Car insurance for a modified car

Thinking about increasing the horsepower of your engine, making a statement with alloys or adding a spoiler or sunroof?

Styling your car can personalise your vehicle and potentially improve its performance. We look at factors to consider when insuring a modified vehicle and how it can impact your car insurance, plus who you can contact for more information.

What is a car modification?

Making changes to the appearance, features, performance, engine, suspension or fuel tank are some types of car modifications. Specific examples include adding window tinting, neon lights, custom paint, wider tyres, alloy wheels, a sunroof, a spoiler, a roll bar, higher-performance brakes, a new exhaust system, a new or improved audio system, turbochargers or superchargers, and sport seats. Keep in mind if you make suspension upgrades, this is usually considered a significant car modification, because it can impact the safety of your car, and it’s also important to make sure your modification is legal before going ahead with it. Underside neon lights, for example, are illegal on public roads in some states and territories. There are quirky vehicle mod ideas too, like fuzzy dice, wing mirror wraps, decals and dome lighting described as ‘cool and cheap’ online, depending on what you fancy.

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Vehicle modifications for people with disability

Vehicle modifications may be needed to support a person with disability for functional and practical reasons. They can include assistive technology that helps a person with disability to drive safely, as well as to store mobility aids. Funding may be available from the National Disability Insurance Scheme (NDIS) to help cover some costs. Spinal Cord Injuries Australia suggests engaging an Occupational Therapist for recommendations about vehicle modifications. Specialist disability car insurance may also be available.

What does modified mean in car insurance?

A modification is when alterations are “made to the manufacturer’s standard body, engine, suspension, wheels or paintwork of your car which may affect its performance, value, safety or appearance”, according to car insurance provider AAMI. In Australia, car modifications are required to be legal, and strict criteria apply – even before a car is sold for the first time – to ensure it is compliant to be driven on our roads.

How can car modifications impact car insurance?

If you modify your car and the changes are legally approved in your relevant state or territory, it may not impact your car insurance. NRMA says that under its car insurance policies, for example, “all legal modifications and accessories are covered”.
Alternatively, if you make certain changes, an insurance provider could charge you more, for reasons like the mods impacting the safety of your wheels, or making it more likely your car will get stolen. Bingle says “if your car looks like it’d be more at home at a Grand Prix than at a school pick-up”, it could impact your insurance. It says it doesn’t cover custom paint or specialised paint (after market), nitro or hydrogen fuel, a petrol turbo or supercharger (when fitted after market), or a roll bar, roll cage, or racing harness, and says the type of car insurance you take out can impact whether or not you are covered.

Even if you make legal car modifications, your provider may set a requirement that you tell them before modifying your car. They may limit what car modifications are covered under a policy, even if they are legally permitted. If you make illegal car modifications, it could void your car insurance policy entirely.

Can you get car insurance with a modified car?

Yes, you can usually get car insurance with a modified car, but it may be available through fewer providers, and the modifications you make need to be legal. If your car has been heavily modified, you might need specialist car insurance, but you could also be covered with a general car insurance policy, depending on what changes you make.

Are modified cars more expensive to insure?

From an insurance perspective, modifications that change the look and performance of your vehicle may be considered to create a greater risk of you having an accident and of your car being stolen. They may also bump up the costs for the repair or replacement of your car. Depending on your insurance provider and the modifications you make, you may end up paying a higher premium. It is also important to note that you generally stand a better chance of getting a more affordable insurance quote if your car has been professionally modified, compared to if you do the mods yourself.

Should you tell an insurance provider if you modify a car?

If you already have car insurance, consider discussing the modifications you are thinking about with your provider before you make them. Your provider will be able to let you know if the modifications will be covered by your current policy or if you will have to change your cover. Plus, they should be able to give you an idea of potential premium changes that could apply.

What rules apply to vehicle modifications in Australia?

States and territories in Australia apply Vehicle Standards Rules that owners of vehicles need to comply with. You may need to seek official approval before performing certain complex modifications to your vehicle, such as an engine upgrade, gearbox and rear axle changes or steering and brake replacements. In addition, if you are a young driver with a provisional or probationary licence, you may not be permitted to drive cars that have received certain performance modifications.

What car modifications are legal and illegal?

Legal car modifications

Minor modifications that insurance providers will typically let you make to your car include:

bicycle racks
tow bars
roof racks
alloy wheels

It’s important to bear in mind many providers will ask that you notify them whenever you make a modification to your car.

Illegal car modifications

Common, potentially illegal car modifications can include:

loud exhaust systems
tinted windows that are darker than what is legally permitted in your state or territory
non-compliant modifications to the engine, including supercharged or turbocharged engines
lowered vehicles where the body is more likely to scrape the road, curbs and speed bumps
under-body neon lights
tyre replacements that don’t comply with the car maker’s minimum load carrying capacity specifications
changing seat belts for harness belts
roll bars or roll cages

What happens if you modify your car illegally?

If your car modification is illegal, you are at risk of being issued a significant fine, or your vehicle being de-registered or even impounded by the police or the transport department in your state or territory. You could also receive a defect notice from the transport department or police if your vehicle is found to be defective (e.g. it does not meet roadworthiness requirements and registration standards because it has bald tires or is too low to the ground). This would require you as the owner to have the vehicle repaired to make it safe and legal to drive.

If an insurance provider is made aware of illegal modifications, your policy may be cancelled. You may also be denied cover if you apply for car insurance for a vehicle that’s illegally modified.

How can you check if a car modification is legal?

Speak with your relevant state or territory transport department for more details to find out if a car modification is legal. More information is available at these links:

5 factors to consider with car modifications

Here are five factors to think about if you are considering modifying your car.

What mods do you want to make? And, are there some you haven’t considered that could make your car stand out?
Are the mods legal? Do your research and check this out by enquiring with your relevant state or territory transport department.
Will the mods add value or power to your car? Consider whether the modifications will increase the value or performance of your vehicle, and how this could affect the cost of your car insurance. Generally, the more extensive or expensive your changes, the more you will have to pay on car insurance.
What will any mods mean for your current car insurance? If you already have car insurance, talk to your insurance provider, let them know what you’re planning and ask whether it will affect any existing cover.
Could you get a better car insurance deal elsewhere? Can you get the modifications covered under a standard policy, or will you need a specific policy, specialist car insurance or disability insurance cover? Research widely, and read the fine print for a policy such as the Product Disclosure Statement (PDS), Target Market Determination (TMD) and extra information from a provider to check if it’s right for you.

FAQs

What are the different types of car insurance?

There are four main types of car insurance in Australia. They are:

Compulsory Third Party (CTP) insurance: provides financial cover for injury or death in an accident.
Third party property damage: provides financial cover if you cause damage to someone’s property (such as their car or you drive into their fence) in an accident.
Third party, fire and theft cover: provides financial cover for your car if it’s damaged by fire or stolen by thieves, as well as cover for damage to someone’s property.
Comprehensive car insurance: the most advanced form of cover that provides financial protection for your vehicle and others if you are involved in an accident, if your car is damaged by applicable weather events or if it’s stolen.

What’s the difference between market value and agreed value in car insurance?

Depending on your policy and insurance provider, you will often have a choice between market value and agreed value when deciding on your cover.

Market value means the policy will cover you for the market value of your car at the time of the claim, if your car were to be written off. This is subject to depreciation in your car’s value from when you take out the policy to the time of the claim.
Agreed value involves you and your provider agreeing on how much the car is worth. Agreed value provides more certainty about what compensation you will receive if your car is written off; however, the premiums can be higher than insuring your car for its market value.

Is disability car insurance available for car modifications?

Specialist disability car insurance is available in Australia. For example, Blue Badge Insurance says it offers “disability car insurance benefits [that] include up to $5,000 in cover for assistive technology that’s in your car, plus cover for your family, support workers and others who regularly drive your car.” It covers disability conversions including hand and foot controls, hoists and ramps from wheelchair modifications.

What vehicle standards apply in Australia?

In Australia, Road Vehicle Standards (RVS) legislation came into effect in 2021. Before a car is provided to the market for the first time, either new or used, it needs to comply with the Road Vehicle Standards Rules, which cover how the Road Vehicle Standards Act 2018 (RVSA) is applied.

What are the Australian Design Rules?

Vehicles sold in Australia need to be certified as compliant with the Australian Design Rules (ADRs), which the Australian Government describes as “national standards for vehicle safety, anti-theft and emissions,” adding they “are generally performance based, and cover issues such as occupant protection, structures, lighting, noise, engine exhaust emissions, braking and a range of miscellaneous items.” ADR standards can change. For example, one recent regulation, ADR 85, is anticipated to impact how many popular car models, such as the Volkswagen Amarok ute and Nissan GT-R supercar, are made.

What are the Australian Light Vehicle Standards Rules?

The Australian Light Vehicle Standards Rules (ALVSRs) are model rules the National Transport Commission describes as regulating “in-service vehicle standards for light vehicles”. These are based on the ADRs, and form the basis for states and territories to apply their own Vehicle Standards Rules that owners of vehicles need to comply with.

Cover image source: ParabolStudio/Shutterstock.com

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This article was reviewed by our Sub Editor Tom Letts before it was updated, as part of our fact-checking process.

Jacqueline Belesky

Sub Editor

Jacqui Belesky is a senior marketing communications professional with over 15 years experience in journalism, marketing, editing, digital content, content marketing, content management & PR. She holds a Bachelor of Journalism (Distinction), QUT, and postgraduate qualifications in publishing from UQ.

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