Car Insurance For Modified Cars
One of the beauties of owning a car is having the ability to customize it. Personally modifying your vehicle can be incredibly exciting. There are so many modifications for cars available on the market nowadays. From advanced stereos to spectacular paint jobs, the possibilities are pretty much endless.
While you have the option, should you do it? A simple modification can result in some issues with your current car insurance policy. Most likely, your insurance company will not extend coverage to the modified parts. If this is the case and you end up in an accident, you will be paying out of pocket if you want your modified car back to the state it was pre-accident. This can be a serious problem as it is important to have insurance for all aspects of your vehicle.
There is a solution for these troubling facts, and it comes in the form of modified car insurance. Modified car insurance offers you coverage for all the special, fancy upgrades you make to your vehicle. You spent all this time on your car, so you want it protected, right? Well, your best bet is to insure its parts properly. This piece works to be your guide to everything modified car insurance, from what a modified car is to how much such a policy can cost you.
What is a Modified Car?
A modified car is a vehicle that has been upgraded, customized, or improved beyond what it featured upon purchase. Car modifications come in all shapes and sizes, from complex to surface level. The types of modified parts you can add to your vehicle will be explored in the next section. Sometimes these modifications can increase safety and promote smarter driving, while some are just for the aesthetic. There are also changes that may be considered dangerous (ex. Modified parts that make cars go faster).
Generally, any custom parts you add to your vehicle will result in it being considered by insurers as “modified,” and such a label can result in having to consult your auto insurance company. This then requires a policy edit. More of that will be explained later, but you should still keep your car insurance policies and rates in mind as you consider modifying your vehicle.
Types of Car Modifications
There are numerous modifications you can make to your vehicle. As previously mentioned, some custom parts are very basic, while others require internal work. The idea of a “modified” car can be very vague, and you may not even realize how drastically it changes the value or status of your vehicle. For these reasons, it is a good idea to get an understanding of some common modifications for cars:
- Custom rims
- Phone stands
- Paint jobs
- Roof rack
- Tinted windows
- Truck bed liner
- LED light bars
- Modifications for disabilities (ex. ramp)
- Bluetooth or Wi-Fi
- Enhanced radio
- Rearview camera/sensors
Outlined above is just a shortlist of changes you could potentially make to your car. As you can see, some of these are significant, like adding a rear view camera, while others you can install yourself (like a phone stand). But complexity does not always matter to insurance providers. Changes are changes, and your auto policy will reflect that.
What is Modified Car Insurance?
Now that we have explored what a modified car is, let’s get into buying insurance for such cars. Many auto insurance companies offer what is known as modified car insurance. This car insurance pretty much does what it says: provides insurance for your modified car parts. It does not exactly focus on your vehicle as a whole but instead on the modified parts. It offers coverage to them in the event of an accident. This insurance will be heavily based on the value of the modified parts.
Does Standard Car Insurance Cover Modifications?
No. Insurance companies will not normally offer coverage for customizations you make to your vehicle. This means your existing car insurance plan will not apply to any modifications. Most of the time, car insurance companies state a policy will only cover cars’ original parts from the manufacturer. Some parts may not even be offered converged under a car modification policy. If you lack such car insurance and end up in a wreck, you will most likely only get coverage for original parts. If your $5,000 wheels are damaged, but you have custom rims, so you make a claim for $7,000, and your insurance is unaware of the modifications made, they may assume it is a fraudulent claim. This can either restrict the coverage you receive or null it all together. After adding any custom parts, you should alert your insurance agent so they can steer you and your modified car in the right direction to get the appropriate policy.
How Much Does Modified Car Insurance Cost?
It is difficult to give an exact estimate of how obtaining modified car insurance coverage will affect your current policy premiums. A modified policy is typically treated by insurance companies as an “add-on,” and you would purchase it on top of your preexisting car insurance coverage. Along with this, the price is determined heavily based on your modified car. Everything from the value of the parts to if you installed the modification yourself is taken into consideration by insurance companies. While it is hard to figure out a price range before consulting your car insurance, it is possible to get an idea of what factors help to determine your future rates. Outlined below are the steps you and your insurance agent can take in coming to an agreement on insurance premiums for your modified vehicle.
Disclosing Vehicle Modification
The moment you make any modifications to your vehicle, you will need to let your insurance company know. Without knowledge, they cannot offer you a policy, and therefore your new fancy upgrades will not be protected. In fact, it would be better if you discuss with them modifying your vehicle prior to doing it. When you do this, your insurance agent may be able to give you a better estimate for how much your premiums will go up or, sometimes, down. After you notify them, they can adjust your rates accordingly. As mentioned, how much they change is hard to say. Some upgrades may cost more than others. If you have a seriously decked-out, state-of-the-art radio system, that may be very expensive to insure. On the flip side, adding a phone stand may not change your rates much. Either way, you should always check with your insurance after customizing anything in your vehicle. You are going to be thankful for the assistance should tragedy strike.
Agreed Value Policy
With modified car insurance, it can be helpful to have an agreed value auto policy. This insurance policy is what you and your insurance agent agree is the value of your car and its modifications. You should work with both your insurance company and an appraiser. This means your insurance company should pay out the agreed value of your modified car if you have a total loss. This type of policy can increase your premiums, but it may be worth it. This agreed value to replace your car should it be totaled will typically be more than the actual cash value (ACV), which is what your insurance payouts usually default to.
Pros And Cons of Modifying Your Car
There are both some benefits and downsides to modifying your car. While you may only see the benefits after adding upgrades, your insurance company may not always agree. As touched on previously, some modifications can cause your insurance coverage rates to increase, while others may do the opposite. It is best to really sit down and consider the benefits and risks before upgrading any vehicle parts. Outlined below are some pros and cons to consider when it comes to your modified vehicle.
Some Modifications Can be Expensive to Insure
As has been touched on a few times in this piece, some modifications can be expensive to install, which then makes it expensive to obtain car insurance coverage. While some parts may seem worth it at the time, you can be seriously paying for them on the insurance end. For this reason, it is a good idea to understand what changes can be costly. Some pricey car modifications include:
- Stereo systems
- Full exhaust system
- Engine swaps
The cost of purchasing just one of these modifications can be thousands of dollars, way before the cost of labor is added to the bill. Due to this, the price and worth of these items will be taken into consideration by your insurance company when determining premiums. Sometimes upgrades may not qualify for coverage. It depends on the policy available and the type of feature. Depending on your car, you may need to look into specialized insurers for the appropriate coverage.
Certain Modifications May Result in Discounted Premiums
Modifying your vehicle does not always just mean getting a cool paint job or installing powerful speakers. A modified vehicle could also mean modified safety. There are many custom upgrades you can get on the market that can improve both your car’s safety and security. After alerting your insurance company about these adjustments, you may get a decrease in your annual premiums. This is due to the fact that the safer your car is, the less of a risk you are to your insurance company. An insurer would then assume you are less likely to make a claim. Some premium-saving parts available may include:
- Rearview Cameras - Having the ability to see better when backing up your car can be a big plus. Installation of such a device will help you be a safer driver, most likely resulting in fewer collisions. This can also include blind-spot detection devices.
- Sensors - Accident sensors can be installed on your vehicle to alert you when you are near an object like a wall or another car. Such devices help prevent you from scraping against something or hitting it directly.
- Daytime Running Lamps - Daytime running lamps help to make your vehicle more visible during morning and afternoon hours. They emit light from outside your car for others to see.
- Adaptive Headlights - These kinds of headlights react to driving conditions and adjust to give you the best visibility. The kind of adaptive headlights you purchase can vary. Some focus on helping you see around curves, while others improve nighttime visibility.
- Anti-Theft Features - Some anti-theft systems you could install include car alarms, GPS trackers, and OnStar assistance. All of these will either aid in the recovering of your stolen car or discourage thieves from stealing it in the first place.
Keep in mind, though, that just because you make such changes to your vehicle does not mean you will get a discount on your car insurance premiums. Some of these additional car parts can get pricey and actually be counterintuitive. But this should not discourage you from reporting your car changes to your insurance company. Insurers still need to be aware of any and all vehicle modifications.
You Create Your Dream Car
A pretty obvious perk to making car modifications is that you get the car you have been dreaming your whole life of. With each paint job or system installation, you are getting closer to exactly what you want. Sometimes what the manufacturer has to offer is not always sufficient for you, and that’s okay, as long as you are willing to pay the price for it. Who knows? That may be completely reasonable for you and, if so, terrific. It is just best that you understand how such changes can impact car insurance policies before taking the custom route.
Do You Need Modified Car Insurance Coverage?
Suppose you make any changes to your car, yes. You will need to get modified car insurance coverage if you want these updates to be recognized by your insurance company should you end up in an accident. For example, if you have a $3,000 headlight modification and you don’t disclose that fact prior to a car crash, you may not receive coverage for the headlights. The limits to how far a standard auto insurance policy will offer coverage are up to insurers. To be on the safe side, consult with your insurance agent about such coverage and the modified car insurance policy available for you in addition to your standard car insurance coverage. As a general rule of thumb, assume anything that is not your vehicle’s original parts or does not come from the car’s manufacturer won’t be automatically covered under your insurance policy. When it comes to insurance in general, it is always better to be safe than sorry.
How to Buy a Modified Car Policy
Remember, it is highly unlikely that your current car insurance policy will offer coverage for car modifications. Due to this, you are going to want to know how you can get appropriate insurance coverage. The first place to start is the insurance company you currently have a car insurance policy with. In most cases, a modified policy can be an add-on to your preexisting car insurance. If that is the case, you will pay to include the modified vehicle coverage, and then your premiums will be adjusted accordingly. This is done following getting an appraisal or providing the insurance company with information on the modifications and their value.
Sometimes, an insurance company will require you to purchase modified car insurance as a separate policy. It is also possible that the modification you are trying to obtain coverage for is not available through your current insurer. If that is the case, you will need to find a specialized insurance company to get a policy through. That is typically rare but not impossible. It is best you start with your current insurance policy provider to see what they have available for modified cars. You could even begin shopping around for insurance if you would like to compare other insurers’ rates.