What To Know & How To Insure Your Modified Car
The possibilities to modify your car today are endless, with an ever-expanding availability of parts and a wealth of information available online. From upgrading your suspension to your tires, brakes, turbo, or even tuning your vehicle, there are options for everyone. There is no better time to upgrade your daily driver and have some fun on the way to work.
While caught up in all the excitement of planning, purchasing, and installing your parts, you may have forgotten to let your insurance company know your plans. Yes, those damn insurance companies are at it again and ruining all your fun. Although this might not be what you want to hear, it is essential to know before you start your journey of upgrading your ride.
Most insurance companies have a very low tolerance for modifications unless they come directly from the manufacturer. The real reason is that companies don't have enough data on how each modification affects the car or if the modification was correctly installed. It is difficult to price the insurance for each modified car accurately. Insurance companies today rely on vast amounts of data to give you a specific price for your car, which takes into account the cost to repair or replace each part of the vehicle, and also includes what type of driver would typically drive that car. They can break down the average costs for each claim into precise numbers, and they can use this to have a very accurate idea of how likely you are to have an accident and how much that accident will cost. Once you modify your car, all that information is now useless, and most insurers don't have enough data to price your insurance correctly.
Part of the issue is the number of modifications out there for every car. If you take any vehicle that came with the 2JZ engine, for example, you can push the engine to 500 HP or more, but stock it typically came with just over 200 HP. A stock Supra most likely can't handle the increased horsepower without upgrading the suspension, stiffening the body, upgrading the brakes, etc. With such variability of upgrades available, it costs insurers a lot of time and money to create rules and rates flexible enough to rate your modded car properly. Even though the market for all these upgrades is quite large today, your typical insurance company does not insure enough of them to make it worth their while. You can think of insurance as a bucket of money that everyone pays into. If there are not enough customers putting money into the bucket, the insurer would have to subsidize it with funds from the rest of their clients, which wouldn't be fair to the other clients.
Well, the first step would be to call your insurance company. They may be OK with the modifications you want to make, or they may require a mechanic to sign off on the mods, or they might flat out say no. All are options you have to be prepared for, but it is best to call them before you start buying parts so you can factor insurance into your total cost. After all, if you can't insure your car, you can't drive it on the road. If your vehicle is a classic or antique, companies such as Hagerty will insure modified cars, depending on which modifications you make.
The other consideration is if you want to take your car to the track. Very few companies will want to insure your car if you do this, so be sure to find a company that will before you go to the track. Your basic auto insurance excludes any racing, and your company will cancel your policy if they find out you have been racing - and yes, this includes street racing.
If you don't tell your insurance company that your car is modified, then they have the right to cancel your insurance or deny a claim, as you have changed what they are insuring. This could lead to massive lawsuits after an accident, and your insurance company will not be responsible for defending you.
So what counts as a modification?
Typically anything that changes the performance of your car. Insurers accept any OEM or a comparable replacement of parts on your car as that is general maintenance required by every vehicle, such as replacing your brake pads and rotors, or tires after they are worn. The insurance industry typically isn't concerned if you install a higher quality, longer-lasting part from a well-known brand name, as long as that part isn't considered a performance or racing part. Let's be honest if you are thinking of modifying your car, then you already know the difference.
What if I don't carry physical damage coverage?
Although physical damage coverage, including collision and comprehensive, is optional, the company can still deny a claim even if you are not at fault. The reason they can deny your claim is that you misrepresented your car that they are insuring, and they may not have insured the car if you had told them of the modifications beforehand.
How do I obtain insurance for a car that I take to the track?
There are companies out there, such as Track Day Insurance - https://www.trackdayinsurance.ca/ that provide single or multi-day insurance for your car while you are at the race track. You can also ask your broker if they can provide a quote for you.
If you have any questions regarding your insurance, please do not hesitate to call us at 905-623-4406, and our experienced brokers would be happy to help you with your insurance needs.