Car insurance for modified cars
Expert tips for choosing car insurance for a modified car
Our car insurance expert, Adrian Taylor, has some top tips on searching for car insurance for modified cars.
Adrian Taylor
Executive General Manager – General Insurance
Declare all modifications
It’s important to declare any modifications to your vehicle before purchasing your car insurance policy. By not declaring changes made to the vehicle, you may not be covered for a claim if the modifications are damaged in an accident.
Keep your policy up to date
If you make any modifications to your vehicle during your period of insurance, you need to contact your insurer as soon as possible and update them on the changes or you risk not being covered if you need to claim. However, this may affect your car insurance premium.
Agreed versus market value
If you have a modified car, it may be more beneficial to find an agreed value policy. A modified car may be worth more than the market value of the standard car, which is why an agreed value policy may ensure you’re covered for the correct amount. Not all insurers will offer agreed value policies so be sure to shop around for one that suits your needs.
What is a modified car?
A modified car is a vehicle where alterations have been made, changing it at all from the manufacturer’s specifications. This can include the body of the car, wheels, engine, suspension and appearance. Modifications may be cosmetic, to improve the handling or performance, or to assist with the mobility of someone with a disability.
With Compare the Market, coverage may be available for vehicles with minor modifications that don’t require certification. If you have made any major modifications that affect the safety, suspension, engine or handling of the vehicle, our panel may be limited or unable to provide you with coverage. In that case, you will need a specialist insurer.
Understanding car insurance for modified cars
Does car insurance cover modifications?
Depending on your insurer, your car insurance may cover some or all legal modifications to your vehicle. Typically, you will need to declare any modifications to your insurer when you’re submitting your car insurance application, even for minor modifications such as installing a tow bar. Major modifications, however, are harder to find coverage for and may require specialised insurance.
If you decide to purchase a used car that’s undergone modifications, make sure you receive a written record of the changes from the previous owner.
Read the Product Disclosure Statement (PDS) before you choose your policy to understand the inclusions and exclusions of your cover. Read the Target Market Determination (TMD) to check your suitability for a policy.
What are classed as modifications on car insurance?
Most car insurance policies will define modifications as any changes made to a vehicle that differs from the manufacturer’s standard and may affect the appearance, handling, performance or safety of the car. This can include anything from custom paint jobs to major accessibility changes. The modifications covered by your policy may vary between insurers so it’s a good idea to compare cover before choosing a policy.
Are modified cars more expensive to insure?
Car owners with modified cars will likely have to pay a higher car insurance premium. This is mostly due to the fact a modified car will typically have a higher value than a non-modified car, and that any damages to the car may cost more to repair.
Young drivers under 25 with modified cars may be considered a higher risk of needing to claim, which can lead to higher premiums, or even being denied car insurance entirely. P-platers are prohibited from driving unapproved high-powered or performance vehicles in QLD1, NSW2, SA3 and VIC4.
What is the best car insurance for modified cars?
The best modified car insurance policy will depend on your individual circumstances and the level of cover you’re after. A comprehensive car insurance policy can provide the most cover for your modified car, and may include cover for:
- Replacing or repairing your car after an accident, theft, fire or severe weather event
- Towing your car if it breaks down
- Your personal property if it’s damaged or stolen while in your car.
You may also be able to choose add-ons to your policy such as roadside assistance, hire car cover and more.
Are disability car modifications covered by car insurance?
If your car has been legally modified for your disability, it’s possible to get cover depending on the total cost of modifications. Some insurers will only cover cars with modifications that cost less than a certain amount (e.g. $5,000). If you’re looking for cover, it may be better to call and ask about your modifications rather than compare online to be sure you’re getting the most suitable policy.
Legal vs illegal vehicle modifications
Before modifying your vehicle, it’s important to understand the legality around modifications and how they must comply with the Australian Design Rules and/or the Australian Vehicle Standard Rules.
What car modifications are legal in Australia?
There are many ways to legally modify your car in Australia, although some types of modifications may require certification and (for significant modifications) even assessment or inspections to be approved. It’s also important to note that while some modifications may be legal, they may not be covered by your insurance. Keep in mind that approval and legality of modifications will vary between Australian states and territories. Always check the relevant government body before altering your vehicle.
Common legal modifications may include, but are not limited to:
- Bull bars or towbars
- Car audio systems
- Heating, ventilation and air-conditioning
- Sound systems
- Custom paintjobs
- Mudflaps or pebble guards
- Roof racks
- Spoilers
- Tinted windows
- Sunroofs
- Alloy wheels or wider tyres (that meet the legal specifications)
- Sports seats.
What car modifications are illegal in Australia?
If you have illegally modified your car, your insurer may not only refuse to cover any claims, but also cancel your policy. It’s important to always get the appropriate permission when getting your vehicle modified. Some examples of illegal modifications include:
- Window tinting that doesn’t meet the transparency ratings of your state
- Under-body neon lights
- Lowering a vehicle too close to the ground (e.g. under 10cm)
- Any major upgrades to the engine, transmission or configuration of a car that hasn’t been approved by the appropriate regulatory bodies.
Meet our car insurance expert, Adrian Taylor
As Executive General Manager of General Insurance at Compare the Market, Adrian Taylor is passionate about demystifying car insurance for consumers, so they have a better understanding of what they’re covered for. Adrian’s goal is to make more information available from more insurers, to make it easier to compare and save.
Want to know more about car insurance?
1 Queensland Government. Provisional license restrictions. Last updated October 2022. Accessed August 2024.
2 New South Wales Government. Prohibited vehicles for P plate drivers. Accessed August 2024.
3 South Australian Government. License conditions. Last updated July 2024. Accessed August 2024.
4 Victorian State Government. Prohibited Vehicles FAQS. Accessed August 2024.