4 Car Modifications That Will Increase Your Insurance Premiums
Insurance companies modify insurance premiums every few months depending on several factors, including changes in repair costs, losses from previous claims, or market forces. For example, insurance companies may revise their premiums to match an increase in spare part prices. They may also adjust their premiums in response to their competitors' market offers.
However, insurance companies may adjust auto insurance premiums for reasons specific to individual car owners. Such adjustments align with the principles of utmost good faith and indemnity. The latter entails policyholders' ethical responsibility to inform their insurers of changes in their assets' valuation. This blog discusses 4 modifications that alter a car's value, necessitating insurance premium modifications.
1. Increasing Its Engine Capacity
Altering your vehicle's engine capacity and performance will likely increase your insurance premiums. In most cases, a higher engine capacity incurs extra charges in insurance premiums for various reasons. First, high-capacity engines cost more than low-capacity ones. Thus, installing a new engine increases your vehicle's value proportionately.
Second, altering your vehicle's engine to increase its performance increases the risk of accidents. Such risks are high when car owners hope to participate in races as a hobby. Insurers acknowledge they risk incurring high losses in case of an accident, hence increasing premiums.
2. Modifying Its Interior
Insurers may increase premiums for policyholders who alter their vehicle's interior; it may predispose a car to theft or vandalism. An example entails replacing your vehicle's music system worth a few hundred dollars with another worth $10,000. The new installation increases your vehicle's value and makes it a target for break-ins, necessitating higher premiums.
Reupholstering an old vehicle's interior by replacing its seats, dashboard, door handles, and seatbelts may also increase auto insurance premiums. The percentage increase varies depending on factors like the vehicle's age and depreciation. For example, replacing a seat on a month-old vehicle may not alter its value significantly. In contrast, such upgrades on a 10-year-old car with significant wear and tear may cost you additional money.
However, car owners should know that not every modification warrants informing your insurer. An example would be changing your seat covers; standard covers will not alter your vehicle's value unless you buy high-end covers that cost thousands of dollars.
3. Making It Disability-Friendly
Many car owners assume that insurers will not increase their premiums for disability-related car modifications, however, they do. Remember, insurance companies always take necessary steps to limit their financial implications should their clients have accidents. Thus, they will raise your premiums to cover the modifications; otherwise, you will not receive full coverage following an accident.
One reason why optimizing vehicles for wheelchairs increases insurance premiums is that the kits are often expensive. The modifications include pedal extenders, amputee rings, wheelchair ramps, and adjustable seats. Full optimizations may cost several tens of thousands of dollars, prompting insurers to increase their premiums proportionately.
4. Modifying Its Bodywork
Expect your insurer to increase your premiums should you modify your car's bodywork. Modifications like bonnet scoops, spoilers, wheel arches, and alloy rims will likely increase your insurance premiums considerably. The improvements increase your car's market valuation and risk of theft.
On the other hand, some modifications do not warrant modifying your insurance premiums. An example includes door edge protector strips that shield doors and bonnets against damage should you bang them. Such changes often cost a few dollars, thus having a negligible effect on your insurance premiums.
Owners who modify their vehicles should inform their insurers to ensure full coverage. Alternatively, car owners may consult The Policy Center for alternative policies that offer coverage at affordable premiums. Please schedule an appointment with one of our representatives today!
