Do Vehicle Modifications Affect Your Auto Insurance?

Modifying your vehicle can be an exciting way to personalize your ride, enhance performance, accommodate loved ones with special needs, or improve its aesthetic appeal. However, it's essential to understand how these modifications can impact your auto insurance.
In case you’re new to car insurance entirely, we’ve also got a handy guide to car insurance for new drivers dedicated to preparing you for such a crucial investment. 
Whether you're adding a custom paint job, upgrading the engine, or installing new tech features, here's what you need to know about vehicle modifications and car insurance.

 

Understanding Vehicle Modifications

Vehicle modifications refer to any changes made to the factory settings of your car. These can be broadly categorized into three types: 

• Performance Modifications: Enhancements that improve the vehicle's speed, power, or handling. Examples include turbochargers, exhaust system upgrades, and suspension modifications.
• Aesthetic Modifications: Changes that alter the vehicle's appearance. This category includes custom paint jobs, body kits, alloy wheels, and tinted windows.
• Functional Modifications: Additions or alterations that enhance the vehicle's functionality. This could involve installing a new sound system, navigation units, or additional safety features.

 

How Modifications Affect Insurance

1. Increased Premiums

Insurance companies assess the risk associated with insuring your vehicle based on several factors, including the likelihood of theft, the cost of repairs, and the potential for accidents. Modifications can impact these factors in the following ways:

• Higher Risk of Theft: Custom parts and modifications can make your vehicle more attractive to thieves. This increased risk can lead to higher premiums.
• Costly Repairs: Modified vehicles often require specialized parts and labor, which can be more expensive to repair or replace. Insurance companies may raise your premiums to cover these potential costs.
• Enhanced Performance: This can increase the likelihood of accidents due to modifications that allow the vehicle to reach higher speeds. As a result, insurers may charge higher premiums. 

2. Coverage Limitations

Not all modifications are covered under standard auto insurance policies. Some insurers may exclude certain types of modifications from coverage or offer limited protection. It's crucial to review your policy and speak with your auto insurance broker to understand what modifications are covered.

3. Specialty Insurance

If you have extensive modifications, you might need to consider specialty insurance. Specialty auto insurance policies are designed to cover customized vehicles and offer higher limits and broader protection for modifications.

4. Voidance of Policy

Failing to inform your insurance company about modifications can result in the voidance of your policy. If you make significant changes to your vehicle without updating your insurer, you risk having claims denied or your policy cancelled altogether. 

 

Informing Your Insurance Provider

Transparency is key when it comes to vehicle modifications and auto insurance. Always inform your insurance provider about any changes you make to your vehicle. Provide detailed information about the modifications, including: 

• Description of Modifications: Clearly describe the changes made to your vehicle, including the type, brand, and purpose of each modification.
• Cost of Modifications: Provide receipts or estimates for the cost of the modifications. This information helps the insurer determine the appropriate coverage and premiums.
• Purpose of Modifications: Explain why you made the modifications. Whether for performance, aesthetics, or functionality, understanding the purpose can influence the insurer's assessment.

 

Benefits of Informing Your Insurer

1. Accurate Coverage

Informing your insurer ensures you have accurate coverage that reflects the true value and risk associated with your modified vehicle. This can prevent issues during the claims process and ensure you are adequately protected.

2. Peace of Mind

Knowing that your modifications are covered provides peace of mind. You can enjoy your customized vehicle without worrying about potential insurance complications.

3. Customized Policies

Some insurers offer customized policies for modified vehicles. These auto policies can include agreed value coverage, which pays a predetermined amount in the event of a total loss, reflecting the added value of your modifications.

 

Tips for Lowering Insurance Costs for Modified Vehicles:

●     Shop Around: Compare quotes from different insurance providers.
●     Bundle Policies: Combine auto insurance with other insurance policies (like home insurance) for discounts.
●     Install Safety Features: Adding security systems, dash cams, and anti-theft devices can lower premiums.
●     Regularly Review Your Coverage: Ensure your auto policy reflects the current value of your vehicle and modifications.

FAQs About Vehicle Modifications and Auto Insurance

1. Do I need to inform my insurance company about every modification I make to my vehicle?

Yes, it’s essential to inform your insurance company about all modifications, regardless of how minor they may seem. Even small changes can affect your coverage and premiums. Failing to disclose modifications can result in denied claims or policy cancellation.

2. How much can I expect my insurance premiums to increase with vehicle modifications?

The increase in premiums depends on the type and extent of the modifications. Performance enhancements and customizations that increase the vehicle's value or risk of theft typically lead to higher premiums. 

3. What types of modifications are most likely to void my insurance policy?

Modifications that significantly alter the vehicle’s performance or safety, such as major engine upgrades, suspension changes, or illegal modifications, can void your policy. Always check with your auto insurance broker before making such changes to ensure they are covered.

4. Can installing safety features in my modified vehicle help lower my insurance premiums?

Yes, installing safety features like anti-theft devices, alarms, and dash cams can help reduce your insurance premiums. These features lower the risk of theft and can improve the overall safety of the vehicle, making it less costly to insure.

5. Are there specific insurers that specialize in covering modified vehicles?

Yes, some insurers specialize in covering modified and custom vehicles. These specialty insurers offer policies tailored to the unique needs of modified car owners, including agreed value coverage and higher limits for modifications.

6. How can I ensure my modifications are adequately covered in case of an accident or theft?

To ensure adequate coverage, provide your auto insurance broker with detailed documentation of all modifications, including receipts, installation costs, and photos. Consider getting an agreed value policy that covers the full value of your modifications in case of a total loss.

7. Are there regulations regarding who can perform modifications on my vehicle in Canada?

The Motor Vehicle Safety Act does not require modifications to be performed by any specific individual or agency. However, in some cases, the manufacturer has advised Transport Canada that any modifications to the vehicle must be performed by a service center that is authorized by the manufacturer. Make sure to check for manufacturer-specific guidelines to ensure compliance and maintain your warranty.

 

Modifying Your Vehicle? Talk to a BIG Broker Today

Vehicle modifications can significantly impact the price of your auto insurance, affecting premiums, coverage, and the validity of your policy. To ensure you have the right protection, always inform your insurance provider about any changes you make to your vehicle. By doing so, you can enjoy the benefits of your modifications while maintaining the security and peace of mind that comes with proper auto insurance coverage.
Want to know how your modifications might affect your insurance? Contact one of our auto insurance brokers and get your free auto insurance quote today.