Updated: July 1, 2025
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A modification is any customization or changes from the car's original factory specifications.
The best insurance for modified cars is a policy with custom parts coverage, which covers repair or replacement costs for permanently installed custom parts.
Modifications to a vehicle usually increase car insurance premiums. Insurance providers have different definitions of what counts as a modification.
Modified cars usually need more than standard auto insurance. Most policies only cover factory parts, so you may need custom parts and equipment coverage to protect your upgrades. A replacement cost policy can also help by covering the full value of modified parts without depreciation, similar to full coverage car insurance policies.
Modified cars are vehicles with changes from the original factory specifications. People modify cars to improve functionality and performance, though some changes are simply for looks or accessibility needs. Understanding this definition helps you get the right coverage.
While modifications improve the car's functionality or performance, they aren't always for the better. Some modifications can lower the actual cash value of a car.
A modified car has customizations beyond original factory specifications. Not all changes add value to your car. Most modifications increase insurance premiums, though different insurers define modifications differently.
Talk to your insurer to determine whether the changes you've made to your car are considered modifications. If you bought a car that's already been modified, inform your insurer. Insurance companies don't automatically assume there are modifications.
Typically, modifying a car increases insurance costs. That’s because of the added value to the vehicle. Other factors may also be considered. For example, modified cars may be more likely to get stolen. If the customization is a more powerful engine, the car may also be prone to speeding.
That said, certain modifications may lower the value of a car. It’s always best to talk to your insurer and discuss the changes to your vehicle.
Insurance companies raise rates for modified vehicles for several reasons, similar to how they evaluate drivers with bad credit. Custom parts increase theft risk since they make vehicles attractive targets. Modified parts cost more to replace than factory parts, and performance modifications like engine tuning increase accident risk, especially for sports cars. Specialty parts are harder to source for repairs, and modifications increase the vehicle's overall value.
Some modifications can actually reduce your insurance premiums. Anti-theft devices like advanced security systems, GPS tracking and kill switches demonstrate reduced theft risk and may qualify for car insurance discounts. Safety enhancements such as roll cages, upgraded brakes and racing harnesses can lower accident severity. Defensive driving aids including backup cameras and collision avoidance systems help prevent accidents, while immobilizers and steering wheel locks provide additional security.
Some modifications can lower your car's value. Always talk to your insurer and discuss the changes to your vehicle before making modifications.
Standard car insurance doesn't cover modified car parts. You'll need to purchase custom parts coverage, usually offered as an add-on. Skip this coverage, and you could face significant out-of-pocket costs when something goes wrong.
A driver with $5,000 in customized equipment coverage and a $500 deductible experiences damage to their suspension lift kit in an accident.
$5,000With proper custom parts coverage, insurance pays $4,500 for the suspension repair ($5,000 coverage minus $500 deductible).
$500This is 90% less expensive.
Failure to disclose modifications to your insurance provider can cause your entire policy to be voided. This means complete loss of coverage in accidents, personal liability for all damages and injuries, potential legal consequences for material misrepresentation and out-of-pocket payment for all claims.
Consider an agreed value policy if you have a modified car. This policy allows the insurance provider to settle the car's worth and any modifications. Your insurance company and an appraiser will decide on the value of your car, including the cost of a total loss of your modifications. Instead of just the car's actual cash value (ACV), your policy will cover the agreed-upon settlement amount in the event of an accident.
The best way to ensure proper coverage is to inform your insurance provider about any modifications to your car. You should also let your insurer know if you bought a car with existing modifications. Withholding this information could invalidate your policy entirely.
Insurance policies can be voided for material misrepresentation, which includes undisclosed modifications of any kind not reported to your insurer, performance enhancements like engine, exhaust or handling modifications and value-adding changes such as custom paint, wheels or audio systems.
If you get into an accident and the other driver files a claim, discovering undocumented modifications could void your policy, leaving you personally liable for all damages and legal costs.
The best insurance for modified cars is one with custom parts coverage. Find out if the company offers this add-on coverage when looking for auto insurance. It covers damage to permanently-installed custom parts.
Before purchasing a policy, review all terms and features included. Compare quotes from different modified car insurance companies to find the best coverage for your specific modifications and budget.
Company | Description |
|---|---|
The company offers custom parts coverage as an add-on. This covers damages to equipment, not in the vehicle manufacturer’s standard. | |
Policyholders may opt to have custom parts coverage in their car insurance for $102 per year. This covers losses to custom equipment due to a comprehensive type of accident. | |
Elephant policyholders automatically get up to $1,000 in custom parts and equipment coverage (CPE). For higher coverage, a CPE add-on can be purchased as part of a comprehensive and collision policy. | |
CPE coverage offers protection for aftermarket updates to the policyholder’s car. This add-on coverage protects against damages to modifications not installed by the manufacturer. | |
The custom parts coverage is an add-on that policyholders can get as part of their comprehensive and collision auto insurance. It pays for the repair or replacement of aftermarket equipment. | |
Policyholders can purchase CPE as an add-on to get coverage for the repair or replacement of an item added to their car, or those considered after-market accessories. | |
Typically, policyholders only get coverage for the original equipment included by the manufacturer. To protect modifications, they can opt to add on custom parts coverage. |
Use MoneyGeek’s quotation tool to get an idea of the cost of your insurance premium if you add custom parts coverage.
For high-value or extensively modified vehicles, consider these specialty insurers:
Specialty Provider | Best For | Key Features |
|---|---|---|
Hagerty | Agreed value coverage, guaranteed repair network, roadside assistance | |
J.C. Taylor | Antique and custom vehicles | Flexible usage policies, restoration coverage, spare parts coverage |
Grundy | Classic cars and hot rods | No depreciation, guaranteed value, low premiums |
American Collectors | Modified and performance cars | Track day coverage, modification-friendly policies |
SAFECO | Performance modifications | Custom equipment coverage up to $5,000, agreed value options |
Before modifying your vehicle or purchasing a pre-modified car, understanding state laws and vehicle modifications legal implications is important:
Tampering with emissions control systems is federally illegal and can void insurance coverage, while modifications must comply with Federal Motor Vehicle Safety Standards (FMVSS). Modified vehicles may face additional scrutiny during state inspections, and exhaust modifications must comply with local noise regulations.
When purchasing a vehicle that's already been modified, get insurance quotes first since some insurers may refuse coverage for certain modifications, just as coverage varies for rental cars. Document all modifications by obtaining receipts, installation records and part specifications. Have a qualified mechanic conduct a professional inspection to assess the quality of modifications, and verify all modifications meet local and federal regulations and state insurance requirements through a legal compliance check. Consider getting a professional appraisal for high-value modifications to establish agreed value coverage.
Maintain comprehensive records for insurance purposes including purchase receipts for all parts and labor, professional installation certificates, before and after photographs, appraisal documents for high-value modifications and legal compliance documentation.
Modified car insurance protects custom upgrades that standard policies may not cover. The key is finding insurers that offer comprehensive custom parts coverage and understanding how your specific modifications affect your rates and coverage needs. Whether you have performance enhancements, aesthetic modifications or accessibility equipment, proper disclosure and appropriate coverage are essential for protecting your investment.
For the best financial protection, compare quotes from multiple insurers and switch to better coverage if needed, including both traditional providers with custom parts add-ons and specialty insurers that focus on modified vehicles. Remember that the cheapest option isn't always the best – prioritize comprehensive coverage that matches your vehicle's true value and modification level based on how much car insurance you need.
Your insurance coverage needs and policy costs may be affected if your car has modifications. MoneyGeek answers frequently asked questions to help you better understand auto insurance for modified cars.
Insurance providers may have different definitions of what a modified car is. But generally, it’s a vehicle with customized parts or changes that aren’t part of the original factory specifications.
The best modified car insurance companies are those offering custom parts coverage, which is often an add-on that covers the repair or replacement of modifications.
Modifying your car usually increases your insurance premiums because of the added value. However, some modifications may lower your car’s actual cash value.
Car modifications can increase the value of your car. Modified parts also tend to be more expensive to repair or replace. Due to the changes in your coverage needs, a modified car may be more expensive to insure. That said, there may be modifications that don’t lead to higher insurance premiums. The best way to check is to talk with your insurer.
Failing to disclose modifications can result in policy voiding due to material misrepresentation. This leaves you personally liable for all damages, injuries and legal costs in an accident.
Disability-related modifications are protected under ADA guidelines, and many insurers can't discriminate against them. However, you should still disclose these modifications and consider custom parts coverage for expensive accessibility equipment.
Most insurers will not provide coverage for modifications that violate federal or local laws, such as emissions tampering or illegal performance enhancements. Ensure all modifications comply with applicable regulations.
An agreed value policy is recommended for heavily modified or high-value vehicles. It establishes a predetermined payout amount that includes your modifications, protecting you from depreciation and ensuring fair compensation.
Our Research Approach
We gathered 22,848 quotes from six major providers across 100 ZIP codes to determine modified vehicle insurance costs and identify which companies offer the most competitive rates for drivers with vehicle modifications.
Sample Driver and Vehicle Details
Our baseline profile included:
Data Collection Process
We pulled rate information directly from state insurance departments and Quadrant Information Services, testing quotes across 100 ZIP codes nationwide to analyze 22,848 total quotes from six major insurers.
Coverage Levels We Tested
For national averages, we used 100/300/100 coverage with comprehensive and collision and a $1,000 deductible:
For state-specific comparisons, we used 50/100/50 coverage:
Coverage Impact for Modified Vehicles
Modified vehicles cost more to repair than standard vehicles. Comprehensive and collision coverage protects your investment when accidents happen, while liability coverage provides financial protection if you cause damage to others. Your deductible is what you pay before insurance covers the rest.
We adjusted this baseline profile by region and coverage type to show how premiums vary based on location and protection level.
About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.
