How car modifications can affect your auto insurance

Crawford Frazer
It makes sense that your car insurance premium is linked to the cost of the car. After all, if you get into an accident, your insurance company needs a value to determine the compensation for the damages. Generally speaking, this is why older cars cost less to insure: The premium is related to the car's depreciating value.
But what happens if you modify your car with a top-of-the-line stereo system and tinted windows? Expensive modifications can make your car worth more than the insurance company realizes -- which is why you need to let the company know.
The cost of upgrades
How much cost is added to your monthly auto insurance premium if you get a custom paint job? What about an upgrade to your engine to make the car faster? The answer: It depends. Three areas to consider are:
  1. Minor upgrades: If you can keep the cost of modifications to your car minimal, your existing premium might cover these upgrades. For example, Progressive Insurance covers up to $1,000 worth of certain custom parts in its comprehensive or collision coverage. However, you do need to let your insurer know about these modifications before an accident or vandalism if you want them to be covered.
  2. More substantial upgrades (non-performance-enhancing): That custom stereo sounds great with the volume up on a summer day, but it also makes your car a target for thieves. And when this kind of modification is expensive, your insurer probably will raise your premium accordingly. For example, auto insurance provider Country Financial offers endorsements (changes attached to the insurance policy) to cover stereo equipment beyond what originally was installed.
  3. Performance-enhancing upgrades: Such modifications run the gamut from performance mufflers to turbo kits to low riders. When the performance of your car changes, your insurer usually will evaluate the car in an entirely new class. You may even need a new policy altogether.
Policies for your upgrades
While those general guidelines often apply, your particular insurance company may have a policy that specifically covers modifications. For instance, Progressive Insurance offers a custom parts and equipment policy that adds up to $5,000 in coverage for customized extras (such as special tires, chrome engine accessories and leather seats). But be sure to note the previously cited rules what is covered. Progressive’s policy will cover a permanently installed DVD player, but won't cover a DVD player that isn't
Be proactive
You can do more than simply let your insurer know about modifications to your car. identifies ways to discuss modifications with your auto insurance company.
While a "street racer" with a souped-up engine may fit one profile, it's possible that your modifications fit in the "show car" category. Essentially, this kind of car is one with modifications meant strictly for auto shows. If you rarely drive the car and keep it safe in a garage, you may be able to convince your insurer to charge a lower premium than, say, for a car that's driven frequently at high speeds.
If your insurer charges more for your premium than you think it should, it may be time to look for a new policy -- or turn to an auto insurance company that specializes in custom cars.

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