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Modified Car Insurance Explained – Forbes


Modifying a vehicle to make it faster or more secure will have an effect on the car insurance premiums it attracts. But how does it work exactly? Here’s everything you need to know about modified car insurance.

Premiums and risk

The price you pay for car insurance reflects the likelihood of you making a claim. For example, if you live in an area with higher-than-average crime rates or park your car on the street and not a driveway, it’s likely to push up your quoted premiums.

Similarly, if you drive an expensive and powerful car, you’ll probably pay more for cover than if you were insuring a ‘run-around’ with a small engine.

In other words, the more likely you are to cost your insurer by making a claim – and the more it’s likely to have to pay out for repairs or replacement – the more it will charge you in insurance premiums to cover the additional risk.

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How modifications affect premiums

But whether making modifications to your vehicle increases or decreases the risk of having to make an insurance claim, depends on what those modifications are. 

For example, aftermarket security systems such as electronic immobilisers or car alarms, make it harder to steal a vehicle. So, since the risk of you filing a claim for theft is reduced, insurers may offer cheaper cover in return.

On the other hand, mechanical modifications like replacing your vehicle’s drivetrain (which delivers power to the wheels) will increase its acceleration or top speeds. As you are now driving a more powerful car, this could bump you up to a higher insurance group which will see premiums rise too.

Even cosmetic modifications such as tinted windows, alloy wheels or vinyl wraps can have an effect on your insurance, since they could make your vehicle more appealing to thieves.

Modifications that make access easier for disabled drivers or passengers such as tail lifts, ramps and electronic accelerators also count as modifications that can impact the cost of your cover and, like all modifications, must be declared to your insurer.

Common modifications

Alloy wheels

Wheels are a simple modification that can significantly alter the appearance of a vehicle. Unfortunately, thieves can remove them almost as easily as you can fit them, even if they’re secured with a locking wheel nut. Insurers will price your premiums to account for this risk factor.

Exhaust

An aftermarket exhaust can improve the performance of your vehicle, and anything that makes a car more powerful makes the chances of you making a claim go up – at least in the eyes of your insurer.

Lowered suspension

Lowering your suspension so that your vehicle rides closer to the road than its manufacturer intended is largely done for cosmetic reasons, but can lead to problems with ramps, towing and uneven tyre wear. Your insurer may increase your premiums to reflect this.

Turbocharging

Installing a turbocharged engine will increase your vehicle’s speed and increase fuel efficiency. Insurers may infer your need for speed as a signal that you’re a riskier driver and pump up your premiums.

Spoilers/bodykits

Spoilers and extensions to your car’s bumpers and skirts can drastically change its appearance. Given the value of such parts – both in terms of what you paid for them and their appeal to thieves – insurers sometimes charge more to cover such vehicles.

Informing your insurer

Whether you’re buying a car that has been modified or you’re making modifications to a vehicle you already own, you must tell your insurer about what’s been done to the vehicle.

Buying an insurance policy is an agreement based on good faith. The insurer promises to pay out claims, where appropriate, as long as you’ve provided complete and accurate information about yourself and your vehicle.

If you were to make a claim without having disclosed modifications to your vehicle, the insurer could reasonably reject your claim on the grounds that you weren’t honest in your application. In that case, you’d have to pay for repairs or replacements out of your own pocket.

It’s best to speak to your insurance provider before making modifications to find out if your existing policy will cover the changes, or if you need to extend your cover. 

Some modifications, such as under-body coloured lights can be illegal to fit to your car. If your insurer refuses to cover your modifications it also reserves the right to cancel your policy should you go ahead with them anyway. Having a policy cancelled can make it harder to find affordable cover in the future.

Some modifications must be declared to the Driver and Vehicle Licensing Agency (DVLA) by updating Section 7 of your vehicle’s V5 document – which you should have received when you bought the vehicle. 

The kinds of changes the DVLA would be interested in would be things like changing your car’s colour, cylinder capacity (CC) or fuel type e.g converting to liquid petroleum gas (LPG). 

Keeping costs down

If you’re committed to your vehicle’s modifications and understand that it could mean paying more for cover, there are other ways you can keep your costs down.

The first port of call is a price comparison service to find out which insurers are offering the best price on the cover you need. Insurers have just been banned from offering new customers lower premiums than existing customers for the same cover, so they can’t use that tactic to compete with other insurers anymore. 

As a result, insurers may have to make their overall pricing more competitive if they want to grow their market share, and you can take advantage. 

If you’re driving less because Covid restrictions mean you’re working from home, either full or part time, remember that your annual mileage is probably going to be lower than usual – and it could save you money.

If you can, paying your premium for the year up front rather than in monthly installments will be cheaper since there’s no interest to pay. 

Increasing the amount you’re willing to pay in voluntary excess  to make a claim can also whittle down your premium. Just be sure you’d be prepared to pay it on top of your compulsory excess.

Frequently Asked Questions

Are car modifications illegal?

No, far from it. While there are some popular modifications that are illegal, such as tinted windows that let in less than 75% of light, underbody neon lights and negative camber wheels, many more modifications are perfectly legal.

What car modifications don’t affect insurance?

Can I get specialist modified car insurance?

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Choose from a range of policy options for affordable cover, that suits you and your car.




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