How to Insure Your Modified Car and Avoid Costly Mistakes

Modding your car isn’t just about having the largest or biggest exhaust (okay in some cases, it might be that), it’s about standing out from the crowd and showing your unique take on your vehicle.

For gearheads, every tweak on your car is a little piece of your own personality and style. Whether you mod your car for the looks, sound or speed, when your pride and joy is rocking expensive aftermarket parts, insuring it can become very complicated.

Here’s what too many modded car owners get wrong about insurance, and how you can keep your custom ride covered for whatever the road (or track) throws your way.

Why Insurance Is Different for Modified Cars

Before diving into the pitfalls, it’s worth asking: why do mods even matter to insurance companies?

It’s because as you swap stock parts, remove old ones and add new ones, you change the risk profile of your car. That twin-scroll turbo or custom wrap isn’t just cool; it will affect the value, performance, and how your insurer assesses your ride from a risk perspective.

Modified car owners and young car owners alike often underestimate these shifts. Miss a step, and you might end up with a payout that doesn’t even cover your mods, or worse, no payout at all.

Confusing Your Coverage Options

It’s easy to confuse different kinds of coverage, especially when your car’s far from stock standard. Here’s a quick breakdown:

• Compulsory Third Party (CTP): Legally required in some countries, CTP insurance is for anyone driving or registering a car. It only covers injuries to others, not damage to cars, property, or your own ride.
• Third Party Property: Covers repair costs if you damage someone else’s property.
• Comprehensive Insurance: Best for modded rides, it covers damage to your car, others, theft, and (usually) declared modifications.

Many car owners think CTP covers everything, but it doesn’t! If your modded turbo hatch causes an accident, you could be responsible for thousands in repairs, unless you’ve got the right policy.

For more information, check out a CTP Insurance quote with NRMA Insurance and see what inclusions and cover options will suit you and your car mods to ensure that you are protected.

Not Declaring Mods (Yes, Even the Small Stuff)

Think your coilovers, aftermarket exhaust, or engine tune are “minor” upgrades to your car? Unfortunately, insurers will beg to differ.

If you fail to declare all the changes and modifications you’ve made to your car, you risk your policy being cancelled or claims being denied. Even cosmetic tweaks like body kits or custom lighting can matter for insurers, as some consider a car to be “modified” as anything not stock from the factory within reason.

If you tend to be forgetful or have a long list of modifications for your car, keep a list of everything to date. Take photos of your mods, show and store receipts from your purchases or service upgrades, and let your insurer know, up front, about what you are replacing and changing. While it might cost a few extra bucks to be covered for everything, it’s nothing compared to completely replacing pricey aftermarket parts out of pocket.

Assuming Mods Are Automatically Covered

A big myth among first-time modders is that “full coverage will take care of my upgrades, right?”. Actually, this is not always the case for most modded cars.

Many basic insurance policies only cover your car as it came from the factory. If your modded Subaru has a custom wrap or you just dropped $2,500 on new custom rims or wheels, you’ll need to spell that out in your policy and terms. If you don’t, the insurer will only pay for OEM replacements and not your additional mods.

If your current provider isn’t mod-friendly, consider switching to a specialist insurer who understands the value and fun of a tuned car.

Overlooking Legal Requirements

Roads across the globe have rules and regulations regarding what you can and cannot do with your car. Let’s say you love aggressive camber, dyed headlights, or exhausts that rattle windows. While these mods might be a dream upgrade for your car, if they aren’t legal or approved by your government or local authorities, you could be left uninsured after an accident, regardless of whose fault it is.

It is important to remember that:

• Illegal mods can nullify your insurance policy.
• Before fitting something new to always double-check state regulations.

For a quick compliance check, review government guidelines or ask your local car club or mechanic for insight. Having the most modded or unique car at your local meet-up shouldn’t leave you stuck with a hefty repair bill if things do go south.

Skipping Agreed Value Policies

After pouring time and money into sexy mods to your ride, the last thing you want is an insurer who values your pride and joy at base model pricing after a write-off. Options like policies that include market value may leave you out of pocket, especially on rare or highly modified builds.

If you want to avoid this, finding a policy that covers an agreed value means you and your insurer settle on what your car is truly worth, including all declared mods. A pro tip here is to keep documentation, photos, and receipts handy to back up your build’s real value.

Not Updating the Insurer After New Mods

It’s easy to forget to keep your insurer in the loop. The thrill and excitement of installing fresh injectors, that hissing blow-off valve, or finishing a widebody kit can overshadow the need to update your insurer or policy before taking your baby for a spin. But just remember that your policy only covers what’s on file.

Every time you bolt on a new part or change something substantial, remember to give your insurer an update. Habits like this will protect your investment and save you headaches if you ever have to lodge a claim with your insurer, ensuring you get as much money back as possible.

Simple Steps to Get Your Modded Car Properly Insured

So with all of our common mistakes covered, are you ready to make sure your ride is protected? As a guide, you can follow this checklist:

• List every modification: cosmetic, performance, even small tweaks.
• Gather proof: receipts, photos, dyno sheets.
• Consult your insurer: ask for specifics on coverage and exclusions.
• Check government regs: make sure mods are street-legal in your state.
• Update regularly: notify your insurer after every big change.
• Choose an agreed value policy: when possible, to reflect your car’s true worth.
• Explore track/event cover: if you hit more than just public roads.
• Compare insurers: find one that understands car culture.

Find An Insurer For Your Situation

No two builds are the same, and your insurance strategy shouldn’t be, either. Declare everything, stay legal, and remember: the right coverage turns your hard work from a high-risk gamble to pure automotive enjoyment.