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Car Insurance for a Modified Car
Car Insurance for a Modified Car
Written by
Kervin Mathew
Edited by
Laura Crowden
Reviewed by
Toby HagonCompare car insurance policies the easy way
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How can car modifications impact car insurance?
Long story short
Modifications can hike your premiums
Altering your car’s performance or appearance can lead to higher insurance costs due to increased theft risk and repair expenses.
Disability modifications may get support
If you modify your car for accessibility, state transport authorities might help cover the costs, potentially easing the financial burden.
Undeclared mods can void your insurance
Keep your insurer in the know about modifications or you might have to deal with your claims being denied in the case of an accident.
Heavily modified cars may need specialist insurers
Vehicles with modifications meant for racing or off-roading may require insurers who specialise in modified cars to ensure adequate protection.
How can car modifications impact car insurance?
It may be stating the obvious, but there are generally two main reasons you might want to modify a car: to make it look better or perform better.
To insurers, this can sometimes mean there is a greater risk of your car being stolen, or a greater risk of you having an accident. It also means repair or replacement costs could be higher. And with these higher risks, you could well end up paying higher premiums.
However, a less obvious reason to modify your car may be a result of having mobility issues or living with a disability.
For this reason, there are ways that your state or territory’s transport authority can help you cover the costs of necessary car modifications too, such as via the Transport Accident Commission in Victoria.1For more information, see Transport Accident Commission – Driving and vehicle modifications
What counts as a modification?
Whenever you make additions to improve your car’s performance or appearance, or to make it more accessible beyond standard inclusions, it’s usually classified as a modification. That could include, but is not limited to, the features listed below:
| For drivers seeking performance or appearance upgrades | For drivers living with a disability or mobility issues |
| Spoilers (including wings and side skirts) or bullbars | Wheelchair accessible conversion |
| Custom paint jobs and/or window tinting | Hand controls |
| Driving lights, LED light bars or high performance stereos | Loading devices |
| Alloy wheels and/or wider tyres | Major changes to the body of the vehicle |
| Sunroofs | Steering aids |
| Higher performance brakes, upgraded suspension or aftermarket exhausts | Left-foot accelerator |
| Sport seats | Extended mirrors |
| Performance modifications including turbos, superchargers or modified software | Additional mirrors |
There’s also the question of what’s the difference between a modification and an accessory.
- A modification alters or replaces any standard manufacturer components in your car and changes its safety, performance and appearance in the bargain.
- An accessory does not alter the structure of your car, nor does it enhance its performance – think manufacturer-approved roof racks or tow bars.
If you make any changes or modifications to your vehicle, it’s important to notify your insurer to ensure your vehicle is covered. This is because some modifications may impact an insurer’s decision to cover you.
There’s a good chance your claim may be denied if your car has illegal modifications.
Helpful tip:
Remember that a modification may be legal in your state or territory but may not be legal when you cross into another state or territory. It’s something to keep in mind if you are planning some big trips.
Toby Hagon
Motoring Journalist
What car modifications are illegal in Australia?
Some car modifications are illegal. Changes to wheels, tyres and suspension systems, for example, are heavily regulated. That doesn’t mean you can’t add aftermarket components, but you need to ensure they are legal.
Think twice before you decide to go with illegal modifications such as:
- lowering your vehicle by more than a third its standard height
- uncertified lift kits that raise your car more than 50mm
- tinted windows that block more than 35% of light from getting through
- tyres with a diameter of more than 7% of the original factory-fitted ones
- new tyres or tyre combinations that are non-compliant with the car manufacturer’s load-carrying specs
- an exhaust system that exceeds 90 decibels or mods such as EGR components that can affect your vehicles emissions
- neon lights under your car or nitrous oxide (NOS) systems
- ultra-bright headlights or headlight kits
What is classed as illegal can differ from state to state, so be sure to check with your state or territory’s relevant transport authority before you make any modifications.
Do insurance providers cover modified cars?
Insurers will generally cover factory-approved modifications and accessories. That also extends to many common modifications, such as the addition of a bullbar. Minor modifications generally won’t impact your insurance premiums either.
Beyond compulsory/green slip insurance, you may also want to consider an extended level of care with third party property, third party fire and theft, or comprehensive car insurance.
Complex modifications are likely to change your premiums or impact an insurer’s decision to offer you insurance. Bear in mind that cars with complex modifications may require an insurer that specialises in car modifications.
Regardless of their complexity, it’s important to let your insurer know about any modifications, ideally before you make them! Most insurers require you to inform them of any changes you make to your vehicle. Plus, you’ll want to know if your insurance policy will still cover you if you go ahead with modifying your vehicle.
Worst case scenario, your modified car gets in a crash and you then find out you can’t claim the damages because you didn’t inform your insurer about the changes to your vehicle.
Will I pay more for insurance if my car has modifications?
It’s likely that premiums for a modified car could be higher than those for a car without modifications.
But if you require modifications to your car because you live with a disability or have mobility issues, then your state or territory’s transport authority can help you cover the costs involved under the following conditions:
- Vehicle modifications that are necessary to help you get in and out of your vehicle, drive, load mobility aids, or to safely travel as a passenger.
- Minor changes such as non-permanent equipment or accessories that can be installed and removed from a vehicle (e.g. hand controls or loading devices.)
- Major changes such as wheelchair accessible conversion or changes to the body of the vehicle.
As an example, for drivers in Victoria living with a disability or mobility issues, the TAC can help cover the difference between a quote for the modified vehicle and what it would cost to insure it if it were unmodified.2As above
When it comes to younger drivers, adding certain modifications might mean higher insurance premiums or even denied coverage. In fact, NSW, Queensland, SA and Victoria outrightly ban P-platers from driving a variety of high-powered and modified vehicles.
Frequently asked questions
What if I use my modified car for racing or off-road activities?
If you’re planning on using your modified car for motorsports, it’s likely that you’ll need to purchase specialist car insurance for motorsports professionals.
Any driving activity that’s out of the ordinary day-to-day driving, poses a higher risk to the insurer, so check your product disclosure statement (PDS) to ensure you’re covered for off-road activities or take out a policy that includes cover for off-road driving.
Will insurance cover me if my modifications are stolen?
Yes, as long as you’ve informed your insurer of the modifications in advance. If you have comprehensive car insurance or a third-party fire and theft policy in place, your insurance policy can help provide cover in the event your modifications are stolen. You’d also need to make sure you have agreed on the value of your modified car with your insurer.
But remember, if you modify your car after you’ve taken out a policy and fail to notify your insurer, you may not be covered at all due to non-disclosure. So always tell your insurer about any modifications!
You must ensure that you have a level of cover you’re comfortable with by reading through your product disclosure statement (PDS), which will clearly state the inclusions and exclusions of your policy, as well as any add-on cover you may have chosen.
Will insurance cover me if my modification malfunctions and damages my car?
No. A car modification that malfunctions is likely to be considered a mechanical fault and isn’t generally classified as an insurable event.
This is because mechanical faults are typically caused by things like defective parts, wear and tear, corrosion, leaks, friction, or rust, and as such, should all be prevented and treated by a licensed mechanic.
Insurable events are caused by accidents, fire, theft, or malicious damage, and are classified as insurable because by nature they are accidental and unexpected.
Do I need agreed value or market value insurance?
While the market value of your car is the total value of your car at the time you make a claim, the agreed value is the total value of the car which is decided between you and your insurer when you take out a policy.
Both options have their pros and cons, but generally, market value can be cheaper than agreed value.
However, keep in mind that when it comes to modified cars, an agreed value policy may be a more suitable option as it can allow you to replace it for a specified value that factors in the additional modifications.
Are car modifications worth it?
Only you can truly appreciate any modifications to your car, because for some of us, our cars are our lives.
Still, it’s a good idea to know how much your additions will cost you in car insurance premiums.
So, before you make any changes, you should talk to your insurer about how any intended modifications could affect your policy or premiums.
Give your modified ride the protection it needs
A modified vehicle can be a great way to extend your personality or might be a necessity that makes your life easier. That’s why it’s important to take measures to safeguard it from the unexpected. iSelect’s car insurance comparison tool can help you explore a range of policies that might suit your needs.
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