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5 tips for insuring your souped-up car

Rachel Hartman

Want to add racing seats, oversize tires or a spoiler to your car? Watch out: Those changes may be just the tip of the muffler when it comes to modifying your vehicle.

“It’s called a mod bug,” says Nick Roshon, owner of Nick’s Car Blog, who put more than $6,500 in parts into his 2006 Audi A4. “Once you get started, you can’t stop.”

In February 2012, Roshon traded in his A4 for a 2006 Audi S4. Since then, he’s already made various modifications, including changing the car’s wheels and suspension. “It’s a fun but expensive hobby,” he says.

Car insurance companies take vehicle modifications into account when setting rates. Determining how much you’ve put into the vehicle, and how to add those modifications to your car insurance policy, will help make sure the extra parts are covered.

Modifications and auto insurance

Auto enthusiasts often add products to their vehicle to boost its look – especially a vehicle they’re proud to own, says Jhan Dolphin, owner of a marketing firm in the automotive industry.

There are long lists of products you can add to vehicles like Jeeps and Hummers. On the other hand, “you don’t see as many products for minivans,” Dolphin says.

Regardless of your vehicle model, here are five guidelines to help make sure its modifications are covered under your auto insurance policy.

1. Some coverage may be included.

Just because you add some spiffy wheels to your car doesn’t mean the insurance premium will skyrocket. In fact, the majority of insurance companies include a small amount of coverage – such as $500 – for items that weren’t installed at the factory, says Billy Van Jura, an insurance broker in New York. This small amount usually will be included when you buy comprehensive or collision coverage for your car.

Say you purchase a 2006 Cadillac and then add $500 worth of equipment. When you take out a car insurance policy that has comprehensive or collision coverage, the policy automatically would cover those extra features.

Some car insurance companies will offer more than $500 of coverage for modifications. For example, in most states Progressive provides $1,000 of “custom parts and equipment/accessory” coverage if you buy comprehensive or collision coverage. This covers changes made to your vehicle after it has left the manufacturer, such as adding on different tires, a new roof or leather seats.

2. You may be able to buy more.

If you add more than $1,000 worth of equipment to your car, you can buy additional coverage – for example, with Progressive you tack on coverage valued at $4,000. Say you put different wheels on your car, add special tires and have it painted. The total work on the car equals $5,000. If you have comprehensive or collision coverage with Progressive, you’ll have the automatic $1,000 of coverage for the add-ons. You then can buy $4,000 worth of the same type of coverage. That will give you $5,000 of coverage, and your vehicle’s modifications will be insured.

How much does it cost to buy this extra coverage? Your rate will vary, depending on the company and your policy. On average, you can plan to pay about $50 for every $1,000 of modifications, Van Jura says. For instance, perhaps you put $3,000 of modifications on your car. To have those parts covered by your car insurance policy, you might have to an extra $150 a year.

3. You’ll need to notify your insurance company.

If you modify your vehicle, but don’t report it to the insurance company, there will be nothing officially recorded in your policy about the extra parts. If you get into a crash and the vehicle is damaged, “it’s unlikely that a claim would be paid on the modified parts,” says Andrew Schrage, co-owner of Money Crashers, a personal finance website.

Make sure you report any changes to your insurance company and include those changes in your policy. Van Jura recommends taking pictures and keeping receipts of the modifications. With this evidence, you’ll be able to receive coverage for repairs or new parts if your car is damaged.

4. Heavy modifications may lead to different insurance.

If you invest in substantial changes to your vehicle – $10,000 or more in modifications, for instance – your car insurance policy still may provide coverage for the extra parts.

For a heavily modified vehicle, another insurance option is go with a company that specializes in collectibles or modified vehicles, Schrage says. Hagerty is one such company: It offers protection for substantially changed vehicles, such as a car with a custom paint job valued at more than $10,000. With Hagerty, however, your vehicle must fit certain requirements to be insured. For example, it must not be used every day and has to be stored in a secure area.

5. You’ll need extra insurance for race day.

In addition to his Audi S4, Roshon owns another car that he occasionally uses for racing with friends. To cover the vehicle during track events, he purchases extra insurance. “You can get a supplemental policy for high performing driving events,” he says. The policy will cover the vehicle for up to a certain amount – such as $50,000 – during the time you’re racing it. 

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