Modified car insurance

Range of modified vehicles

Had some work done on your car? Get specialist car insurance for your tailored vehicle.

A modified car is one that has had changes made to it by anyone other than the manufacturer and can include things from a simple window tint, to something more complex like petrol turbo. In many cases, regular car insurance will actually cover modifications. The only time you might have to look at a specialist insurer is if you've got a car that looks like it belongs more in Fast and the Furious than on the streets.

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What car modifications are covered by insurance?

When looking for modified or unique car insurance, you’ll need to shop around, as the items covered vary with each provider.

Modifications that are normally covered by most insurers include:

  • Alloy wheels
  • Bicycle racks
  • Bull bars
  • CD stackers
  • Chrome exhaust systems
  • Driving lights
  • Leather seats
  • Reversing cameras
  • Roof racks
  • Tow bars
  • Sunroofs

Modifications typically not covered by mainstream insurers include:

  • Custom paint work
  • Roll bars or roll cages
  • Racing harnesses
  • Nitro or hydrogen fuel equipped engines
  • Turbo or supercharged engines

What type of insurance do I need?

There are four main types of car insurance in Australia:

Whether your vehicle has modifications or not, everyone needs at least two of these types of insurance (CTP plus third party or comprehensive).

Most insurers offer these four types of cover, but many do not cover a range of modifications. In such circumstances you would have to find a specialist insurer and take out one of the following forms of cover:

  • Regular use. Cover for modified vehicles that are used every day for personal or business use.
  • Recreational use. Cover for modified cars not used for regular everyday driving, but still driven occasionally for recreational use.
  • Limited recreational use. Cover for modified vehicles that are not driven more than 60 days or 5,000 kilometres a year.
  • Club/concessional use. Cover for modified cars that are registered under a club or concessional scheme.
  • Restoration/laid up. Cover for unregistered vehicles being restored, provided they are securely garaged.

Who offers insurance for modified cars?

The following is a list of insurance companies who offer modified car insurance for exotic or historical vehicles in Australia.

  • NRMA Car Insurance. Covers a range of modifications and also offers specialist insurance for vintage and classic cars.
  • Shannons Car Insurance. Provides specialist insurance for the motoring enthusiast, including limited usage cover and restoration/laid up cover.
  • Dawes Car Insurance. Offers cover for a range of exotic, classic, prestige, racing and high value vehicles, but only through a broker.
  • Enthusiast Car Insurance. Provides insurance for all legal modifications with engineering approvals, plus cover for classic, vintage, prestige and historic vehicles.
  • Ryno Car Insurance. Insurance for classic, prestige and vintage vehicles, including motorcycles and caravans.
  • Lumley Car Insurance. Provides cover for vintage, veteran, classic and modern-classic vehicles, including motorcycles.
  • Youi Car Insurance. Offers tailored insurance, including cover for after-market accessories and modifications made to improve performance and handling.
  • RAA Car Insurance. Offers Hard to Place (H2P) insurance for modified and imported vehicles.
  • TCIS Car Insurance. Provides specialist cover for 4WD and camping equipment, including off road cover and cover for unlimited legal 4WD modifications.

When can specialist car insurance help?

Most mainstream insurers shy away from performance enhancing modifications, so if your vehicle has other modifications, particularly to the engine, chassis or suspension, you may need to approach a specialist insurer for cover.

They are more willing to insure vehicles of motoring enthusiasts, and can appreciate that people take good care of these cars and invest a lot of time and money in them.

Unique car insurance

Specialist insurers are often able to cover unique car insurance to cover even the most unlikely modifications by adding substantially to the excess the insured must pay. This helps to share some of the risk and reduce the likelihood of a claim. Specialist insurers also charge more in relation to the power of a vehicle. If you modify your car to make it 20% more powerful, you can expect to pay at least 20% more for your insurance premium.

However, even if you install modifications to increase safety, this will not necessarily lower premiums as the value added by these must also be factored into the costs.

Specialised insurance for modified classic cars

Specialists are particularly good at taking care of modified classic cars. This is because they can more accurately value vintage vehicles for agreed value, not just market value, while also having a good understanding of car modifications and a modded car enthusiast's needs.

For example, they readily accommodate classic cars, which might only get driven a week out of every month, by offering flexible lay up periods. Almost all of them let you choose your own mechanic, retain salvage, and flexibly cover classic car modifications that would cause a headache for any mainstream insurance company.

Should I use modified car agreed value or market value?

When you looking for modified car insurance you'll have to decide on whether you want market or agreed value cover. In most cases, it will probably be best to go for an agreed value policy as you might end up losing money come claim time if you opt for market value.

  • Market value. A market value policy pays you the car’s current market value, subject to depreciation, at the time of a claim. The replacement value of the car fluctuates with market conditions. A modified car insured under market value will almost always be underinsured, and not covered for its actual value. Market value is rarely used for modified or classic cars.
  • Agreed value. Agreed value is how much you and your insurer agree the car is worth. This number is locked in at the time of purchase, and can only be changed at certain times. This is especially useful for heavily modified or classic cars, but generally costs more. Agreed value is almost always used for modified or classic cars.

Is it possible to get low cost cover for modified cars?

Depends. How cool is your car? Like any car insurance policy, there are a lot of ways to reduce the cost of your premiums when buying modified car insurance. These include:

  • lil banditDriving a less expensive, less powerful vehicle
  • Nominating drivers, which can earn you a discount
  • Restricting the age and number of drivers
  • Choosing a Pay As You Drive option
  • Increasing your excess
  • Adding security such as a car alarm or immobiliser
  • Packaging your insurances with one provider for a loyalty discount
  • Shopping around for the a No Claims Bonus discount
  • Insuring for market value rather than agreed value
  • Buying online to get a discount (up to 20%).

Insurance rules for modified cars

  • Is your modification legal? Naturally all modifications made to your car must be street-legal, otherwise no insurer is even going to look at you. Also, if you are stopped by the police with illegal modifications, you might face a fine and have your vehicle de-licensed.
  • Was your modification approved? In Australia, modifications must be approved by the motor vehicle licensing department in the state or territory you reside in. They must comply with Australian Design Rules, various road traffic rules and regulations and also with the National Code of Practice for Light Vehicle Construction and Modification (NCOP).
  • Do I need to tell my insurer if I make modifications to my car? Yes. If you don’t tell your insurer, they can reject your claims and cancel your policy. If your vehicle is under warranty and you don’t tell the insurer, you may void the warranty entirely. And if you don’t tell the licensing authorities and your modification turns out to be illegal, you could receive a defect notice and a substantial fine and have your vehicle de-licensed or impounded.

Modifications which are typically permitted include:

  • Additional lighting
  • Air shock absorbers
  • Alarm systems
  • Radio and stereo systems
  • Roof racks
  • Single tone air horns
  • Stabiliser bars

Modifications which are typically not permitted include:

  • Dark window tinting
  • Loud exhaust systems
  • Changes to the engine that do not fit the legal standard
  • Illegal changes to the chassis
  • Noncompliant changes to the tyres
  • Changes to the suspension that do not comply with legal standards.

How modifications affect the cost of insurance

One of the main reasons why insurers charge substantially more for custom modifications and unique cars, or refuse to cover them at all, is because such modifications unpredictably increase the value of the vehicle. Unlike standard parts which cost a set price to replace in the event of an accident, custom parts cost more to replace and so insurers charge more to cover them.

The more extensive and expensive the modifications, the more you can expect to pay to insure them. The cost of replacing them is huge and therefore, so is the cost of insuring them.

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