modified car insurance
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modified car insurance I am going through this scenario right now with State Farm....anybody have this problem. I just had to submit a list of mods to my agent and its under review. It doesnt look good for me and I am pretty pissed about having to make the car stock. I have been with them for 10 years and even had a Yamaha R6 sportbike insured with them and never had any traffic convictions. 
I cant believe they can get away with this but after getting my modded Jetta written off a couple years ago I dont want to go through the hassle of trying to get coverage again or the risk of not being covered in the event of an accident. You never know what can happen. Here are a couple of stories/articles I have copy and pasted for your info. PLEASE READ! 
from toronto-subaru-club.com:
Hello all,
There seems to be a big crackdown from the non-regulated insurance companies across Canada on people who have "modified" cars.
There have been several cases I have read about where people have gotten into accidents and have had their insurance company literally and "legally" walk away from them forcing them to cover all costs incurred due to the accident.
There is a clause in the ONTARIO AUTOMOBILE POLICY that states:
Material Change in Risk
1. (1) The insured named in this contract shall promptly notify the insurer or its local agent in writing of any change in the risk material to the contract and within the insured's knowledge.
(2) Without restricting the generality of the foregoing, the
words "change in the risk material to the contract" include:
(a) any change in the insurable interest of the insured named in this contract in the automobile by sale, assignment or otherwise, except through change of title by succession, death or proceedings under the
Bankruptcy and Insolvency Act (Canada); and, in respect of insurance against loss or damage to the automobile,
(b) any mortgage, lien or encumbrance affecting the automobile after the application for this contract;
© any other insurance of the same interest, whether valid or not, covering loss or damage insured by this contract or any portion thereof.
This, in the insurance companies view, means that ANY modifications done to the car that falls in the following categories must be FULLY DISCLOSED TO THE INSURANCE COMPANY or else you are in breach of contract and will NOT be covered in the event of a claim:
Contours changed in any significant fashion from manufacturer's design.
Center of gravity/normal body "level" has been materially changed.
Equipped with non-standard accelerating devices or equipment designed for unusual performance, (ie nitrous oxide).
An engine NOT available from the manufacturer as a standard option for the year and model.
Extra-wide treaded tires designed and normally used for racing
Now here is the catch 22. If you disclose to your insurance company that you have a modified car, chances are VERY high they will not cover you AT ALL and will either deny your application for insurance, or terminate your existing policy as shown by a friend of mine:
Jettset Wrote:
State Farm called me today to say that they will no longer be insuring "modified" vehicles. I got a little nervous last year about the "full disclosure" thing and got my car appraised and went to my agent with it. At the time I fully expected to be dropped however my agent assured me I would be fine due to my excellent insurance and driving record. Well, I was fine until yesterday when they called me to drop my "modified" car
This is absolute BULLSHEET!!!!. They already took my money for coverage till June and now they give me 10days to find coverage and then their dropping my car. Although they won't drop my winter car or my house.
This is just absurd. Insurance companies are running amuck in Ontario and unless we do something to stop it everyone will be paying $5000 a year. No I see why over 40% of cars on the road in Ontario are driving with no insurance.
Now I have heard of two scenarios that make people say to themselves, "I'm not going to worry about it. I am fine." The first one being if you get into an accident, you just get a tow truck and take your car home, strip all the modified parts off it, and then call the insurance company. That is fine other than the fact it is illegal and also what happens if, God forbid, that you are seriously injured in the accident and are not able to do that. That means that the insurance company will not pay you out for injury, injury to third party or any damage!
The other scenario is that some people are taking legal action on the insurance company. Well in my opinion that is the best way of dealing with it, however, who has the financial resources to battle such a huge corporate giant?? Not me.
I cant believe they can get away with this but after getting my modded Jetta written off a couple years ago I dont want to go through the hassle of trying to get coverage again or the risk of not being covered in the event of an accident. You never know what can happen. Here are a couple of stories/articles I have copy and pasted for your info. PLEASE READ! from toronto-subaru-club.com:
Hello all,
There seems to be a big crackdown from the non-regulated insurance companies across Canada on people who have "modified" cars.
There have been several cases I have read about where people have gotten into accidents and have had their insurance company literally and "legally" walk away from them forcing them to cover all costs incurred due to the accident.
There is a clause in the ONTARIO AUTOMOBILE POLICY that states:
Material Change in Risk
1. (1) The insured named in this contract shall promptly notify the insurer or its local agent in writing of any change in the risk material to the contract and within the insured's knowledge.
(2) Without restricting the generality of the foregoing, the
words "change in the risk material to the contract" include:
(a) any change in the insurable interest of the insured named in this contract in the automobile by sale, assignment or otherwise, except through change of title by succession, death or proceedings under the
Bankruptcy and Insolvency Act (Canada); and, in respect of insurance against loss or damage to the automobile,
(b) any mortgage, lien or encumbrance affecting the automobile after the application for this contract;
© any other insurance of the same interest, whether valid or not, covering loss or damage insured by this contract or any portion thereof.
This, in the insurance companies view, means that ANY modifications done to the car that falls in the following categories must be FULLY DISCLOSED TO THE INSURANCE COMPANY or else you are in breach of contract and will NOT be covered in the event of a claim:
Contours changed in any significant fashion from manufacturer's design.
Center of gravity/normal body "level" has been materially changed.
Equipped with non-standard accelerating devices or equipment designed for unusual performance, (ie nitrous oxide).
An engine NOT available from the manufacturer as a standard option for the year and model.
Extra-wide treaded tires designed and normally used for racing
Now here is the catch 22. If you disclose to your insurance company that you have a modified car, chances are VERY high they will not cover you AT ALL and will either deny your application for insurance, or terminate your existing policy as shown by a friend of mine:
Jettset Wrote:
State Farm called me today to say that they will no longer be insuring "modified" vehicles. I got a little nervous last year about the "full disclosure" thing and got my car appraised and went to my agent with it. At the time I fully expected to be dropped however my agent assured me I would be fine due to my excellent insurance and driving record. Well, I was fine until yesterday when they called me to drop my "modified" car
This is absolute BULLSHEET!!!!. They already took my money for coverage till June and now they give me 10days to find coverage and then their dropping my car. Although they won't drop my winter car or my house.
This is just absurd. Insurance companies are running amuck in Ontario and unless we do something to stop it everyone will be paying $5000 a year. No I see why over 40% of cars on the road in Ontario are driving with no insurance.
Now I have heard of two scenarios that make people say to themselves, "I'm not going to worry about it. I am fine." The first one being if you get into an accident, you just get a tow truck and take your car home, strip all the modified parts off it, and then call the insurance company. That is fine other than the fact it is illegal and also what happens if, God forbid, that you are seriously injured in the accident and are not able to do that. That means that the insurance company will not pay you out for injury, injury to third party or any damage!
The other scenario is that some people are taking legal action on the insurance company. Well in my opinion that is the best way of dealing with it, however, who has the financial resources to battle such a huge corporate giant?? Not me.
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From: Barrie (just north of T.O), Ontario, Canada
Rep Power: 0 heres another interesting article from AutoWeek:
No Insurance Coverage: Forming A Policy Against Tuners
Insurance—Or Lack Of It—May Spell The End For Sport Compact Enthusiasts
By ANDREW LUU
Canadian Ron Shortt is a far cry from the fast and furious type: The 47-year-old Toronto man drives a 2002 Pontiac Sunfire back and forth to his job as a computer information technology specialist, and his driving record is snow-white clean—no accidents, no tickets.
None of that mattered when Shortt decided to dress up his Sunfire with off-the-shelf, bolt-on interior parts, special wheels, a trick exhaust and lowered springs. In response, his insurer of 15 years, State Farm, canceled his policy, citing the lowered springs as a big no-no.
As with muscle cars of yore, which faded away as much because of jacked-up insurance rates as the triple whammy of high gas prices, government emissions rules and safety regulations, insurance companies are embarking on a collision course with the booming population of drivers who insist on tuning their sport compact rides.
“The insurance industry may be able to accomplish what the police could never do,” says Shortt, “by making all these cars illegal to be on the streets because they can’t get coverage.” Shortt eventually wound up back with State Farm, but not before he reinstalled the factory springs and had the work verified by an insurance company adjuster.
Steve Budzinski of Ottawa also was dropped by State Farm because of performance upgrades to his Acura Integra Type-R. “My underwriter flat out told me it no longer wants to insure modified cars,” said Budzinski.
State Farm Canada spokes-man Derek Fee says the insurer has no blanket policy to refuse coverage to the sport compact segment, but he acknowledges some sport compact owners—particularly those involved in street racing—are a growing concern. “That subculture is causing difficulties for the rest,” Fee says.
In the United States, major insurers like AAA and State Farm say sport compacts aren’t a problem—at least not yet. State Farm spokeswoman Ana Compain-Romero says the company has no issues with minor upgrades such as lowered springs and tuned exhaust systems, but she recommends informing your agent about any modifications, especially when you go from minor to major. Changes discovered after the fact (say, after an accident when an owner is trying to collect against the policy) may void the coverage.
“Changes are subject to an agent taking a look and an underwriter deciding if we can extend coverage,” Compain-Romero says.
That kind of talk has some people worried Canada’s sport compact insurance woes could be a precursor of similar trouble in the United States. Steve McDonald, senior director of government affairs for the Specialty Equipment Market Association, says the aftermarket group is keeping an eye on the situation and gathering information.
“We’re not sure how widespread it is,” McDonald says. “We are alarmed by the possible implications of this.”
Meanwhile, auto manufacturers are powering ahead with plans for performance models, as well as building up their inventories of performance parts that can be used to turn their sport compact entries into tire-ripping street burners. Automakers contend they are merely responding to demand from customers who want performance.
Are they concerned about potential insurance pitfalls? “To a degree, yes,” says General Motors sport compact expert Bob Kern. “But 90 percent of kids say ‘So what?’ Most kids are dedicated to the cars and aren’t really reading the fine print. I think a lot of them don’t know they could invalidate their policies by modifying their cars.”
No Insurance Coverage: Forming A Policy Against Tuners
Insurance—Or Lack Of It—May Spell The End For Sport Compact Enthusiasts
By ANDREW LUU
Canadian Ron Shortt is a far cry from the fast and furious type: The 47-year-old Toronto man drives a 2002 Pontiac Sunfire back and forth to his job as a computer information technology specialist, and his driving record is snow-white clean—no accidents, no tickets.
None of that mattered when Shortt decided to dress up his Sunfire with off-the-shelf, bolt-on interior parts, special wheels, a trick exhaust and lowered springs. In response, his insurer of 15 years, State Farm, canceled his policy, citing the lowered springs as a big no-no.
As with muscle cars of yore, which faded away as much because of jacked-up insurance rates as the triple whammy of high gas prices, government emissions rules and safety regulations, insurance companies are embarking on a collision course with the booming population of drivers who insist on tuning their sport compact rides.
“The insurance industry may be able to accomplish what the police could never do,” says Shortt, “by making all these cars illegal to be on the streets because they can’t get coverage.” Shortt eventually wound up back with State Farm, but not before he reinstalled the factory springs and had the work verified by an insurance company adjuster.
Steve Budzinski of Ottawa also was dropped by State Farm because of performance upgrades to his Acura Integra Type-R. “My underwriter flat out told me it no longer wants to insure modified cars,” said Budzinski.
State Farm Canada spokes-man Derek Fee says the insurer has no blanket policy to refuse coverage to the sport compact segment, but he acknowledges some sport compact owners—particularly those involved in street racing—are a growing concern. “That subculture is causing difficulties for the rest,” Fee says.
In the United States, major insurers like AAA and State Farm say sport compacts aren’t a problem—at least not yet. State Farm spokeswoman Ana Compain-Romero says the company has no issues with minor upgrades such as lowered springs and tuned exhaust systems, but she recommends informing your agent about any modifications, especially when you go from minor to major. Changes discovered after the fact (say, after an accident when an owner is trying to collect against the policy) may void the coverage.
“Changes are subject to an agent taking a look and an underwriter deciding if we can extend coverage,” Compain-Romero says.
That kind of talk has some people worried Canada’s sport compact insurance woes could be a precursor of similar trouble in the United States. Steve McDonald, senior director of government affairs for the Specialty Equipment Market Association, says the aftermarket group is keeping an eye on the situation and gathering information.
“We’re not sure how widespread it is,” McDonald says. “We are alarmed by the possible implications of this.”
Meanwhile, auto manufacturers are powering ahead with plans for performance models, as well as building up their inventories of performance parts that can be used to turn their sport compact entries into tire-ripping street burners. Automakers contend they are merely responding to demand from customers who want performance.
Are they concerned about potential insurance pitfalls? “To a degree, yes,” says General Motors sport compact expert Bob Kern. “But 90 percent of kids say ‘So what?’ Most kids are dedicated to the cars and aren’t really reading the fine print. I think a lot of them don’t know they could invalidate their policies by modifying their cars.”
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From: Barrie (just north of T.O), Ontario, Canada
Rep Power: 0 Pretty fawked up eh! I dont know what Im going to do if I have to go stock. Im going to sell the car and buy a fast car and do a smoke show in the State Farm parking lot and ask them if this is any better. STUPID. If you want to race it doesnt matter what you drive, its all in the mentality of the driver.
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You should talk to APRboy... he's with State Farm and now they're talking about dropping him because his cars modded.
I'm with State Farm too... but they don't know my cars modded.
I'm with State Farm too... but they don't know my cars modded.
My insurance company took pictures of my car after I disclosed my kit and rims. The problem is that it seems lowering springs (or just lowering the car) seem to be the major issue for insurance companies. My insurance company does not know that I have it dropped. I am afraid my premiums would triple.
IF they can legally walk away from modifies cars that are not disclosed this should concern people greatly. YOu may think that you can always pay for your own damage, but If you hurt someone else you could be on the hook for "liability" of up to $1,000,000 or more. Basically you are bankrupt for the rest of your life.
MY personal feeling is that insuance issues could be the real downfall to the whole industry if this continues.
It also pisses me off that old drivers are really more dangerous on average than modified cars but they dont get 5000 dollar premiums.
JD
IF they can legally walk away from modifies cars that are not disclosed this should concern people greatly. YOu may think that you can always pay for your own damage, but If you hurt someone else you could be on the hook for "liability" of up to $1,000,000 or more. Basically you are bankrupt for the rest of your life.
MY personal feeling is that insuance issues could be the real downfall to the whole industry if this continues.
It also pisses me off that old drivers are really more dangerous on average than modified cars but they dont get 5000 dollar premiums.
JD
Yes, it's an Acura EL
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Rep Power: 368 Yet another cash grab from the insurance industry. If they insist on not covering modified cars, citing the whole "changing suspension alters the car's physical properties", then they should inspect all those who have cars past warranty...many people just drive older cars into the ground, and they have bad mufflers, blown shocks, frame damage (from haphazardly repaired collisions), airbags and seatbelts that no longer work, etc etc.
Do you really think this is because our cars, with the 2whp gained from I/H/E and stiffer cornering from lowering springs, are "race" cars and are now so fast they're unsafe? Nope, there's another agenda afoot, and it sickens me.
Do you really think this is because our cars, with the 2whp gained from I/H/E and stiffer cornering from lowering springs, are "race" cars and are now so fast they're unsafe? Nope, there's another agenda afoot, and it sickens me.
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I saw on mtv's true life about street racing, they think modding = bad because of DIYs, they think if you install stuff its likely that some people are bound to mess things up and cause accidents, well they can think what they want, In some cases i'd rather have piece of mind DIYing and having friends help and such, you can see EVERYTHING thats being done to your car and you know if its done right or not. some people think DIY modding = ur car will fall apart any second cause you dont know what you're doing..
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From: IL
Rep Power: 320 oh yea, just the other day I saw a grand prix w/ a exhaust system hanging down about 1-2" too low looked like the whole thing was about to fall off, that guy made me 10x more nervous than a newb DIYing mods and driving next to me..
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Rep Power: 0 If you really want all of your mods covered, I'd suggest doing something like my buddy does with his M3. He has a crazy custom stereo system, a few minor performance mods, and a ton of suspension work done. His car has been professionally appraised and is fully covered for the appraised value of the car. You would likely have to go through a broker for this, as they can point you towards an appraiser as well as a company that will cover your appraised car. 
Well it all comes down to statistical analysis (darn math), and they're generalizing on a huge scale. They're essentially trying to forecast their risks, and particular modifications go hand-in-hand with accidents. I suppose they don't want to be spending the time and money to be evaluating each car and driver individually. I guess they would also end up losing money if they decided to keep rates low until the first accident (since only major accidents tend to be reported).
That being said, it sucks to have to weigh these external cost factors when thinking about simple upgrades. Since I don't race, I was looking to modify the exterior of my car - just to have something a little different and pleasant to look at. At this rate it won't be happening until I get past the 'dangerous-driver age range' (17-24).
If some company could figure out a workaround, I'm sure they could make a killing as the 'modified car specialists'. Japan has a system worked out, but I don't think it could carry over because people there really spend their money... as in they earn lots and then actually spend it - which creates a very stimulated economy.
Maybe rates need to fall more rapidly if your record is clean.
Just something I've noticed that may be useful: If you don't live with your folks but you're still linked to their insurance plan, you should declare that you're not living in the house with the car. Should help a bit... Also be sure to shop around different insurance companies - even the small ones.
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That being said, it sucks to have to weigh these external cost factors when thinking about simple upgrades. Since I don't race, I was looking to modify the exterior of my car - just to have something a little different and pleasant to look at. At this rate it won't be happening until I get past the 'dangerous-driver age range' (17-24).
If some company could figure out a workaround, I'm sure they could make a killing as the 'modified car specialists'. Japan has a system worked out, but I don't think it could carry over because people there really spend their money... as in they earn lots and then actually spend it - which creates a very stimulated economy.
Maybe rates need to fall more rapidly if your record is clean.
Just something I've noticed that may be useful: If you don't live with your folks but you're still linked to their insurance plan, you should declare that you're not living in the house with the car. Should help a bit... Also be sure to shop around different insurance companies - even the small ones.
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You do relaize that a modified car is not just more of a risk in an accident, but also more a a risk in theft and vandalism ... You wnat your "premium" mods covered, pay the extra insurance
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