Car Modification Effects on Car Insurance Premium

Modified Cars – How they Stack Up

Before delving deeper into whether you should modify a car or not, you should remember that modified cars are essentially labors of love, i.e. they have their designs and other components changed to suit the owner’s preferences. Modification means changing the external parts from the exhaust to the color and even adding new bits and tweaks here and there. They are also made for enhancing mileage and power in some cases while interiors are also refurbished and tweaked with multiple editions and features.

The impact of modifications on car insurance

While assessing the effects car modifications have on car insurance, you should remember that there are two kinds of insurance, i.e. third party insurance which is mandatory and comprehensive insurance which is highly recommended yet optional. Modifications of your car will impact the comprehensive part of your car insurance policy since it takes own damage or vehicle damage into account. The insurance company, while issuing your comprehensive insurance policy, will list various facts about the car while working out the premium/cost.

When you modify your car, the vehicle value may change. Hence, you should quickly alert your insurance provider about the same. If the insurer is not notified about these modifications, then your claim may be denied by the company in case of any damage or a partial payment may be issued, based on the parts of the policy that are covered/applicable. Upon informing your insurer about the car modifications, the company may inspect the vehicle again, take all the modifications into account and then adjust your insurance policy likewise.

Modification Types

The prevalent modification types include the following:

• Exterior Modifications – This includes body graphics, spoilers, lights, design changes and tweaks, paintwork, and other external components.
• Interior Modifications – These include changes to the dashboard design, seats, audio unit, other features, air conditioning unit, adding any extra features like new horns, Bluetooth and so on.
• Performance Modifications – This part includes engine, exhaust and filter tweaks for boosting performance along with other components. This also includes conversion of the type of fuel, i.e. installation of a CNG kit in a regular petrol vehicle, for example.

Some points worth noting/span>

• Engine modifications including the performance and tuning may enhance accident risks and lead to insurance companies considering the same as higher liability. The premiums will go up exponentially as a result.

• Paintwork is not regarded as a serious modification by insurance companies. No additional premium is charged in most cases by insurance providers for any paintwork.

• Changing the brakes or modifying the braking setup may compromise with the safety aspect of the vehicle. Hence, this will translate to a higher insurance premium once you notify the insurance company of the same.

• Putting stickers- Stickers will never affect the current liability quotient. The insurance company will not charge you any additional premium for putting on any stickers to your vehicle.

• If you are installing interior components and features which may have a bearing on driving safety aspects, then the insurance company may view this as a higher liability. Hence, your overall premium could go up substantially to say the least.

• Installing an audio system or a new air conditioning unit, getting your seats replaced and any similar modifications will not lead to the policy premium going up. This is because they do not come with any direct accident-related risks for drivers.

• Any bodywork or cladding should be assessed carefully before finalizing the same. This is because a new exhaust setup, spoiler or a new wheel rim mod may lead to changes in the performance of the car. Hence, the insurance company may levy a higher premium for the same. This is another aspect that you should always keep in mind.

• ARAI-approved devices for anti-theft, if installed on your car, may actually save you money! Installing such devices (have to be approved by ARAI), will make you increasingly eligible for obtaining more discounts on the non-damage component of the car insurance premium. Hence this is something that you should always consider.

These are some technical tips that will stand you in good stead with regard to getting your car modified. Always go for a modification after keeping all these pointers in mind since you will not like paying a considerably higher premium or risk future non-payment or partial payment of your claims.

What you should remember

Your car modifications will only affect your comprehensive car insurance policy and not the third party insurance coverage which is mandatory for all vehicles plying on roads. Third party insurance coverage don’t account for damages to your vehicle and hence it is unaffected by car modifications.

Yet, if you have comprehensive car insurance (which is always recommended for greater peace of mind and cost savings alike), you should inform the insurance company promptly about the changes in order to re-adjust your policy details and premium. Not getting this done may lead to issues with claims in the future.