Const & Coverage
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Modified cars typically cost more to insure, however certain car modifications, like extra safety features, can actually result in discounts.
If you modify your car with customizations, like a paint job or a new stereo system, you will need to notify your insurer to extend your coverage for the modifications
If you don’t notify your insurance company about the mods, then the modifications will not be covered and you may end up paying out of pocket for damages
Many insurance companies offer “custom parts and equipment coverage” to protect your modifications if they are damaged in an accident
You should get an agreed value auto policy so that if your modified vehicle is damaged or totaled, you will be paid out the agreed value of your car, which is determined by an appraiser before you sign your auto policy
If you have car insurance, your car insurance company will pay the damages you’re liable for if you cause an accident or hurt someone with your car. Car insurance can also protect you financially if your car is stolen or destroyed.
Most states require a minimum amount of auto insurance coverage, but most drivers need higher limits than what their state requires. When it comes to different types of cars, coverage can needs differ between standard daily drivers and exotic or sports cars, classic cars, and luxury vehicles like BMWs.
In sum, the major difference is the amount 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. Newer cars with updated safety features can also be less expensive to insure.
Since modified cars typically use more expensive parts and have highly specific repair needs, you’ll have a higher premium for 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.
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When it comes to car insurance, your car insurance company will consider your car to be in the same condition that you bought in its original form. 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:
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 coverage types that all offer different kinds of protection. These are the standard parts of a typical auto insurance policy:
|Coverage Type||What It Does|
|Bodily injury liability||The part of your liability coverage that pays for medical bills if you've injured someone in an accident|
|Property damage liability||The other part of liability coverage, covers the cost of property damage you've caused in an accident|
|Personal injury protection||Covers medical expenses for you or your passengers after an accident|
|Uninsured/underinsured motorist||Covers the costs if you're in an accident caused by a driver with little or no car insurance|
|Comprehensive||Covers damage to your car that happens when you're not driving|
|Collision||Covers damage to your car after a car accident, no matter who was at fault|
Collision and comp insurance will cover damage to your vehicle, but it will not cover damages to any customizations you made. Your basic car insurance policy may not actually cover your modifications at all, which is why you will need to purchase additional special coverage for your modifications.
Many insurance companies offer this special coverage for aftermarket modifications, sometimes called “custom parts and equipment coverage.” This insurance covers repairing or replacing your customizations if they’re damaged in a car accident. Naturally, some mods don’t need extra coverage, like a $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 your usual auto insurance company won’t cover your car with its modifications, you may want to look into more specialized insurers. Frequently, insurers who offer coverage for rarer vehicles, like classic, vintage, collector, and performance cars, will also offer modified-car insurance.
If you're in an accident and your car is damaged, you will be reimbursed according to the original manufacturer version of your car. That means, for example, if you added $3,000 worth of modifications and did not purchase additional special coverage, you won’t be reimbursed that $3,000. Since you don’t have special coverage for your modifications, the modifications won’t be on your policy and therefore basically won’t exist in your insurer’s eyes, so you won’t get reimbursed.
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 modified 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.
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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 their claim if they find that the car was modified without their knowledge. The insurance company 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.
In addition to making sure your claims go smoothly, declaring your modifications to the insurance company lets them know that, when you do file an insurance 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 modification. However, you’re unlikely to be reimbursed for a modified speaker system unless you specifically added custom parts and equipment coverage to your policy.
If you have a valuable modified car, you should make sure you have an agreed value auto policy. Also called a replacement-cost policy, this type of policy settles how much the car and the mods are worth. Before you sign your policy, you will work with an appraiser and your insurance company to determine the value of your modified vehicle. Meaning amount you will be paid out should you have a total loss of your modified car will be the agreed value between you and your insurer.
Agreed value policies could increase your premium, but they could save you money because this type of policy pays out the agreed value to replace your car if it is totaled, as opposed to the actual cash value (ACV), which is the value of your car as determined by your insurer.
Some modifications can 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 if there are additional discounts they offer for security modifications.
As counterintuitive as it may seem, however, safety tech features don’t always earn you a discount, even when they reduce your risk of getting into an accident. Some high tech safety features can actually raise your rates slightly since the parts are expensive to replace or repair, so don’t necessarily count on those discounts.
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