A car is a great medium for boldly expressing your lifestyle preferences. Sometimes, you consider doing modifications to the car to enhance its:
- Performance quotient
Cosmetic alterations to the car’s body or interiors are done to make it visually appealing. However, if you are tinkering with the structural components of the car to render it more fuel efficient or performance-driven, you risk violating the design integrity of the manufacturer. This can impact your Bajaj Allianz car insurance premiums.
Car makers factor in all safety and other relevant aspects during the designing process. They adhere to approved emission, safety, and structural soundness standards for getting various models statutorily registered.
When you purchase Bajaj Allianz car insurance policy, you pay a premium underpinned by a tacit commitment that you have not significantly modified the car’s design. Hence, a modification may lead to higher premium liability.
Modification: Definition from Car Insurance Perspective
Modification implies changing your car’s model in a way that it differs from the characteristics with which it was originally manufactured.
Your car model will no longer bear a resemblance to other similar models of car from the same manufacturer. The car can be aesthetically modified or may be given a performance upgrade.
How Do Modifications Impact Your Bajaj Allianz Car Insurance Policy?
Bajaj Allianz sells you a car insurance policy after comprehensively assessing all the risks associated with the factory model of the car. When you carry out modifications, the risks increase considerably; hence, the existing premium becomes insufficient for compensation in the event of an incident.
You need to inform Bajaj Allianz General Insurance about the modifications beforehand. This will allow Bajaj to inform you about the proportionate increase in auto insurance premium value. If you fail to pay the newly adjusted premium, you may be denied claim settlement benefit after an incident.
But why do modifications make your car insurance premium costlier? You can get an overview below.
1. Chances of Meeting with An Accident Increase
The car's power output increases considerably if you do mechanical modifications to the engine or powertrain. When pressing your feet on the accelerator, your car will attain a top speed in a few seconds. This will make it difficult to control the car if an obstruction suddenly comes your way. Hence, the potential of accidents increases, and Bajaj Allianz, too, could charge a higher premium for indemnification.
Other modifications that make your car more vulnerable to accidents include:
- Change in wheel dimensions by technically altering the car’s body frame or chassis
- Alteration in the brake pedal or shoe can compromise the efficiency of stopping the car during an emergency
- Change in a car’s suspension can alter the way it is expected to behave on the road, especially one with undulations or potholes
2. Car Theft Risk Increases
If you paint your car with a colour that makes it more attention-grabbing or you apply expensive wraps over the paint, you convey a hidden invitation to car thieves. The risk of your car being stolen increases because you make thieves believe that your costlier model will fetch them more returns in the black market.
Bajaj Allianz will charge you a higher car insurance premium to cover this increased risk.
The risk of theft is increased further by modifications like
- Fitting large-sized or stylish wheels
- Installing a fuel tank made of fibreglass
- Having a new steering wheel, expensive music system, high-quality upholstery
3. Usage Frequency of Car Can Increase Resulting in Increased On-Road Risk
This happens when you install CNG or LPG kit in your car. The cost of this fuel is lower than that of diesel or petrol.
As a result, you will have a spontaneous feel of using the car mainly for pleasure trips like long drives. Consequently, your car will be exposed to higher risk on the road due to frequent usage.
Indian Motor Tariff Act 2002 also stipulates charging an extra premium of INR 60 per car for covering the liability arising from installing a CNG or LPG kit in the car. Further, upgrading the fuel kit may have to fit some costlier parts, which will also increase the auto insurance premium.
4. Overall Worth Of Your Car Increases
If you replace the standard wheels of a car with broader or alloy-type wheels, for example, the overall value of your car increases. This enhances the cost of covering risks associated with the car. Hence, the premium value goes up. Also, the risk of theft becomes higher.
5. Impact of Modifications on Bajaj Allianz Car Insurance Policy Premium
Bajaj Allianz will re-calculate your car insurance policy premium and ask you to pay the difference for continuing the risk coverage of the four-wheeler.
Below you can get a quick overview of the type of changes that shall result in increased premiums.
- Applying decorative decals or stylish paints on the car’s body
- Changing the sound system, pedal, seat, steering wheel, and other parts of the car’s interiors (quality of product matters)
- Modifying the engine (through the addition of a nitrous oxide kit or turbocharger) for better acceleration or optimum speed
- Replacing the pre-installed engine of the manufacturer with the modified engine of a different brand, model, make, manufacturing material, etc.
Some modifications can actually reduce your car insurance premium. This is because the risk profile of insurers decreases, and the scope of theft drastically reduces. Such changes include:
- Installation of Automotive Research Association of India ratified anti-theft alarm
- Installing a GPS tracking system in the car
- Fitting the car with parking sensors that prevent accidental dashing of the car against a wall or other vehicles during reversing
You should immediately inform Bajaj Allianz about the changes made to your car’s structure or components.
This will enable the insurer to reassess your car’s insured declared value (IDV) and charge you the difference between the actual car insurance policy premium paid and the increased premium. Your claim can get rejected if you ignore this.
Any modifications to the car must be done with certified components at authorized service centres only.
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