Will Car Modification Impact Vehicle Insurance Claim Settlement?

Car modifications are gaining traction in India and can be seen mainly in youngsters who want to alter their cars per their requirements. Car modifications are quite common in Western countries, but when it comes to India, these are pretty new. As per the Motor Vehicles Act, every Original Equipment Manufacturer (OEM) vehicle should be registered with the Road Transport Authority (RTO) before plying in public places. It could be quite fun and satisfying to modify your car per your wishes, but it is equally important to note that any alterations made to an existing model would have implications.

These implications could be seen from the RTO side as well as the insurance company’s side. Certain alterations are permitted under the law, as well as those that are against the law. For example, using exhaust systems that increase the sound is not permitted under the law, and these things would not be considered even for insurance purposes.

When it comes to the insurance part, insurance cover is provided based on the details submitted by the OEM. Still, when you make some alterations, the vehicle’s structure would change, requiring a go-ahead from the insurance company. For this, you need to submit the details of all the modifications made to your car and get those modifications endorsed in your policy.

For informational purposes, car insurance has two categories: the third party section, which deals with the loss or damage to third parties, and the other is the own damage section, which deals with the damage to the vehicle.

Let’s Discuss the Alterations That are Allowed Under Insurance and Require Approval From the Insurance Company.

Alterations That are Permitted:

1. Color Change: Color change due to paint jobs is usually not a cause of insurance concern. You may change the color of your car, but it is important to make sure that the color is similar to that mentioned in the RC copy. Color changes different from those mentioned in the RC might not raise concerns sometimes, but it is advisable to have the car’s color as mentioned in the RC for all practical purposes.
   
2. Tyre Change: Tyres are an essential part of the car and are the pillars of performance. Tires can be changed without informing the insurance company or the RTO, but it is important to note that the tires’ brand could be changed, not the fit or size. Other accessories such as stickers, rain guards, mudguards, and door protectors can be used, which does not create a problem for insurance claims.
   
3. Pollution control: The other thing that could be installed in a car without the requirement of informing the insurance company is kits for pollution control. You may include these kinds of kits in the vehicle if they do not interfere with its performance.

Alterations or Modifications That Should be Informed to the Insurance Company:

1. Exterior Body Alteration: External body modifications such as paint job, markers, stickers, door protectors, or installation of side mirrors for enhanced view are accepted, but other major alterations such as flared fenders, custom hoods, installation of the rooftop, and design change in the vehicle could pose severe issues to the stability of the vehicle. All exterior body alterations should be duly reported to the insurance company, and proper endorsements must be made before making a claim.
   
   It is important to note that any external modifications made to your vehicle without approval from the insurance company could result in the rejection of claims in the future.
   
2. Engine Alteration: The other alteration is with the car engine. Vehicle engines are quite often modified to increase their performance. Engine modification is usually done using turbochargers or nitrous oxide systems, which is a cause for worry for insurance companies. Artificially enhancing the vehicle’s performance using such systems could lead to engine damages and failure of other vehicle parts and is, therefore, a major cause of concern for insurance companies.
   
   These enhancements are made to significantly increase the power and speed of the car, thereby increasing the chance of accidents. Any such modifications should be intimated to the insurance company immediately so that they can make necessary endorsements.
   
3. Braking & Suspension Alteration: The other alteration is related to the vehicle’s braking and suspension. Breaks are the most important parts of a car; if they fail, it will lead to accidents. On the other hand, suspension is required to absorb the shocks and maintain the vehicle’s stability. Changes are usually made to the suspension to raise or lower the car’s height, which may negatively influence the ground clearance and handling of the vehicle at high speeds.
   
   Braking and suspension alterations should be communicated to the insurance company so that the endorsement can be done on time. Adding external brakes could cause the original brakes to malfunction, as they may not fit the vehicle correctly.
   
4. Wheel Size Alteration: The insurance company should be informed of the other modification, which is the alteration of the wheel size. Wheels or tires can be changed, but not their size. Changes to the wheels’ size could increase the vehicle’s performance but could destabilize the vehicle at higher speeds, and this should be kept in mind before modifying.
   
5. Lights Alteration: Lights are a major thing that comes with factory settings. If you were to alter them with aftermarket lights, it could pose serious problems to your visibility, potentially leading to accidents. Any such alterations of the lights in your vehicle should be informed to the insurance company for making necessary endorsements. Insurance companies may sometimes only be willing to make the necessary endorsements if they think the new additions protect the visibility.
   
6. Alterations for the Disabled: Disabled people usually modify their cars as per the requirements. The modifications would be done so that they get easy entry/exit and comfortable sitting positions in addition to the addition or removal of gears or brakes, etc. You should inform your insurance company and provide the required endorsements whenever such alterations are made. Moreover, disabled people get many advantages regarding insurance through discounts.
   
7. Trailer Additions: You should add a trailer to your car or vehicle. It is important to understand that the vehicle might not be designed to handle a trailer and, therefore, might lose its balance, handling, and structural integrity with the addition of a trailer, which may lead to an increased risk of accidents. If you were to make any such modifications to your car or vehicle, you should inform your insurer and your RTO.

What to do When an Alteration is Made to My Car?

Step 1: The first step after modifying or altering your car or vehicle is to inform your insurance company as well as your RTO. As mentioned earlier, certain modifications and alterations are against the law and not acceptable to either the RTO or the insurance company. The insurer would reject such modifications in most cases.

Step 2: Once the modifications are informed to the insurance company, they will arrange for an inspection of the vehicle or the car. The inspection would capture all the car details, which would then be shared with the underwriter for consideration. The underwriter would then decide the premium to be paid for the modifications.

Step 3: The insurance company will issue an endorsement once the premium is paid. This endorsement should be taken whenever a material change is made to the vehicle.

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