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If you've modified your work truck, sports car or camper van with specialized parts, your regular insurance policy may not cover that part of your vehicle. Modified vehicle insurance can protect you after a crash by accounting for the actual cost of your vehicle. Here's what you need to know about modified vehicle insurance and whether adding more coverage is right for you.
What Is Modified Vehicle Insurance?
Modified vehicle insurance is a type of insurance that covers non-factory (or aftermarket) changes made to a vehicle after purchase. When you modify a car for performance or looks, both the value of the car and the cost to repair it may increase. To properly insure it for repair or loss, insurance companies typically require an additional modified vehicle endorsement or completely new policy that accounts for these additional costs.
Regular car insurance covers parts that are standard from the factory, but not modifications. If you don't disclose your modifications to your auto insurance company, you will likely not be compensated in full for the custom parts and equipment on your vehicle if you have an incident.
In addition, not giving your insurance company an accurate description of your vehicle could be considered a material misrepresentation, a potentially serious insurance violation. Your policy may even be voided.
Some typical modifications that require modified vehicle insurance include:
- Chrome bumpers or steps
- Custom paint
- Custom lights
- Sound systems
- Navigation systems
- Refrigeration systems
- Camper set-ups
- Dump-truck beds
Essentially, any aftermarket change can be considered a modification. When in doubt, ask your insurance agent.
How Does Modified Vehicle Insurance Work?
If you have modified your vehicle, you'll need more insurance. Modified vehicle insurance works by adjusting your policy coverage to cover the costs of repairing or replacing added parts. There are several options for modified vehicle insurance policies:
- Custom parts and equipment coverage: This is an endorsement added to your regular car insurance policy covering replacement or repair of aftermarket equipment or modifications. A custom parts and equipment allowance on a typical car insurance endorsement may only cover up to a set amount, such as $5,000. (You may need to hold other policies, such as collision and comprehensive to add this.)
- Cash value insurance: To get the value of the vehicle as modified after a total loss, you can elect to get cash value insurance.
- Custom car insurance policy: If you have an extremely unique vehicle, such as a classic car, you may need to get a customized or nonstandard policy.
Modifying your car won't always cost you extra in insurance premiums, however. When parts are added to the vehicle which reduce the likelihood of an accident—such as safety equipment—your insurance may reduce your premium.
What Are the Benefits of Modified Vehicle Insurance?
Carrying the correct policy is important to protect the value of your vehicle in the case of an accident or damage. But there are additional benefits to modified vehicle insurance, such as:
- Appropriate coverage: If you depend on a modified vehicle for work, for example, having appropriate coverage for your expensive updates may be essential to mitigate major business losses after a total loss.
- Discounts for safety features: Some policies will give you added discounts when you add items such as anti-theft devices, smart sensors, backup camera, running lights and adaptive headlamps.
How to Buy Modified Vehicle Insurance
If you already have an existing auto insurance policy, start by letting your agent or provider know that you have modified your vehicle. They may be able to offer you modification coverage immediately or let you know the vehicle should be appraised first.
You may need to work directly with an appraiser to add up the value of your modified parts. Together, you can reach an agreement on what a fair value of the modifications are.
Once your insurance provider gives you a quote for modified coverage in writing, you can shop it around with other companies to see if they might offer you a better deal.
A modified vehicle insurance policy typically costs more than a traditional car insurance policy. The higher price ensures that the hard work and investment you've put into your vehicle are financially protected in the case of damage or accident.
Compare Car Insurance Quotes
Experian's auto insurance comparison tool can help you find lower rates on your car insurance by providing an apples-to-apples comparison to your current coverage. If you find a better rate, you can switch your coverage online or with an agent over the phone. Finding out what a new insurer will charge for modified vehicle insurance will be another important part of your research.