While the vast majority of car owners are happy simply purchasing their vehicle and driving it as is, there is a huge subset of people who enjoy customizing their vehicles with all kinds of aftermarket upgrades and modifications. Whether it’s something as simple as a custom paint job or more complex, like a lift kit and tire upgrades, modifying a vehicle can significantly change not just its appearance and functionality, but its value as well.
Much like remodeling a bathroom will enhance the property value of your home, customizing your vehicle can enhance its value, which is a big reason why auto insurance coverage can be kind of tricky when it comes to vehicle modifications. If you’re planning on making changes to your vehicle, it’s important to look into your policy to determine if its coverage extends to these modifications, or if you’ll have to take other steps to ensure your vehicle is fully covered.
How does auto insurance typically handle vehicle modifications?
Speaking in terms of most standard auto insurance policies, coverage focuses on the factory condition of the vehicle. In other words, any modifications you make to the vehicle will likely not be covered in the event of damage or loss, unless they’re added to your policy in some way. Here’s a look at some common types of coverage and how they interact with vehicle modifications:
- Comprehensive & Collision Insurance
- Collision insurance protects your vehicle from any damage caused in the event of such an accident, but this coverage will only extend to factory-installed parts so any damage to your modifications will not be covered.
- Likewise, comprehensive insurance will protect your vehicle from any damages unrelated to collision accidents, including things like theft or vandalism, but once again modifications likely won’t be included in coverage.
- Liability Coverage
- Non-cosmetic modifications like upgrading your brakes or suspension system, or even adjusting the external lighting of your vehicle, can have an impact on the safety of your vehicle. Insurers are able to assess whether these modifications increase the risk of an accident, and therefore may deny any claims.
- Custom Parts & Equipment Coverage
- Depending on who your policy is with, some insurers will offer Custom Parts & Equipment Coverage, which is an optional endorsement you can add to your policy.
- This endorsement, called CPE for short, can extend your coverage to aftermarket customizations and vehicle modifications, as long as you have documentation and proof of the value added for each component.
- Most CPE endorsements will have a coverage limit, so even with this added coverage the total cost of your vehicle modifications may not be covered.
What happens if I don’t disclose vehicle modifications?
It’s incredibly important to keep your insurance provider aware of any modifications you make to your vehicle, because failing to do so can lead to coverage disputes or even give your insurer grounds for policy cancellations. For example, if your vehicle is damaged and they discover that modifications were not included in the policy, they might only pay for the factory-equivalent parts, which would leave you responsible for the difference — or, they could take things a step further, and deny the claim in its entirety if they determine the changes made the vehicle riskier.
If you’ve made some cosmetic changes, supplemental coverage and endorsements like those we’ve discussed above might be enough. But there are options out there for those owners who heavily modify their vehicle, such as Stated Amount Coverage. Be sure to keep all your options in mind, but most importantly keep your provider aware of any and all modifications you make to your vehicle to ensure that you aren’t on the hook for more than you bargained for in the event of a collision or other accident. Be sure to give us a call if you have any questions or would like to inquire about a new policy.
