Modified car insurance : A guide to insuring your custom car

Q: Do I need to tell my insurance company about custom modifications?

Yes , you should inform your car insurance company promptly about any modifications you make to your vehicle. Car insurers calculate repair costs based on factory parts. If you have an accident and your high-end custom rims and wheels are damaged, your insurance coverage may not be enough to replace or repair them. In fact, your car insurance company may void your coverage if you've made changes to your car outside of the factory standards and didn't tell them in advance about the upgrades.

What is a modified car?

A modified car is one that's been customized with unique bodywork, functional upgrades, or improved performance. If you tint your windows, get custom paint, or add custom rims, tell your insurance company about these upgrades to make sure you have the right coverage.

Different insurance companies handle vehicle modifications in different ways. Adding a roof rack to your car may be considered as much of an upgrade as dropping the suspension. That's why it's best to discuss any potential upgrades with your insurance company — it can let you know whether your current policy covers the change or if you need to explore different car insurance companies as an alternative.

Do I need modified car insurance?

Modified Car Insurance

You need modified car insurance if you have completed modifications to your car for which your car insurance policy will not provide coverage. The more you have invested in the car, the more compelling the argument for purchasing this coverage.

Modified car insurance will ensure that your vehicle is covered for its full value, including the modifications.

What modifications aren't covered by standard auto insurance?

Auto insurance generally doesn't cover aftermarket modifications to a vehicle. It covers only factory-installed parts and equipment

Modifications that are generally not covered include:

Custom rims
Stereo equipment
Custom exhaust systems
Custom paint jobs
Lifted suspensions
Hydraulics

However, some carriers do offer custom parts and equipment coverage, sometimes at no charge but usually for an additional premiumThe payment required for an insurance policy to remain in force. Auto insurance premiums are quoted for either 6-month or annual policy periods.. What's covered depends on the carrierAn insurance carrier is the company that provides your car insurance policy and pays claims..

Progressive, for example, offers this coverage for things like:

An upgraded stereo system
A navigation system
Custom wheels
A new paint job

Such coverage typically has a limit of around $5,000.

What coverage do you need for a custom car?

For a custom car, you need enough coverage for the full value of the car, with all of the custom parts and modifications included. That's in addition to the coverage you are required to carry by law in your state and any requirements of your lender, if you financed the vehicle.

Standard car insurance will only cover your vehicle for its actual cash valueActual Cash Value (ACV) is the current market value of your car, considering depreciation. It's the amount your insurance will pay if your car is totaled or stolen. (ACV) based on the factory-installed parts. For a custom car, it's best to get an appraisal and cover the vehicle for that amount rather than ACV. You can then purchase an agreed-value custom car insurance policy.

How does agreed value car insurance work?

An agreed value car insurance policy insures the vehicle for the value that both the owner and they insurance company have agreed to. That amount may be based on an appraisal (and should be, for the best accuracy) or it may be based on a calculation of the money you've put into the vehicle.

In most cases, as long as the amount you're requesting for coverage isn't outlandish, insurance companies will accept your requested valuation of the vehicle.

Agreed value car insurance may be more expensive in some cases, although insurance on a vehicle that is considered a collector vehicle (it's not a daily driver and is kept garaged) is actually often cheaper.

Which car insurance companies offer modified car insurance?

While specialty insurance companies offer the most comprehensive modified car insurance, you can also purchase coverage through some well-known carriers.

The list below provides some examples of coverage available from carriers offering modified car insurance:

Esurance: Offers supplemental coverage of up to $4,000 for custom and aftermarket parts.
Grundy: One of the few classic and custom car insurance companies; it offers agreed-value policies.
Hagerty: Classic and modified car insurance specialist that offers agreed-value policies or collector and classic car insurance.
Nationwide: Offers agreed-value policies.
Progressive: $1,000 in modifications is included if you have collision or comprehensive coverage. You can purchase an additional $5,000 in coverage for modifications.
Safeco: Offers classic car insurance with agreed-value policies.

FAQ: Modified car insurance

Are there modifications that can get me a discount on my car insurance?

Not really. Anti-theft and safety devices may earn you a discount on your car insurance, but these are not generally viewed as modifications.

If I am in an accident, will car insurance cover my custom roof rack?

It might; it depends on your policy and coverage. Contact your insurance company to find out if a roof rack is covered or if you need to add additional coverage for it.

Do I need to tell my insurance company about custom modifications?

Yes, you should inform your car insurance company promptly about any modifications you make to your vehicle.

Car insurers calculate repair costs based on factory parts. If you have an accident and your high-end custom rims and wheels are damaged, your insurance coverage may not be enough to replace or repair them. In fact, your car insurance company may void your coverage if you've made changes to your car outside of the factory standards and didn't tell them in advance about the upgrades.

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