How Do Your Modifications to the Car Impact the Insurance Policy?

Buying your dream car is nothing short of an achievement. But, buying a new car comes with many responsibilities, one of which is getting insurance. Renowned car insurance companies in India like Tata AIG offer car insurance policies. But how to pick the right one?

Now that you own your dream car, you feel like giving it a personal touch in the form of modifications. You often think about putting fancy headlights or turbo engines in your car, and modifying those boring wheels with durable alloy wheels, isn’t it? It may be tempting to customise a car to improve its performance and appearance, but there is something we often overlook.

If you are thinking and trying to gauge the factors that can affect the cost of four-wheeler insurance, car modifications are one of the main reasons. Regardless of your age, vehicle type, driving experience, and gender, this factor can significantly affect your insurance coverage.

This article details the various vehicle modifications and how they influence insurance premiums.

What is Car Modification?

Modifications to a car are often made to improve the car’s performance and enhance its aesthetic appeal. “Car modification” conjures up images of fancy, bulky cars. But, on the other hand, if you like sci-fi, you might think of neon lights, deep turbo engine sounds, and wide tires.

However, modifications are just not limited to aesthetic changes and are just not confined to the exterior of a car. There may be numerous options to handpick from. Modifications range from performance improvement to design enhancement.

The term “modification” also includes additional options offered by car dealers. These add-ons can be added when you buy a new car, and you often don’t understand that you are paying for a modification to your new car. In many cases, a car insurance claim can be voided due to these modifications if your car has an accident or is stolen.

What Are the Modifications That Influence Your Car Premium?

Here are the types of modifications you can purchase and how they affect your car insurance plan.

  • Brakes and suspension modification: Modifications to the brakes and suspension can change the overall driving performance of the car and thus endanger the car’s safety, resulting in higher premiums.
  • Engine modification: Engine modifications to improve engine performance may heighten the risk of accidents. Accordingly, insurance companies are highly likely to view this as an increase in risk and reflect it in their premium hikes.
  • Anti-theft devices: Vehicles can be fitted with anti-theft devices approved by ARAI (Automotive Research Association of India. Insurance companies consider this a good thing because it increases theft protection and entitles policyholders to discounted premiums to their own-damage policy.
  • Cladding addition or bodywork: Any modifications that may affect vehicle performance, such as adding a new spoiler or exhaust system or modifying wheel rims, may result in insurance companies increasing premium costs.
  • Interior modification: The removal or installation of certain internal parts of a vehicle may impact the safety of driving the vehicle and may be reflected as an increase in the insurance premium charged by insurance companies.

What Modifications Do Not Influence Car Premiums?

Any modification somewhat affects the two-wheeler insurance premium. However, some changes will not affect your insurance premium negatively if you reduce the risk of an accident or theft. Insurance companies, for example, don’t consider parking sensors to be modifications. This is because it protects the vehicle from damage that can occur when parking in reverse.

Remember, there are two main types of auto insurance: a comprehensive car insurance policy and third-party liability insurance. Any of these modifications will only influence the comprehensive policy because it compensates for your own damage, that is, damage to your car.

Why Do Modifications Influence the Car Insurance Premium Rate?

An insurer evaluates two areas when assigning a car insurance policy:

  • Theft risk: Many performance-enhancing fixes make your car more likely to be stolen or broken into, affecting insurance premiums.
  • Accident risk: Many modifications, such as an engine change or sports kit, are considered to increase the risk of an auto accident and will likely require insurance companies to increase their premiums.


Not only is car modification expensive, but it also increases your vehicle’s insurance premium. It can be difficult to determine which changes will affect your premium. But you can freely use the online car insurance premium calculator to estimate how these changes will affect your premium. If you make these modifications after you buy car insurance, it is essential to inform your insurer so that you do face issues at the time of filing a claim for damage or theft of your car.

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