Car insurance for modified cars

Modified cars typically cost more to insure if they're covered by your insurer at all.

Zack Sigel

Zack Sigel

Published July 11, 2018

If you have car insurance, when you cause an accident or hurt someone with your car, the car insurance company will pay the damages you’re liable for. Car insurance can also protect you financially if your car is stolen or destroyed.

This coverage more or less works the same way regardless of your car. We’ve explored how coverage differs between traditional cars and exotic or performance cars, classic cars, Smart cars, and BMWs. In sum, the major difference is what you’ll pay for coverage, which is called your premium. The harder your car is to replace or repair, the higher your premiums will be: exotic and luxury cars are the most expensive, with more practical cars being naturally cheaper.

Since modified cars typically use more expensive parts and have highly specific repair needs, you’ll almost certainly be assessed a higher premium to get modified-car insurance than that for less-expensive cars. However, in some cases, modifications can actually lower your premium if they provide additional safety and security measures.

Read on to learn more about:

What is a modified car?

For the purposes of car insurance, your car insurance company will consider your car to be that which originally rolled off the lot. But it’s your car, and you can do what you want to it: Paint a dragon on the side, lower or raise the chassis, get huge tires.

Modifications can be for aesthetic reasons or to adjust the performance of the car. They may not necessarily add value to the car, since they frequently void the car’s warranty, but they may make driving the car much more enjoyable. Mods can be as simple as installing a phone mount or as complex as replacing the engine.

Some common car modifications include:

  • Chrome rims or bumpers
  • Phone mount or Bluetooth connectivity
  • Strut/sway bars
  • Swapping engine
  • Paint jobs
  • Lift kits
  • Turbochargers or turboboosters
  • Stereo systems, subwoofers, CD or DVD players
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Modified-car insurance

In order to understand whether you can get car insurance for your modified car, you need to understand how car insurance works. Car insurance is composed of different components in which you can buy insurance (48 out of 50 states require at least a minimum amount). Some of these components – bodily injury liability coverage and personal injury protection coverage -- specifically deal with paying damages to someone you injured with your car. Collision and comprehensive insurance protect you from damage to your car.

If you modified your car, you’ll want to make sure you have enough insurance in collision and comp to cover the modifications as well as damage to the base car. However, your basic car insurance policy may not actually cover your modifications at all if they exceed the coverage amount you purchased for your car itself.

If you’re struggling to find car insurance that covers your mods, one of Policygenius’ representatives can help you find a policy that fits your needs. But if your usual auto insurance company won’t cover your car with its modifications, you may even look into more specialized insurers. Frequently, insurers who offer coverage for luxury vehicles, like classic, vintage, collector, and performance cars, will also offer modified-car insurance.

In fact, you may have to purchase coverage in addition to the car insurance coverage you purchased. This may be in the form of a special-equipment rider (also called an endorsement) that specifically adds terms to your policy covering your modifications. Naturally, some mods don’t need extra coverage, like that $10 phone mount you installed. This additional coverage is for mods you can’t afford to replace out of pocket, like that stereo system.

If you don’t get additional coverage for your mods, the car insurance company will only pay to repair damage to the car (or replace the car if it’s stolen and unrecovered) up to the amount you initially purchased coverage for. Say you have $50,000 in collision coverage for a car worth $50,000 at purchase. If you soup up the car with an additional $5,000 in mods, you’ll have to increase your coverage to $55,000 to get the full amount back if the car is totaled.

Adding additional coverage for modifications will almost definitely increase your premium, so make sure to discuss this with your car insurance representative. However, some auto insurance policies automatically have special-equipment protection built in to the collision or comprehensive coverages. Check your policy, or ask your agent. Make sure to get this info in writing.

Alternatively, you could decide to not drive your car at all; maybe it’s just meant to sit pretty in your garage. In that case, you could reduce your coverage to just comprehensive insurance, which would lower your premium but make it illegal to actually drive the car in most states.

Tell your insurer about your modifications

You’ll absolutely need to declare your modifications to your car insurer, whether or not you risk paying a higher premium. That’s because if someone files a claim against you, your car insurance company may deny his or her claim if it finds that the car was modified without its knowledge. The carrier will consider this a misrepresentation of your coverage, and you could end up paying the claim out of pocket, costing you tens or even hundreds of thousands of dollars.

While some mods may cause your premiums to increase even if you don’t get additional coverage for them, they could also surprise an insurer if the insurer isn’t used to covering such mods. That could affect your claims or claims against you and cause you to lose out on the value of your customizations.

In addition to making sure your claims go smoothly, declaring your mods to the insurer lets them know that, when you do file a claim, you’re not trying to get more than your claim is worth. Say your car is in an accident and you want to claim $5,000 in repairs to your car and $1,000 in repairs to the speaker system you added. The car insurance company may wonder whether the $6,000 claim is fraudulent if it wasn’t aware of the speaker mods.

Agreed value

Make sure your car and its modifications are covered with an agreed-value provision. Also called replacement-cost provisions, these terms settle how much the car and the mods are worth before you even sign the policy. Agreed-value provisions could increase your premium, but they could save you money.

Car mods that could save you money

Some modifications will actually lower your premium, if the addition is made to increase your car’s safety and security. After making these customizations, contact your car insurer to see about lowering your rates. You can also ask them if there are additional discounts they offer for security modifications.

  • Rearview cameras, to see what’s behind you when you’re backing up, and blind-spot detection.
  • Anti-lock braking system: prevents skidding while braking in low-traction situations.
  • Anti-theft systems, including alarms, tracking devices, OnStar service, or a LoJack.
  • Accident-sensor technology.
  • Daytime running lamps, also called daytime running lights, which increase your car’s visibility during the day, and adaptive headlights, which enhance night vision.
  • Air bags and seat belts, if your car doesn’t already have them.