There are a lot of factors that come into play when answering the question of whether or not your car insurance rates will increase because of customizations, but the general consensus is “yes.”
Generally, modifications made to your vehicle are done so for one of three reasons: to make the car faster and perform better, to garner more attention from people, or to make the car more practical for you as the owner.
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Enhancing the overall performance of the car will likely cause insurance rates to rise. Aesthetic improvements might cause a small increase depending on the scope of the work, and making the car more practical probably will not cause an increase, unless it is an expensive modification like added an automatic wheelchair lift.
What kind of modifications will cause an increase?
The primary category of driver that makes modifications to their vehicles is young men, who already are considered high-risk drivers. The combination of a young man driving a customized and modified car will cause most insurance companies to either raise rates or drop coverage altogether.
Any type of modification that increases performance will most likely cause your insurance company to raise your rates. An increase in performance usually entails making the vehicle faster and more powerful, and a faster car is more likely to be in an accident or receive multiple moving violations.
A modification that is done to get more attention from onlookers will most likely not have a huge impact on car insurance rates. Examples of these types of modifications include tinting the windows or added alloy wheels.
Does making my car look better cause my rates to rise?
While aesthetically pleasing to the owner, certain modifications can cause car insurance rates to rise. Although the customization might not make the car faster or more powerful, it can make it stand out and become more attractive to potential car thieves.
In addition, replacement parts will always cost more if it is a customized part rather than an original manufacturer’s part, so insurance companies have to adjust their premiums to cover that possibility. Modifications such as redoing the interior, performing a custom paint pattern on the car, or tinting the windows will most likely result in a small rate increase.
All in all, depending on the specific modification, expect a possible rate increase since the car is now more appealing to potential thieves, but that increase should stay at approximately 10% or less.
The third and final way to customize a car is to make it more practical. For example, this might include adding a built-in DVD player in a minivan. While there is a cost associated with this customization, it generally will not raise the insurance rates because it only affects the individual who currently owns the vehicle.
A general rule of thumb is that if the customization increases the value of the car, the premium associated with the car will most likely increase as well.
The most important thing to remember is that it is best to ask your insurance company if customization of your car will cause your insurance premiums to rise. This should be done before any customization work is done.
If there is an increase, ask what it would be and remember that the increase is most likely over a six-month or 12-month period. In fact, you may be surprised that, depending on the insurance company, rates may not rise at all depending in the work that was done.
Most likely, there are some modifications and customizations that will not raise your rates. If your rates do rise, you always have the option of shopping for car insurance from another company.
Do I have to tell my insurance company about the modifications?
When you tell your insurance company that you are making a certain modification or customization to your car, there is the possibility that your insurance rates will rise.
If you choose not to tell your car insurance company about a modification, then your rate will not change. However, remember that if you do not report the modification it will not be covered in the case of a loss such as theft or an accident.
All in all, rates will most likely rise if you customize your car. It is best to contact your car insurance agent or customer service department to find out about any possible rate increase before you begin the customization.
And no matter what the modification is, you should always tell your insurance company about it. The increase in your monthly premium will be far less than having to redo the customization if it is not covered by your insurance.
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