Have you ever thought about splurging on a set of new alloy wheels, installing a high-end sound system, or giving your car a custom paint job? Modifying your vehicle can be a great way to personalise it and improve its performance.
However, you might want to check with your insurer before making these changes. Not all modifications are viewed favourably by insurance companies or state and territory transport departments. Some modifications might hike up your policy premium, and some can void your existing policy.
Even the slightest of modifications can alter the cost of your premium significantly, so you should make yourself aware of the details of modified car insurance.
Changing the appearance or making adjustments to improve the performance of your vehicle is considered a modification. Insurers generally consider these changes to be modifications:
If, however, any of these come standard in your car, the insurer won’t consider it a modification. You should still declare them on your car insurance policy to make sure they are covered.
Insurance companies take into account two key areas while evaluating your insurance costs – the risk of an accident and the risk of theft. Modifications that change the performance of your car can be deemed dangerous and increases the risk of an accident. At the same time, changing the look and making the car more attractive increases the likelihood of possible car theft. Both of these possible scenarios can significantly increase your insurance premiums.
If you already have car insurance, it is advisable to check with the insurer regarding all your planned changes before you modify your car. Checking with them will give you a clearer picture of whether your current policy covers the modifications, or if you’ll need to modify or add to the policy to cover the changes.
Generally, you’re more likely to get a more affordable insurance quote if the modifications are done by a professional than if you were to carry out the modifications yourself.
Not all car insurance providers accept all modifications, and the actual list varies from insurer to insurer. Typical modifications that most insurers cover include:
Modifications that are not covered by most insurers include:
There are some specialist modified car insurance providers who are willing to insure vehicles with performance-enhancing modifications. They do this by adding to the excess you pay, which is the amount you pay when you make a claim.
You can compare modified car insurance providers to find the right insurance for your car.
Like with any insurance policy, there are several ways to lower your modified car insurance premiums. The following list will show you how to insure a modified car at a low cost.
You might still have a few queries regarding modified car insurance. Here are some common conditions around insurance for modified cars.
All modifications made to your car must be street-legal for you even to entertain the idea of insuring the car. If you modify your vehicle in a way that isn’t legal, you’ll likely not be able to get insurance to cover your car. The police could also fine you, impound your vehicle or deregister it if you get pulled over with illegal modifications. Young drivers with a probationary licence aren’t permitted to drive cars with performance-enhancing modifications and could lose their licence.
Depending on the state or territory you live in, you might need to seek official approval before carrying out certain complex modifications. Check with the local transport department for details.
If you don't inform your insurer about any car modifications, you may not be fully covered. They may also reject your claims and even cancel your policy because the car no longer matches the one on your policy. If your vehicle is still under warranty and you don't inform the insurer, it could invalidate your warranty.
Some insurers might give you the option to choose between market value and agreed value when deciding on your cover. Market value means your policy will cover you for the current market value of your car, subject to depreciation. Agreed value is the number you and your insurer agree your car is worth, but the premiums, in this case, can sometimes be higher. If you’ve modified your car significantly, the market value may not match the additional value you’ve added to the car. In this case, opting for the agreed value may be the smarter option.
Disclaimer
This article is over two years old, last updated on November 2, 2020. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent car insurance articles.
This article was reviewed by Mark Bristow before it was published as part of RateCity's Fact Check process.
