Mods and Insurance: Disclose, Disclose, Disclose

 

It is often said that the most important factors for real estate are location, location and location. It can similarly be said that the first rule of insuring a car with performance modifications is disclose, disclose, disclose.

It's no secret that half the fun of owning a sports car is modifying it from a stock vehicle into a one-of-a-kind car that is an extension of your personality, but even modified vehicles have to be insured, and the wrong kind of mod, made without permission from your insurance provider, can cause problems when shopping for new policies or renewing existing ones. Even worse, an unapproved modification may void your insurance entirely. For this reason, it's important to make your insurance agent your new best friend, and tell him or her everything about what you're doing to your car – in writing, preferably with pictures and receipts.

Why It Matters

Insurance premiums vary from company to company, but generally, all are calculated along three general principles:

• The smaller your engine, the less expensive your insurance
• The less expensive your car, the less expensive your insurance
• The more common your vehicle, the less expensive your insurance

Modified cars, and modified sports cars especially, tend to exist in opposition to these rules – they are expensive cars with larger engines and other features that take them beyond blue book norms, so that they become difficult to compare to other vehicles. This, in turn, means that there are no statistics to support their true risk-levels (because such stats are based on commonalities), and therefore they are perceived by insurers as high-risk cars.

By disclosing all the modifications you make, you are helping to ensure that your car is valued correctly, that you are adequately compensated in the event of damage or destruction, and that your policy remains in force.

 

Low-Risk vs. Higg-Risk Mods

When it's time to go car insurance shopping, and your car has already been modified, bring along an itemized list of those modifications. Nothing is too minor to include – for some insurers a mere rear spoiler is considered a "kit," and makes your premium more expensive. If you are already insured, but are considering future mods, check with your insurer first.

A good number of aftermarket mods cause no trouble to your insurance as long as the company is informed, but some modifications are riskier than others, and some will earn you a flat "no," and you'll be sent off to shop for specialty insurance.

Here is a list detailing the kinds of modifications that are most common, and how they're treated.
Body:
This includes any alterations to the exterior of your vehicle, including the rear spoiler mentioned above. Unless they're extreme or extensive, most body mods won't adversely affect your insurance rates, unless they include head, tail, or brake light changes. These will always trigger detailed questions, but are usually approved as long as the altered parts are both sensible and legal.

Brakes:
Improving the quality of the discs in your braking system is not a problem, but changing the size of them is. Changes to the calipers are cause for caution.

Engine:
An induction kit probably won't cost you a fortune in premium, but any mention of "chipping" is likely to send you to the specialty insurers.

Interior:
Unless interior changes are excessive, it is unlikely anything will affect your premium, but you should still disclose them.

Security Devices:
Kill switches are sometimes illegal, let alone uninsurable, but most other anti-theft devices, including engine immobilizers and tracking devices may actually help reduce what you pay for insurance.

Suspension:
A drop of 30-40mm shouldn't be an issue; more than that will give most mainstream insurers pause.

Wheels:
Mainstream insurance companies will charge you more to cover your shiny, new, alloy wheels, but specialty insurers will not.

But what if you are doing major modifications, like chipping the engine, or installing a full-body kit? It's at that point that a specialty insurer becomes your best – indeed your only – option. Such policies are not without benefits – they are generally less expensive, at least for cars that aren't driven often, and you vehicle will be valued at an amount you and they agree upon, that takes your mods into account, but there are caveats as well:

• You may need an appraisal in order to determine value.
• Your driving record must go back at least ten years, and must be clean for the past three to five.
• You will have an annual cap on mileage, and there will be usage restrictions.
• Storing your car in a locked garage when not in use will be a requirement, rather than a good idea.

 

Modifying your car is a special pleasure, and the rewards are often thrilling, but driving any car without insurance is both illegal and just plain stupid.  Keep your policy in force: disclose, disclose, disclose.