Installed a CNG Kit to Save Money? Why Your Car Insurance Claim Will Be Rejected 100%

Why Your Car Insurance Claim Will Be Rejected 100%

Petrol prices in India are skyrocketing. It is no surprise that thousands of car owners are visiting local garages to install aftermarket CNG (Compressed Natural Gas) kits to slash their fuel bills.

You might be saving ₹5 per kilometer, but you are also driving a financial time bomb.

If you meet with an accident—or worse, if your car catches fire due to a gas leak—your insurance company will reject your claim instantly if you missed any legal steps. Here is the harsh reality in 2026.

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The "Material Alteration" Clause

When you bought your policy, you insured a "Petrol Car." By installing a gas cylinder, you have fundamentally changed the risk profile of the vehicle. In insurance terms, this is called a Material Alteration.

If you do not inform the insurer, the contract becomes void ab initio (from the start). It doesn't matter if the accident wasn't caused by the CNG kit (e.g., someone hit you from behind). The fact that the car specs didn't match the policy is enough grounds for total rejection.

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The 3-Step Process You Must Follow

Installing the kit is not enough. You must legalize it to satisfy both the RTO and the Insurance Company.

Step 1: Install Only at "Authorized" Centers

Warning: Do not go to a roadside mechanic. You must install the kit at a Government Authorized Retrofit Center. Only they can issue the valid "Compliance Certificate" required by the RTO.

Step 2: Endorse it on the RC Book (RTO)

You generally have 14 days after installation to inform the RTO.

• Submit the original invoice and the compliance certificate.
• The RTO will inspect the fitting.
• Once approved, they will update your Registration Certificate (RC) to say "Petrol + CNG."

Step 3: Endorse it on Your Insurance Policy

Once the RC is updated, send a copy to your insurer immediately.

• Own Damage Premium: You pay approx 4% to 5% of the kit's value (e.g., ₹1,500 for a ₹30,000 kit).
• Third-Party Premium: You pay a fixed liability premium (approx ₹60-₹80) as set by the IRDAI.
• The insurer will send you an "Endorsement Letter." Now, you are covered.

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The Hidden Trap: "Hydrostatic Stretch Test"

Even if you have the endorsement, your claim can still be rejected if your cylinder is old.

⚠️ The 3-Year Rule

Under the Gas Cylinder Rules, every CNG cylinder must undergo a Hydrostatic Stretch Test every 3 years. You get a metal plate (Compliance Plate) fitted near the filler valve.

The Risk: If your car catches fire and the surveyor finds your Hydrostatic Test certificate is expired, the claim will be denied due to "Negligence" and driving an "Unroadworthy Vehicle." Check the date on your cylinder plate today.

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"But the Premium Will Increase!"

Yes, it will. But let's do the math.

• Extra Premium: Maybe ₹800 to ₹1,000 per year.
• Risk of Rejection: If your car is stolen or totaled, you lose ₹5 Lakhs to ₹10 Lakhs.

Is saving ₹800 worth risking the entire value of your car? Absolutely not.

Valid Documents Save Fortunes

Saving money on fuel is smart. Being stingy on paperwork is foolish.

If you have installed a CNG kit recently, check your insurance policy document today. If it doesn't say "Fuel Type: CNG/Petrol," call your agent immediately. Do not drive another kilometer without coverage.