Upgrading your car? What you need to know about insurance
While the most significant risk factor for an auto policy is always the driver, the vehicle does play a role in determining auto insurance rates. Be careful when choosing how to upgrade your car in order to avoid a shock when you update your policy.
While there’s nothing wrong with stock cars, you may feel the desire to personalize your ride with some upgrades, especially if you bought an older car that didn’t have a wealth of modern features to begin with. Here’s what you should think about before deciding to upgrade your car:
Your premium is going to go up
Aftermarket parts often cost more than manufacturer parts, so making repairs and replacing parts are more expensive. In some cases, upgrading your car also increase the its replacement value. For that reason, most modifications will make your premium get higher. Custom parts will need to be insured under a special coverage extension called Custom Parts and Equipment coverage. This coverage can add about $5,000 to your coverage. If you have comprehensive and/or collision coverage custom parts may be covered up to a certain amount.
Generally speaking, a car with higher value also means it’s worth more to thieves, making it more likely to get stolen. Of course, not every upgrade will make the appear more valuable, but it can play a small role in determining your new rate, especially if there are visual upgrades. These visual upgrades can include alloy wheels, custom paint jobs, body kits, new lights, and more.
Performance upgrades can also make your auto insurance rates shoot up, as vehicles with more horsepower and higher top speeds represent more opportunity for dangerous driving. Because of that, these upgrades are likely to cause the greatest amount of change to your premium.
Even convenience features like power windows, sunroofs, AC, and GPS are likely to bump your rates up as they add value to the vehicle, requiring more money to repair or replace if they’re damaged.
Safety features can keep your premium low
On the flipside, adding safety features like anti-theft alarms or a tracking device can sometimes decrease your premium. Some insurers give you a discount for making your car safer, but the overall impact of modifications are likely to make your auto insurance premiums head higher, even if they are features that will help you drive safer, like a new brake system.
Bottom line: you have to update your policy
At the end of the day, your car is your car. What you choose to do with it is up to you. If the upgrades really matter, you’ll pay the higher premium and not regret it because you’re driving the car you want.
When you install an upgrade or modification, inform your insurance company and they’ll handle the rest.