Can Vehicle Modifications Affect My Insurance?

Sometimes a stock car just won’t do. There are times when you will want to make changes. Whether you want extra tinting on the windows, need a hitch to tow a trailer, or one of those mufflers that makes your car extra loud.  

Modifications can help you get the most out of your car.

But what about insurance? Can making changes to your car affect how much you pay in premiums? And can your insurance company refuse to pay a claim if they found out that you’ve made modifications? 

Let’s take a look at how vehicle modifications affect your car insurance. 

What makes up my car insurance rate?

What you pay for car insurance in Canada depends on several factors. The most significant, of course, is you. Things like how old you are, how much driving experience you have, where you live, how you use the car, and your history of tickets and accidents all influence how much you pay.

The other piece of the puzzle is your car. Insurance companies spend lots of time, money, and effort to figure out how likely a vehicle is to be involved in a claim. And how much you, the owner, need to pay according to that risk. Insurance companies use the CLEAR table to see the claims rate and type of claim on any vehicle—the higher percentage of claims, the more expensive your premiums. 

Finally, the amount of coverage you carry also makes a difference in how much you’ll pay. Generally speaking, the less coverage you have and the higher your deductible (the amount you pay out of pocket before insurance begins to pay) is, the less you’ll pay.

How do modifications factor into my car insurance rate?

Any changes you make to your car will reflect in the cost of repairing or replacing it if something goes wrong. Typically, modifications cost money over and above the vehicle’s price, thus increasing what your insurance company might have to pay should you make a claim.

Some modifications might also affect how your car drives and how safe it is. A vehicle with altered suspension will handle differently from its stock counterpart and could be at higher risk of being in a collision. Engine modifications that affect how powerful your car is another example of changes that could increase risk. 

Other modifications can make your vehicle more accessible to you, but they can be quite costly. Modifications like wheelchair lifts and ramps, pedal extensions and hand controls can enable you to drive despite a disability. Your insurer will want to build in the cost of replacing that equipment in your policy, and so will you. Note that as a person with a disability, you may be able to save on car insurance or access funding from the government and non-profit organizations to help offset these costs.

Other modifications are purely cosmetic. Changing the paint colour, getting aftermarket wheels and tires and replacing any interior components are unlikely to affect your risk factors where insurance is concerned.

Can my insurance refuse to pay out if I have modified my car?

In short, yes. Your car insurance provider can refuse to pay out a claim if you have made modifications to your car. But, as in most things insurance, it depends.  

Car insurance policies have a condition that says you must notify your insurer if there is a material change – something within your control that has a real and lasting effect on your risk level. If you’ve made significant modifications to your car and haven’t notified your insurer, your claim could be denied (or your coverage revoked) for failing to report that information.

Additionally, each province has laws outlining strict requirements for cars to which you must adhere to drive legally. These regulations cover everything from the number and colour of lights on your vehicle to safety features and minimum maintenance standards. If you make a modification to your car that isn’t street legal, your insurance company can refuse to pay a claim for that reason as well. 

How can I maintain my insurance coverage when modifying my car?

Contact your insurer or broker before you make any modifications to your vehicle. Tell them about your plans and ask how they will affect your policy and premium. Your insurance provider is legally required to give you sound advice and can tell you with certainty whether or not a particular modification is allowed under your policy. They can also give you a quote to tell you how much your premium will change after modifying. 

If you’ve already modified it, call your insurance company right away to avoid any unpleasant surprises later on.

Even when you have your insurer’s blessing, it’s still your responsibility to ensure any modifications you make to your car are both safe and legal to maintain your insurance coverage. Additionally, the police can give you a ticket or even tow your car if you’re driving with illegal mods.

Can car modifications lower my car insurance rate?

Yes – there are car modifications that can lower your insurance premiums. Some simple changes like aftermarket alarm systems, ignition immobilizers, and other safety upgrades can have a small but positive impact on your car insurance premium. For car insurance in Ontario, your insurer must give you a 3-5% discount if you install winter tires. 

What can I do if my insurance rate goes up?

If your car modification has an outsized impact on your insurance rates, there are a few things you can do.

First, you can remove the modification and restore the car to its stock form. Doing so maybe your only choice if your insurer refuses to provide you coverage or if the conversion isn’t legal.

If that’s not an option, consider shopping around for quotes from other insurance companies. You might find that another insurance provider will offer you the same coverage for a lower rate. In fact, car insurance rates change so much from year to year that you should still consider comparing car insurance quotes every year when your policy comes up for renewal – even if you’re happy with the amount you pay.

The bottom line

Modifying your car can be a great way to get the most out of your vehicle, but you need to remember to involve your insurance provider whenever you make a change. Talk to your insurance company or broker to make sure your modification won’t affect your insurance coverage, and be sure to shop around for the best rates any time you make a change to your car insurance. empowers Canadians to search smarter and save money by comparing mortgage rates, credit cards, high-interest savings accounts, chequing accounts, and insurance.



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