According to the Specialty Equipment Market Association (SEMA), specialist automotive equipment has increased to $50,9 billion from $47,9 billion over just one year.
This means that more and more drivers are adding aftermarket modifications to their vehicles.
Whether it is a custom paint job or a major modification, customizing your car can have fairly significant consequences for your car insurance.
In this article, we will take a look at what exactly qualifies as a car modification, as well as which kinds are likely to affect your auto insurance premiums.
What Is a Car Modification?
As a general rule, any enhancement to your vehicle that was not included when it was assembled at the factory will be considered a modification and will require a custom car insurance policy.
The two modification elements when it comes to custom cars include:
Aesthetic modifications
These include chrome bumpers, special lights and headlamps, custom paint work, and upgraded stereo systems.
Performance modifications
These modifications include suspension improvements, strut bars, and engine turbochargers, as well as exhaust systems.
What Cars Can Be Classified as Modified Vehicles?
There are various types of cars that typically get modified for aesthetic or performance-related reasons. Some of these types of cars include:
Hot rods and street rods
Resto Mod
Pro street
These are high-horsepower vehicles that have been tubbed and caged. In other words, they have been specifically optimized for racing.
Custom cruiser
These are new, big-body vehicles from the 1960s that have 22” rims or 100-spoke wheels, as well as hydraulics and airbag suspensions.
Custom imports
Generally from the 1980s and later, these include Japanese and European vehicles with performance-enhancing or aesthetic upgrades.
What Is Modified Car Insurance?
Your standard car insurance policy may not cover your modifications at all, which is why you will need to purchase supplemental coverage, or an additional modified car insurance policy for your vehicle.
Many car insurance companies will offer an endorsement or optional coverage for aftermarket modifications. These endorsements are sometimes known as custom parts and equipment coverage.
This insurance coverage will help pay for the repair or replacement of your customizations on your modified vehicle if they are damaged in a car accident.
Not all car modifications require additional coverage—it all depends on how much the modification would cost to replace.
If your car insurance company won’t cover your car and your modifications, then it will be a good idea to find specialized auto insurance companies that do offer the coverage you need.
To start this process, you can simply head to the top of this page and enter your zip code. With a few clicks, we will provide you with a wide range of insurance coverage options that suits your budget and needs.
What Are the Types of Insurance for Modified Cars?
In order for you to be reimbursed for the total value of your car and its modifications, you will need one of the following types of car insurance:
Supplemental coverage
This coverage provides additional protection in the form of an endorsement to your standard auto insurance policy.
Some insurance providers refer to this as custom parts and equipment coverage.
This insurance will cover modified car parts and custom features up to a specific, pre-agreed limit, minus your deductible.
Key Point: What Is a Deductible in Auto Insurance? A deductible is a set amount of money that you will need to pay out of pocket before your insurer will pay for the cost of repairs to your vehicle. Typically, you can choose a deductible of between $500 and $1,500. For example, let’s say that while you were driving, you swerved to avoid hitting a deer and accidentally hit something on the side of the road, like a barrier. If you have a deductible of $1,000, your insurance company would pay your car’s repair costs, minus the $1,000. If the cost of the damage to your car was less than your $1,000 deductible, you would not want to claim, as your insurer will not pay anything out to you. |
To purchase this type of modified car insurance, you will need to have comprehensive coverage and collision coverage in place.
Agreed value car insurance
Agreed value insurance is a type of car insurance policy in which you and the insurer agree on the value of the covered modified vehicle. When you make an insurance claim, your payout will only be to the value that you’ve agreed upon with the insurer.
This type of car insurance is commonly used for expensive or modified vehicles. The advantage of this type of insurance policy is that it offers extra protection, as the age and depreciation of the vehicle will not result in a lower payout.
Auto insurance rates for this type of insurance plan are generally higher than for a standard policy and you will need to have the vehicle appraised before purchasing coverage.
Stated amount coverage
This type of modified car insurance will either pay out the actual cash value of your vehicle, minus your deductible, or the amount that you said the car is worth—whichever is less.
Stated amount coverage could make sense if your car has a lot of additional custom parts or equipment.
Stated amount insurance will consider the following:
- The condition of the vehicle
- Your vehicle mileage
- Any modified parts or specialized equipment
- Overall upgrades
- Rebuilt parts such as a new engine
Classic car insurance
If you own a particularly old veteran or vintage vehicle, classic car insurance can be purchased through a specialized insurance provider.
In this instance, your insurance agent will have experience in assessing and protecting collectibles and other rare vehicles. This can include custom and modified cars.
Why Do You Need Modified Car Insurance?
If you would like your modifications to be covered in the event of an accident, it is essential to have modified car insurance.
Should you be involved in an accident without informing your insurance company of your vehicle’s modifications, they will not cover the damage at all.
In addition, by neglecting to tell your insurance company about your modifications, you could invalidate your car insurance policy altogether.
This could lead to you being held personally liable in the event of an at-fault accident.
When insuring your modified car, be sure to obtain a copy of your notice of modification from your insurance company.
Are There Any Benefits to Modified Car Insurance?
A specialized insurance policy for your modified car will include the following benefits:
Covers modified parts
Standard car insurance policies will not usually cover modified parts, which can lead to expensive, out-of-pocket costs if you are involved in an accident or your car gets stolen.
Protects your policy
Not listing modified car parts on your policy could cause it to be voided. This means that you will be without car insurance and will not be legally allowed to drive your car.
In addition, if you are involved in an accident, you will be held personally liable for medical costs and damages.
By purchasing modified car insurance, you also protect your overall car insurance coverage.
What Insurance Considerations Should You Take into Account before Modifying Your Car?
Before you add any modifications to your car, even if you are considering a fairly minor modification, you should take the following into account:
Read your existing policy well: You need to be completely aware of the exclusions and exceptions that exist in your current insurance policy.
Consult with your insurance agent: If you’re planning on making changes to your car, get in touch with your insurance company and find out how much the modification is going to cost you in car insurance premiums.
Ask for clarification in writing: To make sure that your car modifications are covered, ask your insurance agent to explain the details or any confusing policy language to you in a written email or letter.
Don’t hide a customization from your insurer: If your car is worth more after being modified, and you’re involved in an accident before updating your car’s insurance to reflect this modification, you will not be paid out in full.
Consider the cost implications of your modification: Even if your auto insurance company does cover you, you may find that you will pay more in car insurance premiums as a result of the modification.
What Happens If You Buy a Car That Is Already Modified?
If you purchase a car that has already undergone modifications, it is important that you let your insurance company know right at the start.
Insurance companies do not automatically assume that modifications may have been made to a vehicle, even if the vehicle is a vintage model.
Before you buy a car that you know has been modified, it is important to remember that insurance companies may not want to cover you. In the section below, we take a closer look at why this is the case.
Will Vehicle Modifications Increase Your Car Insurance Rates?
In most cases, modifications to your car will increase your car insurance rates. Your original car insurance policy was likely put together using the information about your car in its original factory form, or at least based on the condition it was in when you first took out insurance.
As soon as you begin modifying your car, the potential repair costs become more expensive.
Insurance companies also tend to believe that people with modified cars are likely to make more claims. One of the reasons for this is that modified cars are worth more and this can increase the likelihood of theft.
In addition, if you have enhanced the performance of your car, you may be more likely to be involved in an accident. For example, if your engine has been modified for higher performance and you use the extra horsepower, you may travel at higher speeds.
Are There Any Modifications That Can Result in Car Insurance Discounts?
Some car modifications can actually lower your car insurance premium if the addition has been made to increase your car’s safety and security.
After making any of these customizations, be sure to contact your insurance company to request that they lower your auto insurance rates.
Rearview cameras: These cameras are fitted to the body of the vehicle and help you see what is behind you when you are backing up.
Anti-theft systems: These modifications include alarms and GPS tracking devices which help prevent theft and help law enforcement to find your vehicle if it is stolen.
Accident-sensor technology: These include warning systems that sense slower-moving or stationary vehicles that are nearby.
Daytime running lights: These increase your car’s visibility during the day. You can also install adaptive headlights which enhance your night vision.
How to Buy Modified Car Insurance
In most cases, your car insurance policy won’t automatically cover modified parts.
Although some modifications won’t qualify for coverage, you have the option to discuss a stated value of the car with your insurer, which could cover your repairs after an accident or theft.
Before you add any modifications to your car, it’s recommended that you first contact your insurer to check how much coverage they offer, as well as how much that coverage is likely to cost you.
If you have a vehicle with existing modifications, we recommend that you provide a complete list of these modifications to your insurer.
It is important to remember that your insurance company may not cover you at all, or could only cover some of your modifications.
Should you be unhappy about how much your insurer covers, or if they don’t cover your modifications at all, it is time to start shopping around for a cheaper, more comprehensive coverage quote.
Get Cheap Modified Car Insurance Coverage for Your Vehicle Today with CheapInsurance.com
Getting insurance coverage for a modified car is more challenging than buying standard car insurance.
At CheapInsurance.com, we recommend that you compare as many insurance quotes as possible, regardless of the type of insurance coverage you need.
But getting the best insurance for your car can be hard work. Luckily, we are here to help you find the car insurance coverage you need—at the best possible price.
All you need to do is head to the top of this page, enter your zip code, and answer a few short questions about your driving habits, requirements, and history. We will then provide you with a wide selection of insurance quotes to choose from.
Once you have an idea of the auto insurance premiums that you could be paying, contact the insurers that are offering you the cheapest rates to get a formal quote.
Getting car insurance should be quick, simple, and stress-free, and you deserve to get the best insurance rates possible.
At CheapInsurance.com, we’ve got you covered!
