If you are a car buff and keep making modifications to your vehicle, then you should be aware of its implications on your car insurance premiums. Typically, it only goes up, never down.
Hence, be prepared for a potential hike in your premium payments when you choose to go ahead with your car modification.
You may be confused as to what is precisely considered a modification when it comes to cars. Simply put, it includes and changes that you make to your vehicle that transforms it from its original condition as sold to you by the manufacturer.
In technical insurance terminology, modification points to any transformation that alters the physical look of the car or its performance. In case you take any optional extras from your car dealer, that too will be considered as a modification. Many car owners do not realise this when they purchase extras and how it impacts your car insurance policy.
The premium rate quoted to you for your motor insurance is determined by two primary factors:
Risk of Theft: Any performance-related modification made to the car increases the probability of theft or the car being broken into.
Risk of Accident: Engine changes, body kits, sports seats, spoilers are modifications that insurance companies consider to be higher accident risks.
Your car insurance premium is of course affected by any modification that you go ahead with. The common ones include:
Engine and Mechanics Modifications: In order to hike the engine performance and accelerator speed, you may choose to modify the engine and mechanics of your vehicle. Adding a supercharger or turbo engine largely lists you as a greater risk for the insurance company as cars capable of high speeds are prone to more road accidents.
Breaks and Suspension: Any change in the breaking and suspension system will first have to be reviewed and assessed by the insurance company. Any upgradations to this system can change the car’s overall control and performance on the road. Any such amendments must be informed to the insurance company before execution.
Wheel Modifications: To make your car look sleeker and hipper, you may wish to change the wheels. The insurance company must be notified of any such modifications of this nature.
Car Interior: Any planned interior changes such as pedals, sound system, seats, steering, etc. should be communicated to the insurance provider as well.
Paintwork: Changing the look of your car physically such as getting a complex racing design or incorporating attention-grabbing patterns also constitute under car modification. Even though the change made seem minor, your insurance provider must be notified of the same.
Non-Standard Engine Change: Installing a non-standard engine is a key factor that can impact your car insurance premium as it greatly raises the risk of accident down or breakdown. It is important to inform your insurance provider of these changes as they need to assess the quality of products being used and their subsequent wear and tear may vary from other standardised products available in the market.
Car Stickers: Several insurance providers consider car stickers as part of the car modifications being made. If you have applied one or are planning to in the near future, then check with your insurance company if it is going to have any effect on the premium that you pay.
Be it a minor or major modification, it will impact your car insurance policy in one way or the other. However, if the insurance company’s assessment lowers your risk quotient post the modification, then the premium may not be adversely affected.
Any modification that you plan on making to your car must be communicated to your insurance provider. This is because your claims in the future may be rejected by your insurance provider if upon investigation your car specs do not match to the originally purchased model from the manufacturer.
In fact, it can go as far as making your insurance coverage completely void. With insurance that gets rejected or cancelled, you may find it a lot harder to find a new insurance company to cover your vehicle. It may be more expensive too.
Regardless of the rising premium costs, more and more individuals are opting to modify their cars to give it a more personalised touch. As long as the insurance company has been kept in the loop, there is no need to fear any claim rejections in the future.