Read the fine print on insurance for modified cars

Stock standard cars not spinning your wheels? You might be considering modifying your vehicle, but is there such a thing as modified car insurance? Canstar explores.

In many of our car insurance guides, we’ve listed things that will make it more difficult to get car insurance. Modifying your vehicle is definitely right up there. So, we wanted to look at your options if you have modified – or are planning to modify – your car.

How are cars modified & why are they treated differently to standard cars?

Common examples of car modifications include adjusted suspension, eye-catching repaints or tinted windows. Before you even consider making adjustments to your car, though, check that it’s legal. Boy racers have made headline news in recent years, not only for their reckless driving, but also for the illegal modifications made to their vehicles. Don’t be like them.

According to the New Zealand Transport Authority, depending on the type of modifications, you may have to get what’s known as a low-volume vehicle (LVV) certification, before you can get a warrant of fitness. You can find out more about the LVV certification process, including whether you’re likely to need to go through it, via the transport authority’s website. These rules aren’t just a money-collecting exercise. Without LVV certification, you could risk your and your passengers’ lives. For example, if you modify your steering or suspension, you could alter the way your vehicle handles, which could cause you to lose control and crash.

Read up on what modifications are legal before you go any further. Once you’ve done that, you can start to do your homework on insurance for modified cars.

What car modifications are generally covered by insurers?

Minor modifications that insurers will typically cover include:

  • Bicycle racks
  • Tow bars
  • Roof racks
  • Alloy wheels

Depending on your insurer – and the nature of your modification – increased premiums may apply. Many insurers will also ask that you notify them whenever you make a modification to your car.

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How do New Zealand car insurance companies treat modified cars?

The message from our earlier guides remains the same: if you’re modifying your car, don’t expect signing up for insurance to be as simple as if you’d left the car in its original form. In saying that, if you do alter your car, there are options available. Information about how a car insurance provider deals with modified vehicles can be found in their product disclosure statement (PDS).

We had a look at some of the car insurers listed on Canstar’s database, to see how they deal with cover for modified cars in New Zealand. According to State’s PDS, modified cars are not covered, unless you have informed State of all the modification details and the insurer has agreed in writing to continue cover. You also have to let State know immediately if you modify your car after you’ve already signed up for an insurance policy. The insurer may change its terms of the policy as a result.

Here is how State defines car modifications, according to its car insurance PDS:

“Any change to the car that’s different to the manufacturer’s original specification or recommendations.”

Examples include:

  • Changes to the engine, steering, performance, suspension or chassis
  • Body kits, paintwork or interior modifications
  • Changes to tyres or wheels of the car
  • A sound system upgrade that is valued at more than $1000

Similarly, ASB, whose car insurance is underwritten by IAG, says that car owners must notify the insurer of any modifications made to the car, before they are confirmed under your car insurance policy. ASB defines modifications as any adjustments made to the vehicle after it has left the factory, such as adding a performance exhaust pipe.

BNZ’s car insurance policy, also underwritten by IAG, states that it will not cover cars that have been modified, unless you’ve written to the provider to declare any changes and ASB has agreed in writing to the modifications.

How can you increase your chance of getting suitable car insurance in NZ?

Regardless of whether you’re modifying your vehicle, when choosing a policy and provider to meet your needs, it’s important to do your homework, read each insurer’s PDS and compare your options. To help you choose, Canstar surveys New Zealanders on their level of satisfaction of car insurers in New Zealand, including customers’ experiences when making claims. To see how car insurers stack up, check out the customer satisfaction responses, below.

Regardless of whether you are modifying your vehicle, it’s important to do your homework, read the insurer’s PDS and compare your options, to ensure you choose a provider and policy that meets your needs.

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