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Licensed auto and home insurance agent
4+ years of experience in insurance and personal finance editing
NPN: 20564519
Updated
Modified car insurance protects modifications to your vehicle that aren’t factory standard, like custom rims, specialty paint jobs, performance enhancements, or upgraded sound systems. Many standard car insurance policies exclude modifications or set limits on coverage.
So, without extra protection, you could be left paying out of pocket to repair or replace aftermarket parts if you need to file a claim.
This guide covers how modified car insurance works, what it covers, and how to find the right policy for your vehicle.
Always tell your insurer about any modifications to your vehicle. Failure to inform your Insurance company may be considered misrepresentation or fraud, resulting in denied claims or loss of coverage.
Aftermarket upgrades can raise your vehicle’s value and repair costs, so your premiums may go up.[1]
Agreed-value coverage through a specialty insurer protects the full value of your car if it’s totaled.
A “modified car” is generally considered a vehicle that has been altered in any way from the original manufacturer’s build. Modifications come in many forms and may include aftermarket parts that boost vehicle performance, cosmetic upgrades, or accessibility additions.
It doesn’t matter if you, a previous owner, or even an authorized dealer made the upgrades. If your vehicle has aftermarket parts, it likely qualifies as a modified car.
Here are some common types of vehicle modifications:
Performance: Turbochargers, suspension upgrades, and aftermarket exhaust systems
Cosmetic: Custom paint jobs, body kits, specialty lighting, and window tints
Electronics: Aftermarket stereo systems, navigation units, and upgraded audio setups
Accessibility: Hand controls, wheelchair lifts, pedal extensions, and other adaptive equipment for drivers with disabilities
Insurance companies consider vehicle features when setting rates. They may also exclude certain types of modifications from coverage, so it’s important to disclose any modifications to your insurer. Otherwise, your insurer could deny your claim.
For example, suppose you spend thousands to modify your vehicle with a new suspension and wheels designed for off-road driving without telling your insurer. Damage to those parts in an accident may not be covered, leaving you to cover the cost out of pocket. Your insurer could deny your entire claim if your policy doesn’t cover risky activities, like off-roading.
In more serious cases, not telling your insurer about car modifications could result in policy cancellation. Or worse, you could face legal issues for insurance fraud.
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Car insurance premiums ultimately come down to how likely you are to file a claim and how expensive your vehicle is to repair or replace. Vehicle modifications can affect both.
Performance mods, like an engine upgrade, can raise the risk of speed-related crashes. They can also make repairs more expensive and increase the likelihood of theft. Custom paint or other aesthetic modifications might not change the odds of a collision, but they can still raise repair costs and attract thieves.[2]
When your car costs more to fix, is more appealing to thieves, or could suffer more expensive damage in an accident, your insurer expects to pay more over time. Higher expected payouts usually mean higher premiums.
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Modified car insurance comes in three main options: a custom parts and equipment (CPE) endorsement to your standard policy, an agreed-value policy, or stated-value coverage. The option you choose depends on the value of your modifications, whether you use your car as a daily driver or a show vehicle, and how important payout certainty is to you.
Standard collision coverage or comprehensive insurance may cover aftermarket parts, but only up to a small amount. CPE coverage is an add-on that raises that limit. It picks up repair or replacement costs your standard policies won’t fully cover.
Limits can range from $5,000 to $20,000 or more. If repairs for your upgrades cost more than that amount, you pay the difference yourself. CPE coverage can be a practical option if you only have a few upgrades and don’t want to switch to a specialty insurer.
Most standard auto policies pay claims based on actual cash value (ACV) at the time of the total loss. ACV factors in depreciation, which reduces your claim payout. Agreed-value policies are different. You and the insurer set the car’s value up front. Then, if the insurance company totals your car, you get the agreed value (minus any deductible), even if the car has depreciated.
Agreed-value policies can offer higher payouts than CPE coverage. That’s why it makes the most sense for heavily modified cars or show cars where ACV would come up short.
Stated-value coverage lets you list a value for your car when the policy starts. But ACV still plays a role in your payout. If your vehicle is totaled, the insurer usually pays whichever is lower: the stated amount or the ACV. This is different from agreed-value coverage, which doesn’t consider ACV or depreciation.
Still, stated value coverage offers more protection than a standard policy for a modified vehicle. It can be a good bet if you want some additional coverage without the higher premiums of an agreed-value policy.
Modified car insurance doesn’t cover all changes to your vehicle, so it’s important to read your policy carefully.
Exclusions vary by insurer and state, but these are some common exclusions:
Specialty parts over a certain dollar amount (varies by insurance company)
Snow plows or other equipment used for work purposes
Suspension kits, including homemade kits greater than 4 inches
Underbody lighting, nitrous oxide tanks, dark window tint, and other illegal modifications
These modifications either create too much risk, cross into commercial territory, or involve changes that are illegal in some areas.
Modified cars usually have higher insurance premiums than stock vehicles. The national average for full-coverage car insurance is $183 per month, according to Compare.com data.
The cost of modified car insurance depends on the type of upgrades, their value, and whether they could increase the risk of an accident or other claim. High-end audio or aftermarket wheels can raise your car’s value and theft risk, which can increase your rates. But performance modifications like a turbocharger tend to push prices up more because they can increase crash risk and make repairs harder.
The best car insurance company for your modified car depends on what you’ve done to your vehicle and how you use it. Some auto insurers let you add CPE coverage. This can work well if your upgrades are fairly modest and you drive the car often. Specialty insurers are a better fit for high-value or show vehicles.
When you shop, consider how much you’ve put into modifications, how you use and store your car, and if the insurer offers coverage in your state.
Insurance Company | Type of Modified Car Coverage | Coverage Limits and Exclusions |
|---|---|---|
| Progressive | CPE | Up to $5,000 for custom parts and equipment |
| Elephant | CPE | Up to $20,000 for custom parts and equipment |
| Hagerty | Agreed value | Up to $5 million |
| American Collectors Insurance | Agreed value | 100% of agreed value |
| Grundy | Agreed value | 100% of agreed value |
Getting the right coverage for a modified car takes a little more legwork, since standard policies don’t automatically cover aftermarket changes. Here are the steps:
Document your modifications. Gather receipts, photos, and appraisals for everything added to the vehicle.
Decide between an endorsement or a specialty policy. If your modifications are modest, a CPE add-on might be enough. If you’ve put serious money into the build, a specialty policy with agreed-value coverage is worth a look.
Disclose everything to your insurer. If you don’t tell your insurer what’s on your car, your policy may not cover it if you file a claim.
Verify your coverage limits. Make sure your policy limits reflect what your modifications are worth.
Update your coverage as you go. When you make a modification, let your insurer know and update your policy to reflect any change in vehicle value.
Find the best coverage for your modified car.
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Insurance for a modified car costs more than standard car insurance. Here are some ways you can save on modified car insurance:[3]
Add anti-theft features. Tracking devices or alarm systems can qualify you for a discount with some insurers.
Match your coverage to how you actually use the car. Show cars and daily drivers have different risk profiles, so make sure your policy fits.
Shop around. Insurance rates vary a lot between standard and specialty insurers. Compare quotes to find the best deal.
Adjust your deductible. A higher deductible usually lowers your premium. Just make sure you can cover it if you need to.
Here are quick answers to some of the most common questions modified car owners ask about insurance.
Standard policies often limit or skip coverage for aftermarket parts altogether. Modified cars typically need custom parts and equipment coverage or a specialty policy. And you need to disclose modifications to your insurer up front.
Modifications to your car often increase repair costs and your vehicle’s overall value, which can raise insurance premiums. Your actual rate depends on the modifications, the type of coverage needed to protect aftermarket parts, and the insurer.
The best insurance for a modified car depends on the type of modifications added to the vehicle. A CPE endorsement might be best for modest upgrades. Show cars or high-value vehicles may be better protected with a policy from a specialty insurer.
Progressive offers add-on CPE coverage that includes up to $5,000 in custom parts and equipment. Some baseline coverage for aftermarket parts may also apply under your standard collision or comprehensive coverage. Review your policy carefully or speak to an agent.
Anti-theft devices are one type of modification that may not raise your rate and could even qualify you for a discount. But most aftermarket modifications increase car insurance rates or may require a specialty policy. Always speak to your insurance company about any modifications to your vehicle and coverage options.
Data scientists at Compare.com analyzed more than 50 million real-time auto insurance quotes from more than 75 partner insurers in order to compile the rates and statistics seen in this article. Compare.com’s auto insurance data includes coverage analysis and details on drivers’ vehicles, driving records, insurance histories, and demographic information.
All the rates listed in this article have been collected from a combination of real Compare.com quotes and external insurance rate data gathered in collaboration with Quadrant Information Services. Compare.com uses these observations to provide readers with insights into how auto insurance companies determine their premiums.
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Licensed auto and home insurance agent
4+ years of experience in insurance and personal finance editing
NPN: 20564519
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