How modifications affect your car insurance

Coles Financial Services 5th Apr 2016 in Car insurance

For many car owners, a vehicle is nothing more than a way to get from ‘A’ to ‘B’. But for others their car is their passion and hobby.

There’s a huge range of non-factory parts, accessories and upgrades available to those who want a unique vehicle with special features.

But whether you are considering investing in a custom paint job, adding a bull bar or turbocharging your engine, it is important to bear in mind that any modifications you make to your vehicle may affect your car insurance.

Any non-standard addition or alteration made to your car that affects its performance, handling or safety is considered to be a modification, and this would include any changes to the car’s body, engine, transmission or suspension.

Why modifications could make your policy more expensive

Accessories you add to your car, or modifications you make to it, may not be covered by your insurance unless you have specifically told your insurer and they have agreed to cover them.

If your insurer does agree to cover them, then they should be itemised separately on your insurance policy schedule.

Whether you buy a new or a second-hand car, it is up to you to tell your insurer of any modifications to the vehicle at the time you take out cover. If you decide to modify your car at a later date, you should advise your insurer immediately.

Always keep your insurer in the loop

Modifications will often result in higher insurance premiums because your insurer faces an increased risk in terms of:

  • The value of your vehicle – most modifications are not cheap, and increase the value of your car. In general, insurers tend to charge more to cover vehicles that cost more to repair or replace.
  • Accident risk – many modifications are done to increase performance and therefore might increase the risk of the vehicle being involved in an accident.
  • Theft risk – as much as modifications make your car more appealing to you, they also make it more prone to being broken into or stolen by others.

You should always ensure that your modified vehicle complies with all federal and state regulations. For example, exhaust noise levels must be kept in mind when modifying the engine or exhaust system. Bear in mind that any modification that is illegal may not be covered by your insurer and could even result in your policy being void or cancelled.

Always keep your insurer fully informed about any changes to your personal circumstances (such as a change of address) or to your vehicle. It’s worth it for the peace of mind you’ll get from knowing that should the unexpected occur, you and your car will have the protection you need.

Terms & conditions

Coles Financial Services Pty Ltd (Coles FS) is an authorised representative of WFI Insurance Limited (ABN 24 000 036 279 AFSL 241461), the issuer of Coles Car Insurance and receives a commission for each policy sold and renewed. Any advice provided is of a general nature only and does not take into consideration your objectives, financial situation or needs. Before acting on any advice you should consider its appropriateness. You should read the Product Disclosure Statement before deciding whether to acquire an insurance policy.

Tags: cars car insurance insurance modifications