Disclose Everything: The First Rule of Insuring Modified Cars

Disclose Everything: The First Rule of Insuring Modified Cars

as published in BritishV8 Magazine, Volume XVI Issue 2, October 2008

by: Travis Overby

Half the fun of owning a sports car is making modifications to the engine or styling so that the car becomes uniquely yours. However, it's very important to remember than any modification may affect your insurance coverage, either by voiding your policy when you most need it, making it difficult to renew, or causing a challenge when shopping for new coverage. Insurance experts advise: "disclose everything".

When it comes to calculating a premium, every car insurance company is slightly different, but there are some general principles that work across the board. Generally speaking:

All of these things tend to be in opposition to the average modified sports car. Modified vehicles tend to be more expensive, have larger engines, and include specially-fabricated, modified, or aftermarket parts. These features make it difficult to compare a modified vehicle to a standard car, which, in turn, makes insurers perceive them as greater risks.

As well, all of these items are reasons why you must disclose every modification you've made to your car, during the shopping process. Not disclosing the changes you've made to your car will not only affect valuation (which will otherwise be based on the standard configuration of your vehicle model), but may also void your policy if you're in an accident, and subsequently request replacement of damaged aftermarket parts.

Low-Risk Modifications

If you're shopping for insurance coverage and have already modified your car, disclose every single modification - even a rear spoiler could be considered a "kit" by some insurers. If you have insurance, and are considering making (more) modifications, run them by your insurer before you proceed, just in case they'll cause an increase in your premium.

While most modifications can be worked out with your insurance company, there are some insurance-friendly details you should be aware of, and some specifics about what disclose everything really means.

Saving Money with Modifications

While modifying your car will, at the least, cost you more money in insurance, and may require you to seek a specialty insurer, there are ways you can mitigate the cost difference. Here are a few:

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Major Modifications

All of this is very well and good if you aren't making major modifications. But what if you are swapping-in a V8 engine, installing a turbocharger, or doing some other major modification? What if your car has a full-body kit? What then?

At that point your best bet is to seek coverage from a specialty insurer. While many such companies handle antiques and older collectibles, including vintage street rods, a growing number of insurers are now embracing modified cars as well.

With specialty insurance, you still have to disclose all your modifications, but you'll be able to work with your insurance agent to come to a fair valuation for your vehicle, generally either stated value, where you insure your for an amount greater than book value, and in the event of a total loss the payout will be the stated amount less depreciation, or agreed value, where you also insure your car for greater than blue-book value, but in the event of a total loss the entire amount is paid out.

Such forms of coverage, however, come with caveats, such as:

Despite these restrictions specialty coverage has distinct advantages in addition to case-by-case valuation, and coverage that is based thereon. For example, specialty policies often have very small deductibles, and often include coverage for a tow trailer, for people who tow their modified cars to events. As well, specialty companies that handle street racers and exotics often include special event coverage that will reimburse you if your car breaks down en route.

Driving a modified sports car comes with its own special rush. While the cost of insurance may tempt you to do without, remember that driving without adequate coverage is financially risky. Disclose everything to your insurance carrier, consider specialty insurance when you need to, and you will be able to find insurance that you can afford.

Disclaimer: This page was researched and written by Travis Overby. Views expressed are those of the author, and are provided without warrantee or guarantee. Apply at your own risk.

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