A lot of consumers modify their cars without realizing that doing so may cause their insurance rates to increase. Or worse, they neglect to inform their insurers about various customizations, and discover when they file a claim that expensive parts and systems are not covered.

To be sure, not all vehicle modifications will prompt your insurer to raise your premiums. Much depends on the type of enhancement, and how it affects the performance of your car. For example, adding a rear spoiler, moon roof, or accent lights along the bottom of your vehicle is unlikely to attract your insurance company’s attention. On the other hand, a modified engine that provides a substantial boost in horsepower is likely to do so.

Below, we’ll explain how your insurer decides whether to raise your rates when you modify your vehicle. By understanding their perspective, you can make better decisions regarding the upgrades you choose.

What To Do After Customizing Your Car

Whenever you enhance your vehicle, even if merely adding new stereo equipment, disclose the enhancement to your insurance company. There are two reasons. First, a modification may increase the value of your car. This increase in value should be reflected on your policy. If you are involved in an accident during which your vehicle is totaled, your car, including the upgrade, will be covered.

The second reason to inform your insurer is because an upgrade may suggest a higher risk. For example, if you add a turbo kit to your Acura Integra, your insurance company could argue that you intend to race. If you get into an accident, not only might they decline to cover the turbo kit, but they could refuse to cover other damage due to nondisclosure.

Even if you think a particular modification will matter little to your insurer, inform them and let them decide. Better yet, call them beforehand, and ask whether the upgrade or add-on will affect your rates.

Why Modified Vehicles May Be Considered “High-Risk”

Sometimes, car customizations can move a driver from a normal risk class into the “high risk” category, even if he or she has a clean driving record. If this occurs, the driver’s insurance rates will rise.

This depends largely on the insurance company and the type of enhancement. For instance, new stereo components, a bed liner for a pickup, and high-end wheels and tires are unlikely to prompt a shift (though racing tires may do so). However, a high-horsepower engine, modified exhaust system, and turbo kit all improve the performance of the car. Each might bump the driver to a high risk class.

Once informed of the upgrades, the driver’s insurer will reevaluate the risk of future claims. Does the driver intend to race? Is he or she more likely to be involved in an accident? Will the vehicle be a more attractive target for car thieves? If any of these circumstances are likely, the insurer will increase the policyholder’s rates to reflect the new level of risk.

Specialty Insurers And Policy Exclusions

Insurance companies will occasionally decline coverage for policyholders who own vehicles with significant upgrades. It’s not uncommon for car enthusiasts to purchase older vehicles, and then spend tens of thousands of dollars enhancing them. To the insurer, the modified car may present too high a risk.

There are a couple possible solutions. First, the driver may be required to seek coverage from a specialty auto insurer. Because specialty insurers cover performance and collector cars, the rates are often higher than those attached to a “typical” policy. The second option is that the policyholder’s insurance company may append his or her policy with exclusions.

For example, the driver’s car may be covered as long as it is driven on normal roads, but coverage ends the moment it is on a race track. Or, damages that result from any type of racing, even that which occurs on normal roads, may not be covered.

Do Your Due Diligence Beforehand

The best way to manage your premiums when considering any type of customization to your vehicle is to call your insurance company ahead of time. Ask how the enhancements will affect your policy. In many cases, you can add endorsements to your current coverages to cover upgraded parts and systems that are more expensive than stock components.

The most important thing to remember is that every insurance company handles modified vehicles differently. If your current insurer is unable to offer reasonably-priced coverages, look elsewhere. You may find lower rates at another company.

It is difficult to guess how any modification might affect your insurance rates, and best to shop locally. If you’re after car insurance Leamington you should probably shop there. If you’ve got kids, you’ll appreciate the understanding you’ll get from a local broker who understands.