How Modifications Can Affect Your Car Insurance

It is very tempting to personalize your car by tweaking up your engine, adding wide wheels as well as brakes or any other customization that may affect the performance of the car.  

Cars are manufactured after much planning, designing and testing. The cars are tested extensively especially the "crash test" which is meant for the passenger's safety in the car. One of the main concerns among car manufacturers is the safety of passengers.

Actual crash test dummies are strapped onto the seats and analysis is done on the effect of an accident on the passenger. By modifying the car you are changing the safety features of it and in the process jeopardizing the passenger’s safety and the public in general. These changes do attract a revision of your car insurance premium. All systems are synchronized to work together to maximize performance.

The rest of the parameters like fuel efficiency, speed, braking systems, power, air conditioning systems, etc. also play an important part in the overall design and handling of the car. Making changes may have an adverse effect on performance.

What is Considered as a Modification

Any modification to the car that causes a difference to the manufacturer's original factory specification is considered as a modification by the insurer. The insurer gauges the modifications for any additional risks to be covered and will calculate the premium accordingly. Some of these modifications include the following:

Modifications to the Vehicle’s Engine

Modifications were done to increase the engine’s power that results in increased speed always increases the risk of accidents. High speed is a temptation to drive recklessly and can engage to overtake. Modifying your car by adding a supercharger will increase your premium.

Wheel Modification

Car owners may also change the wheels of their car and they cannot be as per the manufacturer’s specifications. These wheels may enhance the look of the car and may also increase the value of your car’s insurance.

Brakes and Suspension Systems

Brakes are one of the most important features of a car. Any changes (not recommended) should be done by a highly skilled mechanic. If the suspension system is modified, it may change the way the car behaves. These critical changes must be notified to the insurer who will re-assess the premium. It is suggested to inform them about the service provider who carried out these changes.

Changes to Car Interiors

Any internal changes like changes in the steering wheels of your car, pedals and sound system are also regarded as changes that are supposed to be reported to the insurer. The quality of the products modified and the wear and tear are also considered while re-calculating the revised insurance premium.

Paint Job

Painting your car may seem innocuous but the insurance companies need to be informed about it. This is especially when you have decorative decals or any race car emblems or any other eye-catching designs painted on the car. The insurance company has to be notified about the paint job so that they can re-calculate your cars insurance.

Change of Engine

One of the vital parameters while calculating the premium is the car’s engine. If you replace the factory-installed engine then the insurance considers it as an increased risk. The insurance company makes their assessment based on the manufacturing year, make and model of your car. Generally, premiums are standard for a particular brand/model and year of the car. The premium changes when you make modifications.

The revised premium for third party insurance is lower than a comprehensive insurance policy.

Not all changes modifications attract additional premiums. For example, if you install parking sensors it would certainly lower your premium. This is because of the reduced risk of smashing into another car or wall.

Also, the installation of anti-theft alarm system, tracking mechanism, and other devices that will prevent break-ins will get you some discounts since there is a lower risk of your car being stolen. Check with your insurance company about discounts regarding this before you buy the car insurance policy from them.

Checklist for Car Owners Who Are Planning to make Modifications

Below is a list of modifications and the percentage increase in your car insurance premium. These are just indicative figures and may vary from insurer to insurer and also on the insurance assessor.

MODIFICATION

% INCREASE IN PREMIUM

Turbo/ Supercharging/ Nitrous oxide

Non-Standard Engine Change

Exhaust System Changes

Air Filter

132%

63%

26%

25%

Bonnet Bulges, Flared Wings

Complete Body Kit & Panels

Spoilers

Tinted windows

Lights Addition or Changes

66%

57%

23%

16%

12%

Roll Bars, Roll Cages

Replacement Seats

Upholstery or Dashboard

41%

27%

16%

Updated Brakes

Suspension

36%

25%

Specialized paintwork

Stripes, Decals, Badges

36%

22%

Broad Wheels Or Tyres

Alloy Wheels

18%

8%

Points to Remember

It is advisable to inform the insurance company if you are planning to make any changes to your vehicle. They will assess the risk or the impact of the changes and accordingly calculate the new premium. Do not make the changes and then inform the insurer only when the policy is due for renewal.

Every change or modification done to your car affects your policy. If you inform the insurance company you may have to pay an additional amount. However, if they are not informed, the insurance company will view it as a fraud and that may create problems for you especially if you are making a claim. In extreme cases, the insurer can even invalidate your car insurance policy.

Summing it Up!

Modifying or customizing a vehicle is not only an expensive affair; it also increases your premium. Minor modifications may not attract any increase but any designated modification like tweaking the engine, structural changes to the body, frame or chassis or using oversized wheels and other such modifications will certainly attract a higher premium to cover the risk of an unfortunate accident. It is always a good practice to inform the insurer about any change to your car so that these modifications do not become a bone of contention at the time of claim. Also, do not forget to make endorsements in the policy about the modifications.  

Written By: PolicyBazaar - Updated: 10 June 2020
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