In Canada, when you buy a car from a dealer, it comes with certain “standard equipment” from the factory. If your vehicle has had significant changes from that standard equipment, whether it be a modified engine, exhaust, tires or suspension, you’ll need to let your insurer know, and depending on the changes, you may find that few insurers are willing to cover your modified ride. If the changes add value, you’ll also want to protect that new value.
Canadians love to modify their vehicles. In fact, as of 2015, they spent $21 billion a year doing so. More than $7 billion of that was in Ontario. When we talk about modified vehicles, we mean cars and trucks that have non-factory equipment. That can mean engines, transmissions, suspensions, exhaust systems, tires, paint, window tint, lighting, sound systems and more.
Modifying a vehicle is a good way to truly make it your own, but before you buy a modified vehicle or undertake to “pimp your ride”, there are a number of legal, safety and insurance considerations that you need to be aware of.
The first thing you need to know is that not all modifications are legal. If it’s not legal, it can’t be insured, and you could be in for a nasty surprise if you get in an accident. See the table below for a breakdown of some common modifications and their legal status in Ontario.
Insurance companies set their rates based on the year, make and model of your car, and the prior claims experience that insurers have had with similar models. Once you modify the car to any great extent, that claims experience becomes irrelevant, because you are no longer comparing vehicles with the same features, so the risks may be greater. Your car may have more power and speed, and may be a bigger target for thieves.
Depending on what exactly you’re changing, your current insurer may no longer want to insure you. Certainly any changes to the engine or suspension would reduce the number of insurance companies that may want your business. That’s why it’s a good idea to check with your insurance company before making modifications.
Depending on the exact nature of the modifications you want to make, you could find that there are few insurance companies that want to insure you and your vehicle. And yes, that could lead to significantly higher premiums than you would pay for a factory-built car.
If you’re tempted to simply not tell your current insurer about the changes to try to save some money, we advise that you think again. Remember that most of these changes are obvious to the eye, meaning that if you ever get in an accident, you’re probably going to get found out. That means any claim could be denied, you could be cancelled for misrepresentation, and then you’re in insurance hell for a long time.
The other consideration is that modifications may add significant value to your vehicle, and it could be a challenge to get insurance for the full value of the changes. Even those insurers that do insure modified vehicles will likely insist on an appraisal and an OPCF 19 endorsement, which will limit any potential insurance payout to the appraised value of the modified vehicle.
To protect your investment as much as possible, be sure to ask your insurance provider about what coverages may be available to extend coverage to your modifications. Again, this will require an appraisal, but depending on the nature of the mods, you may be able to cover the full value if you get in an accident and the car is a total loss.
If you’re considering making modifications to your vehicle, call one of the auto insurance experts at Mitchell & Whale first. They’ll be able to give you an idea of how your mods are likely to affect your insurance, and help you make an informed decision about how to proceed.
Want to add to this story? Let us know in comments below! Mitchell & Whale is a fast-growing insurance brokerage in Ontario, striving to make insurance _not suck_ one customer at a time. Give us a call today to discuss any of your insurance needs at 1.800.731.2228.