Can You Get Car Insurance for Modified Cars?

Yes, you can get car insurance for modified cars. Coverage is available for your modified car if the custom features and modifications are legal and disclosed to your insurer. Even if the  modifications to your car are legal, this does not mean your insurer will automatically cover them.

It's crucial to inform your provider about all changes you make to your vehicle, from high powered engine upgrades to cosmetic alterations such as spoilers. While this may mean higher insurance premiums, proper disclosure to your insurance company is essential, as each insurance company has different rules around what modifications they will accept. Depending on the modification/s, some insurers may refuse to cover your car.

Modifications are any alteration to your car’s standard engine, exhaust system, body,

interior, suspension, wheels or paintwork that changes the functionality, performance, security or value of the car from the manufacturer’s original design.

What modifications can affect your car insurance? Any change from the manufacturer’s standard specifications can impact your insurance, regardless of when they were done to your car.

Minor modifications or major changes like upgrading your car's engine are both considered modifications that need to be disclosed to your car insurer. Failure to disclose your modifications could lead to any claims not being accepted!

Any vehicle that has:

• Performance upgrades: Engine tuning, turbochargers, exhaust systems, wider tyres and suspension lifts.

• Aesthetic: Custom paint, vinyl wraps, non-standard alloy wheels, and body kits.

• Functional/Accessibility: Disability hand controls and wheelchair ramps.

Car insurance premiums are calculated using various factors that help an insurer understand risk, not just the vehicle's value. If you decide to improve your engine performance, for example, with a high powered turbo upgrade, it could alter its risk profile. Because this type of change could increase the chance of an accident, it may also increase the price of your insurance premium, or whether an insurer is willing to insure you.

If your vehicle is also a unique, new or expensive car, this could also increase your premium. Other aspects that may make your insurance more expensive include the cost to replace or repair your custom modifications, so it’s best to consider the price of these parts before modifying your car.

If you have any illegal modifications, including non-compliant suspension or the removal of catalytic converters, this could lead to a claim being denied, even if the modifications didn't cause the accident. Keep in mind that if it's illegal on the road, it's uninsurable.

When modifying your car, we recommend that you adhere to the Australian Government's Australian Design Rules (ADRs)[1] and the Vehicle Standards Bulletin 14[2], which sets national guidelines for vehicle laws and safety standards and can help you protect yourself and other drivers while on the roads.

When it comes to the agreed value vs the market value, these can be two completely different figures. Although the market value does take into account any listed non-standard accessories and modifications, it’s important to know that it may not reflect the full amount that has been spent on these additional parts. This is also true for ‘agreed value’ policies, so keep in mind you won’t be fully reimbursed for the full amount spent on modifying your car.

To ensure your car insurance covers a portion of your modifications, it could be worth setting an agreed value with your insurer. If you need to make a claim, then you have the security of knowing how much you will get in the event of a total loss.[3]

We also suggest that you take time to review your Insurance Certificate and make sure all vehicle modifications are listed and the insured value reflects your investment in the car.

If your insurer has agreed to cover your modifications, they are obligated to repair or replace them if they are damaged in an incident.

For those who wish to use their own specialist to repair their car, you can opt to add "Choice of Repairer" as an optional extra to nominate your preferred repairer.

Any parts installed for disability purposes, such as ramps, hand controls and hoists, are still considered modifications, so you are required to disclose these to your insurer.[4]

Although these are viewed differently compared to aesthetic or performance modifications, it's still important to advise your insurer of the new modifications to ensure all equipment is covered in the case of a total loss or if they are damaged in an incident. The best way to do this is to keep track and properly document the disability modifications you're adding to your car as you go.

To ensure your car modifications are covered, we recommend following the steps below:

Step 1: Ensure all modifications are compliant with Australian Design Rules.[1]

Step 2: Before you add modifications and accessories, check with your insurance provider to ensure they will cover the modifications. This may cause higher insurance costs for your car, but it will ensure a completely covered vehicle - modifications and all.

Step 3: Keep your receipts and valuations for all modifications that are added to your car.

Step 4: Double check your Insurance Certificate to make sure any modifications are listed on your policy.

Once you've correctly followed these few crucial steps, you can have added confidence that your car and its new modifications are insured.