or accident,” a senior underwriter with a leading private insurer said. “If a car’s injectors fail due to ethanol corrosion, it’s considered maintenance but if that failure causes engine seizure and fire, it becomes a liability issue. That’s where disputes can arise.”

Need for clear policy terms 

“We may need revisions in policy terms to define ethanol-related exclusions clearly. Otherwise, we may face rising claim disputes over what’s covered and what’s not,” the executive added.

Another insurer said India’s transition may have been too abrupt. Without a dual-fuel option, owners of older vehicles are left to bear the cost of adaptation, in fuel bills, maintenance, and potentially in insurance disputes.

Survey findings

Eight in ten owners of vehicles purchased in 2022 or earlier reported a decline in mileage this year, LocalCircles survey, which gathered over 36,000 responses from petrol vehicle owners across 323 districts, found.

Compared to August 2025, when 67 percent of such owners had complained of reduced efficiency, the number has now surged to 80 percent.

Among respondents, 16 percent said their mileage had fallen by more than 20 percent, while 45 percent reported a 15–20 percent decline.

The survey also found that 52 percent respondents experienced unusual levels of wear and tear or repairs this year, up from 28 percent just two months earlier. The most affected components include fuel injectors, tanks, carburetors, and engine valves.

Mechanics and service centres across major cities report a 40 percent increase in fuel-related issues since the rollout.

“We’ve been replacing fuel filters, cleaning injectors, and addressing corrosion damage in cars that were perfectly fine before,” said a service engineer at a Hyundai-authorised workshop in Delhi. “Ethanol absorbs water, and when the mix separates, it clogs the fuel system.”

Government's stance on E20 complaints

Road transport and highways minister Nitin Gadkari has repeatedly called complaints against E20 “misinformation.”

The government maintains that E20-compatible vehicles have been available since 2023 and that the ethanol programme supports India’s goals of cleaner fuels, reduced imports, and higher farmer incomes.

E20 fuel contains 20 percent ethanol and 80 percent petrol. It was introduced in April 2023 under the government's Ethanol Blended Petrol (EBP) Programme. The rollout began with pilot projects in select cities and states, with full nationwide adoption completed by this year.