Auto Insurance Rates And Vehicle Upgrades

Auto Insurance Rates And Vehicle Upgrades

By:


In this article you may learn how various vehicle upgrades such as interior pieces, exterior modifications and performance parts might affect car insurance premiums. Most disclosed modifications influence premiums, while some may render your insurance invalid.

Here you can learn the difference between general upgrades, performance upgrades, and aethetic upgrades. We'll then explain why many auto insurance companies are loathe to cover many types of modifications. When they choose to do so, the policies are usually accompanied by strict limitations and much higher premiums; you'll discover why below.

"Typical" Modifications Versus Performance Upgrades

If you plan to own your vehicle for several years, you'll likely make a few upgrades over time. That's normal. For example, you might have a new stereo system installed to replace the original unit. Or, you might want an in-vehicle DVD entertainment system in your SUV. You may install rally lights on the roof of your car, or get a hands-free bluetooth telephone receiver.

While the upgrades described above are geared for comfort, others are designed to give your vehicle an attractive veneer or a boost in performance. For example, new leather seats, shiny aftermarket rims, and window tints all make your car look more aesthetically appealing. On the other hand, a racing transmission, performance exhaust, and hi-flow air intake are designed for performance.

All of the above modifications should be reflected on your auto insurance policy. Otherwise, they are not likely to be covered. Worse, in some cases, a particular upgrade may render your policy null and void. That could be disastrous if you are involved in a traffic accident during which your vehicle is totaled.

Why Insurance Companies Refuse To Cover Souped-Up Vehicles

From the insurer's perspective, a car that has been modified with expensive performance upgrades represents an enormous risk. Some car owners spend two to three times the cost of their vehicle on upgrades and modifications. This is problematic for car insurance companies for two reasons.

Firstly, performance parts and systems added to the vehicle often times cost more than the car itself. If the vehicle gets wrecked, the replacement value for all the upgrades would exceed the value value of the car.

Second, performance upgrades suggest the car's owner has a propensity for racing or other similarly risky driving behavior. That elevates his (or her) risk class and implies a greater likelihood of a traffic accident.

Together these factors may prevent many insurance companies from offering coverage for highly modified cars. When a new policy is extended, or an existing policy is appended, it typically comes with limitations and higher rates.

Limitations When Insuring A Modified Vehicle

Many auto insurance companies are willing to cover cars that have been upgraded with modified parts... for a price. Their main issue is a the high probability of an insurance claim. To that end, they will usually cap the number of miles you're allowed to drive each year and place additional restrictions on the type of driving you do - for example, racing. Such policies will often restrict policyholders to driving less than a certain number of kilometers throughout the year.

The replacement cost reflected in these type of policies is based on an agreed upon value or a stated value. The former is a number that is negotiated between you and the insurer. In the event of a loss, the insurer agrees to pay the negotiated value. The latter is also a negotiated number. The difference is that the insurer agrees to pay the lesser of the stated worth or fair market valuation in the event of a claim.

Can You Find Better Coverage With Lower Rates?

As anyone would expect, auto insurance rates for a heavily modified vehicle are much higher then for the stock model. Moreover, many insurers will refuse to cover some types of modifications. This is an ideal time to shop for the unique type of coverage you need with rates that fit your budget. When you contact your insurer to update your policy with recent upgrades, determine the effect those upgrades will have on your premiums. Then, look online for lower car insurance rates.

Most consumers never invest the time to shop around for a better package (i.e. open coverage options, a better service, and lower insurance premiums.). You may find that doing so uncovers surprisingly attractive deals.

About the Author:
Kade Phillips has many years of experience in writing useful insurance tips. Currently Kade contributes vast expertice to websites owned and operated by Kanetix which offers
cheapest auto insurance quotes
. If you are a Canadian and you wish to get auto insurance online, then visit Kanetix and get online auto insurance quotes.



Article Originally Published On: http://www.articlesnatch.com


Tags: , ,

|

Loading...
Related....
Videos...

Recent Finance Articles

Comments

Still can't find what you are looking for? Search for it!

Loading

Site Navigation:

Copyright 2005-2011 ArticleSnatch, LLC - All Rights Reserved.
Privacy Policy | Terms of Service.