The car is an extension of your limbs – helps you move from one place to another. It is only natural if you wish to personalise it and make it more aligned with your tastes and preferences. These modifications could be minor or could alter the car significantly.
However, no matter what the changes are, they will impact the premium that you will have to pay for your car insurance cover.
What is a Car Modification?
A car modification is any change that is made to one’s car. The car no longer is in the original condition that it has been manufactured in. A modification increases the overall value of the car, which is why the premium of the car goes up in value too.
Also please note that the modifications made by manufacturers are market-approved and are intended to be harmonious with the car’s specifications.
The table given below indicates the changes/modifications that have an effect on premium and the ones that do not -
| Modifications affecting premiums | Modifications not affecting premiums |
|---|---|
Engine modifications that are made to improve the performance of the engine will result in an increase in the premium. This is due to the fact that an increase in the power of the engine, results in an increase in the speed limit, thereby increasing the possibility of reckless driving making one, more accident-prone. | A paint job will alter the very look of your car but has no effect on your insurance premium. |
| Brake modifications will result in changes in the performance of the car on the road, thereby affecting the car insurance premium. | Applying stickers with complex racy designs will not alter the premium that one needs to pay though it is advisable to inform your insurer about this modification. |
| Wheel modification and enhancing its aesthetics increase the chances of it being stolen, increasing the risk attached for the insurer. This in turn manifests in the form of an increased premium. | No risk-bearing installments simply alter the aesthetics of the car and are not of a significant monetary value nor pose the risk of being stolen. |
| Interior features such as steering, pedals, sound system, seats, etc. when modified will affect the premium calculated for one’s car. | |
Bodywork or additional cladding such as an exhaust system, modified wheel rim, new spoiler, etc. will result in an increase or decrease in the premium based on the effect it has on the risk level after such a modification. Any modification that decreases the risk of an accident or theft will not adversely affect the premium. For example, parking sensors are not considered as modifications that must alter one’s premium as it protects the car from damage while reverse parking. | |
| Installation of ARAI approved anti-theft devices reduces the risk of one’s car being stolen thereby lowering the premium that the car insurance company will charge by virtue of the discounts offered. |
- Bonnet bulges and flared wings will result in an increase of 66% in the premium amount of car insurance.
- Updated breaks will result in an increase of 36% in the premium amount of car insurance.
- Turbo or supercharging will result in an increase of 132% in the premium amount of car insurance.
- Alloy wheels will result in an increase of 8% in the premium amount of car insurance.
Documents Required for Different Modifications
Removal or Addition of CNG/LPG kit
The documents required are –
- Request letter from the policyholder
- Registration certificate
- Invoice copy of the LPG/CNG kit
- Report of vehicle inspection
- In the case of addition of bi-fuel kit, endorsement premium
Please note: You will have to pay higher premiums in addition to a CNG Kit as the CNG cars are associated with higher risks and the risk factor is directly proportional to the premium amount.
The additional premium that has to be paid for using a CNG kit is typically 4% – 5% of CNG kit value. The age and make of the car can ramp up this premium amount further by another 4% - 5 %.
Removal or Addition of anti-theft devices
The documents required are –
- Request letter from the policyholder
- Invoice copy of the security system
- In the case of removal of the system, endorsement premium
Installation/removal of electrical accessories
The documents required are –
- Request letter from the policyholder
- Invoice copy of the accessories
- Premium amount
In the case of removal of the accessories, endorsement premium
Installation/removal of non-electrical accessories
- The documents required are –
- Request letter from the policyholder
- Invoice copy of the accessories
- Premium amount
In the case of removal of the accessories, endorsement premium
Why is It Important to Notify the Insurance Company About the Modifications on Time?
It is important to notify the insurer about the modifications that have been made to one’s car due to the following reasons –
- Moral duty to inform.
- Legal duty to inform as not doing so might result in rejection of the claims made at a later date.
- Not informing the insurance company of the alterations made smacks of mala fide intentions and one's policy coverage can be rendered void by the insurance company.
- Insurance companies will modify the premium based on the kind of modification made.
Conclusion
Studies reveal that the insurer believes that a modified vehicle poses a greater risk than a car in its original state. These modifications are usually opted in by young drivers, who are considered to be more unsafe on the roads. More times than not, these upgraded parts demand a high price making it a higher liability for the insurers to cover.
Therefore, choose the modifications wisely and keep your motor insurance agent informed at all times. It is also prudent to ensure that you make an endorsement of the modifications in the policy without failing to avoid any trouble on a later date.
