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How Car Modifications Affect Car Insurance Premiums?

Written by Sharad Bajaj
Updated On Oct 14, 20232 min read
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Know which car modifications affect your car insurance premium and which do not.

Getting their car modified is a desire of many car owners. Modifications are generally done to enhance the aesthetic sense of a car as well as to its boost its efficiency. But have you ever wondered if modifications affect your car insurance policy premium? And if they do, then how? This article aims to answer all your questions related to car modifications and its insurance.

First off, Why Modifications Affect Car Insurance Policy?

Modifications can be done to tweak both a car’s looks as well as its performance. For example, if a car modification adopted by you results into a compromise in car’s security, then the car’s vulnerability to get stolen increases and thus, a car insurance company will charge you a higher premium that it would have charged you before the modification.

Which Modifications Affect and Which Modifications Do Not Affect Car Insurance Premiums?

Below is an exhaustive list of all car modifications which have and which do not have an effect on your car insurance premium:

Modifications Affecting Car Insurance Policy Premiums

Modifications Not Affecting Car Insurance Policy Premiums

Engine Modifications

Modifications done to tune engine’s performance can increase the risk of an accident and hence insurance companies take this as an increased liability and subsequently charge a hiked premium.

Paint Work

Changing the car’s body paint is a harmless modification and hence insurance companies do not charge any extra premium for this.

Brake Modifications

If a newly modified braking system compromises with the car’s safety then the same will be reflected as an increased premium cost.

Applying Stickers

Applying stickers also does not affect the existing liability and risk undertaken by an insurance company. Thus, such modifications do not result in a change in policy premiums.

Interior Features

In case, the car owner installs or uninstalls some interior components which affect the driving safety, then the insurance company may increase the premium amount.

No-risk Bearing Installations

Installation of AC, sound system, replacement of seats and all such modifications that do not pose any risk of accidents will also not increase policy premium.

Bodywork/Addition of Cladding

If the policyholder adds a new spoiler, exhaust system, modified the wheel rim or has done any such modification that may tweak the car’s performance then an insurance company may increase the policy premium.

 

Installation of Automotive Research Association of India (ARAI) Approved Anti-theft Devices

Installation of ARAI-approved anti-theft devices in the car makes a policyholder eligible for discounts on own-damage car insurance premium of the policy.

 

Car owners must disclose modifications done to their car at the time of policy purchase as any such non-disclosure can result in a claim rejection at the time of a claim settlement.

For further reading:

7 Factors that Affect Car Insurance Premium

How Can I Reduce My Car Insurance Premium?

Disclaimer: This article is issued in general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

Disclaimer

This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
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Written by Sharad Bajaj
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 Sharad is an insurance industry veteran who has managed motor insurance products for over a decade. He helped set up and scale the motor insurance vertical for a leading insurance company in his previous stint. In his spare time, Sharad likes to read and be in tune with nature.

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