How Car Modifications Affect The Price Of Your Insurance

2 min read By eCompareMo on June 7, 2016

Whether you want to upgrade your car for performance or pure aesthetics, accessorizing your vehicle can cost you a fortune.

Parts aren’t only expensive, you also have to invest in time and effort to make sure your car lasts longer even without its stock parts anymore. However, you may have a problem with your car insurance provider when you start to spruce up your ride, and it can get bumpy when you get into an accident and file for a claim. Here are the things you need to know before you start pimping your ride.

(Read: Ask An Expert: Which Car Insurance Is Best For Me?)

From the hood up

A nice car with modified body kits, shiny rims, and souped-up engine is a beauty to behold, sure. But in case of an accident, what happens next? Will insurance companies cover the aftermarket parts you installed to your vehicle? Or will the additional expenses you invested in your vehicle go up in flames?

Fortunately, car insurance providers are more than willing to include your modifications and accessories to your policy—provided that you declare them beforehand.

In an interview with Top Gear Philippines, Fortune General Insurance president and Philippine Insurers and Reinsurers Association spokesperson Michael Rellosa said that policyholders can get modifications, provided that they state it clearly upon getting the car insured.

“Any optional modification or enhancement to the vehicle and its amount should be communicated to the insurance company so that the mod can be included in the insurance policy,” Rellosa said. “If modifications were not communicated to the insurance company, they would be excluded from the coverage and only the standard accessories would be covered.”

What happens when you don’t declare your aftermarket parts? Simply put, more expenses and hassle on your part–as you have to shell out money from your own pocket and go spare parts-hunting yourself.

On the other hand, it could’ve been as simple as informing your insurer about these mods so they can update your policy as well as make adjustments to your premium. Remember, the more accessories you install, the higher your premium goes.

What about restrictions?

In other countries, the computation for the adjustments in your premium once the accessories enter the equation is different. Insurers overseas think that more accessories in the vehicle increase the chances of the car getting into accident or being stolen by thieves. However, the Philippine insurance market has a different view of this. To give clarification regarding the issue, we turned to our in-house expert.

(Read: Why It’s Important To Get A Car Insurance Now More Than Ever)

According to Cecilia Alforque, eCompareMo’s resident insurance expert, insurers don’t have limitations in terms of accessories, whether they’re performance or aesthetic modifications. “Usually, car accessories have their fair-market value and insurance providers base their adjustments on it. So, for instance, a fog lamp costs P6,000 and the car’s fair market value is P400,000. Once you declare the fog lamp as an accessory, the value of the car will become P406,000 and they will base the premium on that,” she says.

Since car insurers accept any insurance, she adds that policyholders should never forget to declare it since “they just accept your accessories regardless.”