On the Arrive Alive website we find important insights on vehicle modifications in a section titled “Vehicle Modifications, Alterations and Road Safety”
There may be many reasons why a vehicle owner might decide to have his vehicle “modified”, but without the necessary attention to his car insurance policy the money spent might well be lost forever!
We decided to approach our friends from MiWay to gain some insights on how vehicle modifications might affect the car insurance cover provided by a car insurer:
What is your policy with regards to modifications/alterations on a vehicle and car insurance offered?
All modification/alterations/additions to vehicles need to be disclosed to ensure adequate and accurate cover. The value a vehicle is covered for is what would ideally be paid out in a claim and thus all necessary factors need to be considered to be able to work out the correct value of the vehicle. Where the modifications were done to enhance the speed performance of a vehicle i.e. a chip was added to vehicle etc., cover may be declined.
Would any modifications increase or decrease the market value of the vehicle and be taken into account?
Yes, modifications may impact the overall value a vehicle, as well as the risk associated with the vehicle. This is why we require such changes to be declared so that it can be taken into account and to calculate the correct premium.
Would a client have to inform the company of any modifications made on the vehicle?
Yes, any added extras (features that do not come standard with the specific model from the factory production line) need to be disclosed in order for a proper risk assessment to be done.
If an insured vehicle is in a road crash and it is found by the assessor that there were modifications – would that have an effect on the car insurance claim?
Yes, undeclared modifications could affect a claim, depending on the modification. If we would not have accepted the risk on the cover because of the modifications, then we will not pay the claim. The policy will be declared void and premium received would be refunded. If we were informed of the modifications and accepted the risk, then the claim will not be declined on the basis of the modifications.
Would you insure a vehicle where modifications are aimed at boosting performance?
It depends on the purpose and the effects of the modifications – certain modifications might only play a role in fuel consumption etc. We specifically do not want to cover where enhancements were made to increase acceleration/speed.