Vehicle modifications

If you don’t disclose modifications to your vehicle, your insurer can decline your claim and cancel your policy. Read this guide to find out what you need to tell your insurer to avoid problems.

What are vehicle modifications?

Vehicle modifications are changes to the standard specifications of your car. These include:

  • Changes to car parts to enhance the car’s performance; and
  • Parts or accessories that change the look of the car

Why are they an issue for consumers?

Vehicle modifications can make your car a higher risk for an insurer – modifications can increase the risk of an accident and/or increase the risk of theft. You need to tell your insurer about all modifications so it can assess the risk and decide:

  • If it will cover you
  • What it will cover you for
  • The amount it will charge you

Telling your insurer about vehicle modifications is part of your “duty of disclosure”. See our information on non-disclosure for more information.

Real life examples

Mr Ilam’s declined van claim

Mr Ilam* arranged cover for his van, but did not tell his insurer that there had been changes to the interior of his van. Changes included removal of parts and installation of plywood structures. Mr Ilam made a claim after a car accident. The insurer cancelled the policy and declined the claim because it said it would not have offered cover for the van if Mr Ilam had told it about the modifications. The IFSO Scheme agreed that the modifications should have been disclosed and the insurer would not have covered the vehicle if it had known this information. The insurer was able to cancel the policy and decline the claim.

Mr and Mrs Jay’s caravan theft

Mr and Mrs Jay’s* solar unit was stolen from their caravan. Mr and Mrs Jay made a claim, but the insurer declined it because they had not paid for an optional “accessories and modifications” benefit. Mr and Mrs Jay said that most caravans have power so a solar system was not an accessory or a modification to the caravan. The IFSO Scheme carefully reviewed the policy definitions of accessories and modifications and facilitated a settlement of the claim, based on the unique circumstances of the claim and policy wording.

*Names have been changed

Things to know about vehicle modifications

  1. What you need to tell your insurer

    You have full knowledge of your car and any modifications. You need to tell your insurer about all vehicle modifications. If you are unsure if your car has modifications, talk to your insurer.

    Examples of performance modifications:

    • A larger engine fitted
    • Changes to air intakes
    • Changes to the exhaust system
    • Lowered suspension

    Examples of changes to the look of the car:

    • Alloy (mag) wheels
    • Spoilers
    • Full body kit
    • Special paint finish

    You should also tell your insurer if you have replaced the sound system in your car because this may increase the risk of theft.

  2. When you need to tell your insurer about vehicle modifications

    You need to tell your insurer about the vehicle modifications:

    • When you apply for the policy. Tell your insurer if there are any modifications to the car already present when you first apply for the policy.
    • When the policy renews. Tell your insurer about any modifications that have been completed in the previous year.
    • Immediately, if your policy wording says you need to. Read your policy to see when your insurer requires you to tell it about vehicle modifications.
  3. What happens if I don’t tell my insurer about the vehicle modifications?

    If you do not tell your insurer about the modifications, this is called “non-disclosure”. The consequences of non-disclosure are serious. Even if you accidentally leave out details, any claim you make could be declined and your insurer could also cancel your policy. Non-disclosure can also impact your ability to obtain insurance cover in the future.

  4. My insurer has declined my claim – what do I do now?

    You are able to request a review of the claim decision through your insurer’s internal complaints process. If you are unhappy with the complaint response, you can ask the IFSO Scheme to investigate your complaint, for free.

Tips to avoid problems

Answer all policy application questions and read your policy document

When you take out insurance, make sure you provide the insurer with all important information about your car, including any modifications. If you are unsure of what a modification is, ask your insurer.

Read your policy document to make sure you understand when you need to tell your insurer about any new modifications to your car.

If you are buying a car second-hand, find out its history

You are responsible for understanding the history of your car and if there have been modifications. Ask the seller of your car about its history and whether there have been any modifications.

Tell your insurer about changes you make

If you make modifications to your car after the policy starts, let your insurer know.

Ask your insurer for more information

If you are not sure whether there are modifications to your car, ask your insurer for more information. It will be able to assist you to understand your obligations and what information it requires.