How Can Modifications Impact Car Insurance Premiums?

Automobile personalisation is a passion that everyone would love to try. Everyone likes to upgrade their car, whether it be turbo boosters or exterior stickers. Still, one must remember that these modifications can impact one's finances, including insurance premiums, warranties, and even resale value.

This article explains the various modifications one can make to one's car. It will also outline the changes that may impact vehicle insurance. By reading the article, car enthusiasts can understand the modifications they can make without compromising their insurance coverage.

Modified vehicle insurance covers vehicles that have undergone specific changes from their original factory specifications. These changes may include modifications to the engine, bodywork, and interior, as well as the installation of high-performance components. 

Regular car insurance often fails to account for these changes, which can impact the vehicle's value and performance. To guarantee that the policy reflects the true value of the modified vehicle, insurers offer modified car insurance. 

Most modified car insurance plans cover both standard and modified parts. Thus providing comprehensive protection for owners of customised vehicles.

Modifying a car for aesthetic or performance purposes can affect the insurance premiums for that vehicle. Most instances change the risk profile of the car, and thus, they are reflected in the changes made to coverage and premium rates by the insurers. 

A vehicle with modifications poses a greater risk due to its enhanced value or performance. However, specific improvements may not significantly impact the premium. Such changes include accessibility or safety enhancements.

However, aesthetic or performance changes, such as an engine upgrade or a custom body kit, may incur additional costs. Car owners must tell their insurers about vehicle modifications to ensure proper coverage.

If there have been several modifications or alterations in the automobile system, the user must disclose some details to the insurer. The modifications include:

Engine Upgrades

Modifications to the engine control unit, including the installation of a turbo, help improve the vehicle's overall performance. Therefore, please disclose this modification to the insurer for premium rate calculation.

Suspension Modifications

Alterations made to the suspension, such as lowering or installing coilovers, may compromise the vehicle's operation or safety. Therefore, you must report this to the insurance company.

Custom Body Kits

Any additional parts added to a car in custom mode, such as spoilers or side skirts, are modifications that can affect safety or performance. Thus, an individual should reveal this.

Aftermarket Wheels

Changing or replacing the wheels can alter a vehicle's performance and handling on the road. Hence, it affects how that automobile should be insured for any losses due to the car.

Paint Jobs and Vinyl Wraps

You can change the car's look by making almost minor modifications, such as a custom paint job or something simple like a vinyl wrap, which makes it crucial to inform yourself.

Performance Exhaust Systems

Installing performance exhausts for improved airflow can be risky. This decreases the valuation of your car. Therefore, you should notify your insurer about this.

The Motor Vehicles Act, 1988, governs modified cars in India, as well as the Central Motor Vehicles Rules. The prime intent of these laws is to keep the enthusiasm for vehicle personalisation alive. While not neglecting road safety and environmental considerations at the same time. 

The necessary checks ensure that people who make modifications adhere to specific guidelines. This helps avoid the consequences of going astray. Specific guidelines provide that an individual should not install any replacement parts on the frame or chassis, as this alters the vehicle.

Due to the contraventions of these rules, modified cars are subject to severe penalties, including fines and confiscation. Thus, all vehicle owners should register their modified cars with the Regional Transport Office (RTO). Additionally, they should be mindful of established safety regulations. 

An individual must follow certain step-by-step procedures for smooth insurance registration and execution. Here are the steps to follow:

Step 1: Understand the Laws

First, familiarise yourself with the laws governing vehicle modification in India. Plan to ensure that any changes you make comply with the Motor Vehicles Act and the Central Motor Vehicles Rules.

Step 2: Speak with the Insurer

Consult with your insurance provider. This makes it easier to analyse the effects of the changes on your policy before implementing them. It is essential to determine which alterations require prior approval.

Step 3: File Application with RTO

Write your modifications and submit them as an application to the Regional Transport Office (RTO). This submission leads to the official documentation necessary for the changes.

Step 4: Schedule a Visit

Visit the RTO and wait for your vehicle to be inspected after the specific document has been filed. The inspection is a legal acceptance by the government of modifications.

Step 5: Inform the Post-Modification

After making all necessary changes, confirm them with the insurer. By doing so, the policy will reflect the condition of the motor vehicle.

Step 6: Request Modification Endorsement

Obtain it from the insurer for the entire vehicle and any modifications. This is important because, in future events, this document will help prevent the rejection of the claim.

Step 7: Review Your Insurance Premium

Inform your insurer about any changes to your premiums resulting from a modification. Some changes can lead to increased risks.

Now that you know the need to follow government guidelines and insurer requirements, let's have a look at the factors to consider before modifying the car:

Legitimacy

Verify if the modification is in accordance with the laws of the land. If so, it may also require RTO certification or testing by authorities such as ARAI. Lack of approval can result in fines, vehicle impoundment, or legal action.

Safety

Opt for changes that promise to improve safety, such as enhanced brakes or suspension, to enhance the car's performance. Innovation should never compromise the integrity of the vehicle.

Impact on Insurance

Depending on the modification, your insurance company must be notified of these changes. These modified parts or engine updates may increase premiums or necessitate additional endorsements.

Performance Needs

Determine if the modifications align with your driving endurance level. How can you improve handling, comfort, and the experience on the drive? These are the questions essential for performance needs.

Cost

Consider the pricing of the components, installation, and even the future maintenance of your car plans. A comprehensive budget would prevent such unexpected increases while allowing for high-quality enhancements.

Professional Use

A genuine, highly skilled mechanic should undertake all car maintenance and repairs. Professional installation reduces issues that may arise from improper changes.

Every car owner who has modified their vehicle may be aware that there are penalties for mistakes when insuring. Avoiding these issues will help those who may require modifications in the future. Here are certain mistakes worth avoiding:

Omission of Modifications Made

Informing the insurance firm about these would ensure they do not refuse the claim. Such information is essential for assessing risk and adjusting coverage.

Inattention to Legal Regulations

People often overlook the guidelines for car modifications. This leads to illegal modifications that void car insurance. Hence, paying attention to legal regulations is essential.

Overlooking Safety Considerations

If you prioritise looks over safety, you will compromise the vehicle's structural integrity and increase the risk of accidents. The reason you opt for such modifications must be made clear.

Selecting Inexperienced Installers

Using unqualified mechanics to alter car features can also result in a bad installation. This can result in performance-stifling consequences and complications.

Not Considering Different Coverage Options

When it comes to obtaining extra coverage for modified parts, many people do not take this step. Thus, their policy would not cover the cost of the parts and enhancements.

Classic cars with modifications require specialised policies to protect their vintage value and custom alterations. A standard insurance policy may not fully protect the unique aspects of classic cars.

Insurers providing classic car insurance for modified vehicles often need assessments of those changes. Such an assessment determines the updated value of the car and the risks to that vehicle. Most policies cover the original components and the new modifications for thorough protection.

Owners should provide the documentation of all modifications. This helps the insurer assess the car's actual value.