Insurance for CNG and LPG Vehicles

With fuel costs a persistent concern for Indian vehicle owners, CNG and LPG conversions have become common — particularly for high-mileage users like taxi operators and daily commuters. What many owners do not realise is that retrofitting a gas kit changes the risk profile of the vehicle and therefore affects the insurance policy in ways that can have serious financial consequences if not handled correctly.

Why Gas Kits Must Be Declared

A CNG or LPG kit is a material modification to the vehicle. Under IRDAI regulations and standard motor policy terms, any modification that alters the vehicle's risk profile must be disclosed to the insurer. An undeclared gas kit means the policy was issued on a misrepresented basis. In the event of a claim — particularly a fire claim, which gas-related incidents can trigger — the insurer has grounds to reject it entirely.

How to Endorse a Gas Kit on the Policy

The process involves two parallel steps:

• RTO registration: The CNG or LPG kit must be certified by the manufacturer or an authorised retrofitter and endorsed on the vehicle's Registration Certificate. Driving a modified vehicle without updated RC is an offence under the Motor Vehicles Act.
• Insurer endorsement: Once the RC reflects the modification, inform your insurer and request an endorsement on the policy. The insurer will charge an additional third-party premium (currently set by IRDAI for bi-fuel vehicles) and update the policy document accordingly.

Factory-Fitted vs Aftermarket Gas Kits

Several manufacturers now offer factory-fitted CNG variants — Maruti Suzuki, Hyundai, and others. These vehicles come with the gas kit declared from the factory, and the insurance policy is issued accordingly from day one. There is no separate endorsement required because the kit is part of the original vehicle specification. The distinction matters: factory-fitted CNG reduces administrative complexity and arguably reduces risk compared to aftermarket conversions.

Additional Premium for Bi-Fuel Vehicles

Insuring a CNG/LPG vehicle costs slightly more than a petrol-only equivalent. IRDAI mandates an additional third-party premium for bi-fuel vehicles to reflect the higher third-party liability exposure associated with compressed or liquefied gas storage. The own-damage premium may also be modestly higher, reflecting the added risk of gas-related fire or explosion.

Fire Claims Involving Gas Kits

Gas kit fires, while relatively rare when the kit is certified and maintained properly, do occur — typically from poor quality conversions, aging components, or improper fitment. If you have an undeclared kit and a fire results from it, the insurer will investigate the cause and will likely deny the claim based on non-disclosure of a material fact. This scenario is entirely avoidable by following the declaration procedure.

Periodic Inspection of Gas Kits

Gas kits — particularly aftermarket retrofits — should be inspected and certified periodically (many states require annual fitness certification). Keeping these records not only reduces the risk of a dangerous failure but also supports your insurance claim if an incident does occur.

Conclusion

Running a CNG or LPG vehicle is a sensible fuel economy decision, but the insurance administration that goes with it is non-negotiable. Declaration and endorsement protect your entire policy, not just the gas component. If you are unsure whether your current policy correctly reflects your vehicle's fuel type, consult a TruePolicy advisor who can help you verify your cover and arrange the correct endorsement before a problem arises.