How will Modifications Affect My Car Insurance?

Published On Feb 21, 2021 10:00 AM By InsuranceDekho

If you are someone who spends so much time in your car, in the form of modification, you are perhaps interested in adding a personalised feel to the car. The amount of car insurance premium you pay monthly will affect any modifications you make to the vehicle. When you change your car, it is best to think of the future costs that you will bear.

Modification implies something that has made your car look or function differently. Modified vehicles are known to carry higher risks than ordinary cars with respect to automobile insurance. Furthermore, the replaced/upgraded components could actually cost more than the car itself.

The word modification also comprises those additional features provided by the car dealer. These add-ons may be included in the purchasing of a new car where, as a customer, you do not know that you are paying for improvements to your new vehicle.


How Will Modification Affect Car Insurance?

A list of all car modifications that can affect your car insurance premium and that which do not have an effect:

Modification Affecting Car Insurance

Modifications Not Affecting Car Insurance

Changes made to the performance of the engine will raise the risk of an accident, which is why insurance firms take this as an enhanced risk and then charge a higher premium.

A policyholder is eligible for discounts on the policy's own-damage car insurance premium by installing Automotive Research Association of India (ARAI)- approved anti-theft devices in the car.

If a newly modified braking system damages the stability of the vehicle, the same would be expressed as an improved premium rate.

Often, the addition of stickers does not impact the current liability and risk of an insurance policy. Thus, those modifications should not lead to a change in insurance premiums.

In the event that the vehicle owner installs/uninstalls such interior components that impair driving safety, the premium amount will be raised by the insurance provider.

Also, AC installation, sound system, seat repair and other changes that do not face the risk of accidents and hence would not increase the policy premium.

If the policyholder installs a new bumper, exhaust system, modifies the tire rim or has made some other change that may impact the efficiency of the vehicle, the policy premium can be increased by the insurance provider.


It is a harmless modification to change the car's body paint, and insurance providers usually do not charge any additional premium for this. However, changing the paint of your car that entirely changes your car's appearance is a proper modification for a higher premium. You may fully transform the design/appearance of the car by painting complex/unique racing designs and striking patterns.


Why Informing Your Insurance Provider About Car Modifications Is Required?

As the policyholder, all the adjustments that you make in your vehicle must be disclosed. If you are purchasing a second-hand car and are not sure of the work that may have been done, it is best to have your car inspected by a mechanic. When your vehicle has been modified, and if you have not made the changes yourself, you must report this to the insurer. It is also vital to inform your car insurance provider whenever you make further modifications/changes into your car.

Bottom Line

It is necessary to tell the insurance provider of the modifications you are making to your car. This will facilitate the insured in evaluating and changing the insurance premium appropriately. It is best not to hide or wait until the last moment to notify the insurance company about such changes, as at the time of processing the claim, this can save you from unnecessary hassle.

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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