Before we get to the gnarly truth, let’s first open with pleasant lie. You know that car modification that you finally found the funds, guts, and time to add to your vehicle? Well it will definitely not increase your auto insurance premium. Don’t even bother calling it in to your insurance agent in Dallas or Montreal or New Orleans. Just get in that car and hit the roads. Let’s stop here for a moment and face down an unpleasant truth.

The Unpleasant Truth about Modified Cars 

We love modified cars. There is something about the knowledge that our car is different than every other run-of-the-mill vehicle on the road that appeals to us. Unfortunately indulging in that desire is not without its consequences. Insurance agencies base their insurance premiums on the monetary worth of your car and the risk it will be to insure.

Car modifications often add value to your vehicle and make it more appealing to thieves, for that reason car modifications can and often do increase the auto insurance of the modified car.

Many car enthusiasts who discover this fact may be tempted to prevent this increase in their premium by failing to report the modification or outright lying about whether or not their car has been modified. If you find yourself tempted to omit or lie about a modification, READ THE NEXT SECTION FIRST.

The Unpleasant Truth about Failing to Report Modifications

For an individual who just spent thousands of dollars tricking out there car, an increased monthly premium can be an unneeded expense. You should be aware that the failure to inform your insurance company about the modification can be disastrous. Why? Your insurance is a contract. Your insurance company agrees to help you pay for damages, and injuries when your vehicle is involved in an accident. In return you agree to pay your monthly premium on time and provide honest information to the company.

By not informing your insurance agent about a modification that might change your car’s value, performance, or aesthetic appeal to thieves, you have broken the contract. Even if the breach of contract is the result of ignorance, you are still committing insurance fraud. Insurance fraud will lead you down one of two paths when you finally need to file an insurance claim:

  1. The company may decide to pay only for the value reported instead of the current value.
  2. The company may deny your claim. If you are particularly unlucky they may sue you for committing insurance fraud.

The point of insurance is to protect yourself financially when you are involved in a car accident. As a driver, you spend thousands of dollars a year on insurance. The decision to misrepresent your vehicle will mean that you will have spent thousands of dollars on an insurance plan that is invalid. The cost of not informing your company about a modification that will increase your insurance is far higher than an increase in your premium.

Ending Notes: Not all modifications need to be reported, but it is far safer to run the modification by your insurance agent. You should report all modifications that alter your car’s value, performance, aesthetic appeal to thieves, or changes the engine size. Your insurance agent will inform you how your insurance will be changed based on your modifications. 


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