A couple of weeks ago I called my insurance broker with a couple of questions concerning modifications to cars. My first question was about "After Market" performance enhancing parts and what affect they had on ones coverage. My second question was how the insurance companies are handling the same performance enhancing parts provided and installed by the dealership. And this was her response:
I have gone through each of our carriers (insurance companies) to determine how each defines a "modification" and have typed a few below . . .
Royal & Sunalliance:
It includes changes, other than repairs or restorations that affect the original manufacturer's design specifications or increase the value of the automobile. These may include, but are not limited to engine modifications, paint changes, non-factory installed wheels, tire and electronic accessories and equipment, etc.
Requires approval from the underwriter before binding coverage. Modification for enhanced speed or racing will not be written. "A modified customized or altered vehicle is one which has been changed so it is (or attempts to be) one of a kind. The changes would increase the cost to repair or replace the vehicle over a factory produced model."
"Vehicles that are modified from the manufactured specifications that will enhance the vehicle's performance (e.g. use of nitrous oxide, engine modifications that increase the vehicle manufacturers horsepower rating, performance enhancing exhaust systems)"
What I have determined after speaking with some underwriters is that the owner of a vehicle who is deciding to purchase modifications for their vehicle should contact their broker who in turn will speak directly to their specific underwriter. The underwriters I spoke with had no problem with the brakes that you had spoken of, but sway bars (although not a speed enhancing product) raised flags with each of the underwriters as to how the vehicle will actually be used. . . .perhaps racing. The rule of thumb the underwriters are using is that they will insure the car if the performance enhancing parts come with the car from the FACTORY. Anything done to the car after that, even by the dealership, needs to be reviewed.
The Facility Insurance Company is the safest route to go with respect to insuring a modified vehicle. In order to be insured through Facility Insurance one must be denied insurance through another carrier. The owner of the vehicle would have to submit an appraisal in order that the vehicle be rated with respect to the value of the vehicle rather than the rate groups of that year, make & model.
I speak from experience when I tell you that one of my insureds had a "performance enhancing parts" applied over his stock vehicle. Thankfully, he was insured through the Facility (due to being a high risk driver) when he had an accident. If he had been insured through a regular market carrier, the insurance company could have denied paying the claim as he had not notified me about the "parts". In the end, he did lose out because the company paid for the vehicle based on the year, make and model of the vehicle . . .which did not cover the cost for the modifications made to the vehicle. I felt badly for the kid, as he was "told" by a friend that all he needed to do was just "keep his bills" in the event of an accident.
I don't know how much help I've been, but it seems pretty standard with all the companies that we represent that modified vehicles are not eligible for coverage through a regular market.
So there you have it boys and girls. While some of this is clear there is much more that isn't. The Insurance companies will always view performance enhancing after market modifications with some degree fear. In the end if you want to be certain that you haven't affected your insurance you shoule check with your insurance company.
CORRISPONDING THREAD: ONTARIO AUTO INSURANCE FAQ