Customized Coverage: Understanding Auto Insurance Policies For Modified Vehicles

If you modify your car with aftermarket parts, you will likely need a separate, custom car insurance policy or a coverage endorsement to ensure your modifications are covered. This is because standard insurance policies typically exclude changes or additions that are not made at the factory, including aftermarket parts.

However, some insurers do offer specified coverage for customisations or modifications at an additional cost.

Modifications that are covered by standard insurance policies

Standard insurance policies typically do not cover modifications made to a vehicle. However, there are some exceptions where certain modifications may be covered under a standard policy. Here are some modifications that may be covered:

• Safety features: Modifications that improve the safety and security of the vehicle may be covered under a standard policy. For example, adding anti-theft devices, alarms, security systems, front and rear cameras, parking sensors, and adaptive headlights can result in insurance discounts and may be covered under a standard policy.
• Tires and rims: According to Christopher Paradiso, owner of Paradiso Insurance, tires and rims may be covered under a standard policy, but only partially. You will need to provide receipts for these modifications in the event of a loss settlement.
• Minor modifications: Some insurance companies may cover minor modifications that do not significantly alter the vehicle's structure or performance. For example, adding a roof rack or debadging the vehicle (removing manufacturer emblems) may not require additional coverage.
• Factory-installed components: Standard insurance policies typically cover the original equipment and factory-installed components of the vehicle. Any modifications that replace or enhance these factory-installed parts may not be covered.
• Classic car insurance: If your modified vehicle qualifies as a classic or antique car, you may be able to obtain classic car insurance that covers some modifications. Companies like Hagerty, J.C. Taylor, Condon Skelly, Grundy, and American National specialize in these types of policies.
• Agreed value policies: Some insurance companies offer agreed value or guaranteed value policies, where you can insure your vehicle for a pre-agreed amount, including the value of modifications. This option may be available for custom or classic cars that are not used for everyday driving.

It is important to note that the coverage provided by standard insurance policies varies across different insurance companies. Therefore, it is always recommended to consult with your insurance provider and carefully review your policy to understand what modifications are covered and what additional coverage may be needed.

Modifications that require separate insurance policies

If you modify your vehicle to improve its performance or enhance its appearance, you will typically need a separate coverage endorsement or a custom car insurance policy. This is because modified cars usually feature expensive parts and require specialist attention, which means higher repair costs in the event of an accident.

The general rule is that any vehicle enhancement not made at the factory is considered a modification and requires custom vehicle insurance. This includes aesthetic modifications such as chrome bumpers, special lights, custom paint jobs, and new stereo systems. Performance modifications, including suspension enhancements, strut bars, or engine turbochargers, will also require separate coverage.

Some insurance companies won't provide coverage for modified cars if the engine's performance is seriously enhanced or if custom paint jobs or decals significantly increase the vehicle's overall value. In these cases, a separate policy will be needed.

It's important to note that failing to disclose modifications to your insurance company may result in your policy being voided. Additionally, modifications can affect your coverage eligibility with certain carriers, even if you only have liability-only coverage. Therefore, it is always best to consult with your insurer before making any changes to your vehicle.

Modifications that increase insurance premiums

Any changes made to a vehicle after it leaves the factory are generally considered modifications and typically require custom vehicle insurance. This is because modified cars usually feature expensive parts and require special attention and higher repair costs if damaged. Additionally, modifications tend to increase the overall value of the car, making it more appealing to thieves.

• Custom paint jobs, murals, decals, or expensive body modifications can increase the value of your car, making it more appealing to thieves.
• Engine modifications, such as adding a turbocharger or supercharger, can increase the performance and speed of your vehicle. This can lead to higher insurance premiums as it raises the risk of an accident and increases repair costs.
• Upgrading to more expensive brake systems, such as carbon ceramics or slotted brake discs, increases the overall value of the vehicle, leading to higher insurance costs.
• Lowering the suspension of your car may make it more prone to damage when driving over speed bumps or uneven surfaces, resulting in higher insurance premiums.
• Modifying the exhaust system to increase engine performance will also increase insurance costs.
• Adding side skirts, a bonnet bulge, front spoiler, or rear valence can increase the cost of insurance by several hundred pounds.
• Installing a non-standard engine, such as a bored-out and enlarged engine, can significantly spike insurance premiums due to the increased performance and value of the vehicle.
• Fitting an engine chip that increases horsepower will also lead to a substantial increase in insurance costs.
• Lowering the car by more than 5 cm can add over £1600 to insurance premiums, as it affects the steering and headlight angle, making the vehicle more prone to damage.
• Alloy wheels are more expensive and attractive to thieves, leading to higher insurance costs.
• LED light strips on the bottom of your car, especially when combined with a history of claims, theft, or irresponsible driving, can increase your insurance premium.
• Adding a nitrous oxide system can increase your premium by as much as 132%.
• Gearbox or transmission modifications must be declared and will likely result in higher insurance premiums as they change how the car performs.
• Upgrading or reupholstering seats to increase their value will also increase insurance costs.

Modifications that decrease insurance premiums

Telematics Device

Also known as a 'black box', this device records your speed, distance travelled, and the time of day or night you're on the road. Installing one of these could reduce your insurance premium by up to 24%.

Tow Bar

Installing a tow bar can result in an average reduction of 24% in your insurance premium. However, the savings might be offset by the cost of the tow bar itself, which is around £450.

Dashcam

A dashcam is a cost-effective way to reduce your insurance premium, shaving off 15% at a cost of around £25.

Parking Sensors

Although they cost around £158, parking sensors can reduce your premium by 13%.

Smaller, Lighter Engine

Opting for a smaller, lighter engine will increase your car's energy efficiency and make it safer to drive, resulting in decreased insurance premiums.

High-Performance Brakes

Adding uprated brakes will make your car safer to drive, which may lead to a decrease in your insurance premium.

Suspension Upgrades

Upgrading your suspension can improve the drivability of your car, especially if it is already highly modified. This could lead to a reduction in your insurance premium.

Sway Bar

Adding a sway bar will increase your safety and may decrease your insurance premium. Sway bars can stabilise your car while taking tight turns and help prevent rolling.

Water Cooling System

If your car is already modified, adding a water cooling system to improve the performance of your brakes can contribute to lowered insurance premiums.

Low Mileage

Some companies offer discounts to motorists who drive fewer miles per year than the average.

Group Insurance

Some companies offer reductions to drivers who get insurance through a group plan from their employers, professional or alumni groups, or other associations.

Defensive Driving Course

Taking a defensive driving course may qualify you for a discount on your insurance premium.

What to do if you buy a pre-modified car

If you buy a pre-modified car, there are a few things you should do to ensure you're getting a good deal and that your car is properly insured.

First, it's important to do your research and carefully inspect the car before purchasing it. Modified cars can be a great bargain, but they can also come with a host of problems if the modifications were not done properly. Try to get as much information as possible about the vehicle's history, including the number of owners it's had and any maintenance or repair work that's been done. It's also a good idea to have a professional inspect the car to identify any potential issues. This is especially important for modified cars, as aftermarket parts can put additional stress on the vehicle and accelerate wear.

Once you've purchased the car, be sure to notify your insurance company about any modifications. Modifications are typically excluded from standard insurance policies, and failing to disclose them could be considered a "material misrepresentation," which could result in your policy being cancelled or voided. You may need to purchase supplemental coverage or a separate custom car insurance policy to ensure that your modifications are covered. Some insurance companies specialize in policies for modified vehicles, so it's worth shopping around to find the right coverage for your needs.

When notifying your insurance company, be sure to provide detailed information about the modifications, including receipts, pictures, and serial numbers if possible. This will help ensure that you have the proper coverage in place and that you're not overpaying for your insurance. It's also important to understand the impact that the modifications may have on your insurance rates. While some modifications, such as adding safety features, may result in a discount, others may increase your rates due to the higher value of the vehicle or the increased risk associated with certain modifications.

Finally, keep in mind that not all modifications are legal or safe. Some modifications may void your manufacturer's warranty or even make your car illegal to drive in certain states. Always check with your local department of motor vehicles to ensure that your car complies with all applicable laws and regulations.

Frequently asked questions