How Modifications In Your Car Can Affect Its Insurance

If you are someone who spends a lot of time in your vehicle, you are probably interested in adding a personal touch to the car in the form of a customisation. This could be anything from adding new car mats to revamping the upholstery. But what if you are looking to make bigger modifications to your vehicle?

Some changes you make to the car will impact the amount of insurance premium you pay annually. It is best to think about the potential costs that you will be bearing when you alter your vehicle.

As far as car insurance is concerned, modified vehicles are considered to bear higher risks than ordinary cars. It has also been found that car customisations are usually done by young drivers. Insurance companies think that such drivers are generally unsafe behind the wheels. In addition, the replaced/upgraded parts may actually cost more than the vehicle itself.

What Modifications Affect Car Insurance Premium?

A modified car is one that has been enhanced or altered for the purpose of performance/appearance. Your auto insurance company may classify modifications into specific categories. Some examples of modifications to a vehicle are:

  • Customised paint jobs
  • Performance modifications
  • Structural changes to the body, frame, or chassis

If you have made modifications of any kind to your car, it is imperative that you inform your insurance company of the same. The car insurance provider will most likely add an endorsement to your insurance policy that requires you to pay additional premium.

Some of the enhancements that could result in premium-bearing endorsements are the following:

  • Chrome bumpers
  • Fog lights
  • Racing tyres or chrome wheels
  • Hood ornaments
  • Spoilers at the front and rear side of the vehicle
  • Accent lights under the car
  • Improved stereo equipments

Your auto insurance premium will go up based on the type of enhancement you install and the risk that the insurer views in the upgrade. A vehicle that is factory-tested will be provided insurance without any issues. But modifications in a car could increase its risk for an accident or increment its value. If there is an increase in value of the car, it may also be more prone to theft. Failure to report a car modification can result in your policy being voided. So, you should be extra careful about that.

Premium Bearing Endorsements And Documents Required:

Some of the common premium-bearing modifications to your car and the documentation required for updating the policy with an endorsement are detailed below:

Addition/removal of CNG/LPG kit You will have to get the policy document updated with an endorsement when you add/remove a bi-fuel kit. The documents required for the same are:
  • Request letter from the policyholder
  • Registration certificate
  • Invoice copy of the LPG/CNG kit
  • Report of vehicle inspection
  • In the case of addition of bi-fuel kit, endorsement premium
Addition/removal of anti-theft system If you install/remove an anti-theft system from your car, you will be required to get the policy updated with an endorsement. The documents for the same are:
  • Request letter from the policyholder
  • Invoice copy of the security system
  • In the case of removal of the system, endorsement premium
Installation/removal of electrical accessories The endorsement will include or exclude electrical devices that are installed/removed from the vehicle after its purchase. The documents required are as follows:
  • Request letter from the policyholder
  • Invoice copy of the accessories
  • Premium amount
Installation/removal of non-electrical accessories The endorsement will include or exclude non-electrical devices that are installed/removed from the vehicle after its purchase. The documents required are as follows:
  • Request letter from the policyholder
  • Invoice copy of the accessories
  • Premium amount

Final Word:

In spite of the cost associated with modifying one’s car, more and more people are opting for the same. General modifications may not increase the premium value by a large amount but certain custom modifications will hike the premium significantly. You can modify your vehicle as much as you want, but you should be aware of the costs involved. After a modification, the expenses you incur at the time of an accident could also increase by a large extent. So be alert when you do any customisation and inform the insurer about all changes.

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