Featured Article - How to overcome insurance modification charges

Making modifications to cars has long been a common practice with British motorists for years. Generally this had little impact on car insurance prices, with even the most stubborn of insurers agreeing to cover the cost of repairs even if they would only pay the costs of standard parts.

However, the motoring world is changing and running costs are on the up. The AA reported that the average driver paid 40% for car insurance in 2010 than they did in the previous 12 months. Uninsured drivers are a large contributor to this problem, with moneysupermarket.com research suggesting that one in six road users are currently without adequate cover.

As a response to this, insurers are becoming increasingly ruthless. Upping basic car insurance premiums, and also becoming increasingly stringent when it comes to car modifications. We therefore take a look at what counts as a modification, how you can overcome rising insurance costs and the new regulations that are currently taking effect on the industry.

What counts as a car modification and what impact will it have?
A car modification is basically any change which results in the car deviating from its original manufacturer specifications.

Some modifications, such as replacing a cassette player with a CD player or changing the gear knob, will likely have no impact what so ever on car insurance premiums. However, they could be used by insurers as a means to invalidate any car insurance claims made. The insurer may claim that they had been misled and simply refuse to pay out. It therefore makes no sense to avoid informing insurers about modifications, particularly if they will not cost you anything extra.

However, some modifications like the addition of a spoiler and/or alloy wheels, will likely add to your basic car insurance costs. This is due to the increased statistical likelihood of you making a claim and the additional value of your vehicle. The additional costs added onto insurance premiums will vary depending on the insurance company.

The best advice is therefore to check what sort of impact a modification would have prior to making it, in order to ensure that you can afford to pay for it in the long run.

What is the government doing about rising prices?
The government is attempting to combat these rising insurance costs with the introduction of Continuous Insurance Enforcement (CIE). This new regulation was brought into force on the 20th June 2011 and means that anyone who is without a car insurance policy covering their vehicle will face immediate £100 on the spot fines. The only exemption to this are vehicle which have been declared off the road with a Statutory off road notification (SORN) having been sent to the DVLA.

It is hoped that this will help to discourage uninsured drivers, which the Motor Insurers Bureau believe are costing the UK insurance industry £500 million each year. This is calculated by looking at the insurers lost income from these drivers and the fact that they have to cover the costs of these uninsured drivers when they are involving in an accident. This additional expenses/lost income is being passed onto law abiding motorists in the form of more expensive car insurance premiums and more stringent regulations regarding modifications.

These changes should therefore help to address the problem of rising prices and help ensure that car modifications remain affordable to a greater number of motorists.

What motorists can do
As has already been stated, minor modifications such as changing the gear knob on your car are unlikely to have any impact on insurance prices. However, for larger modifications there are still a number of things you can do to help ensure that insurance price rises are kept to a minimum:

• Improve yourself- the policy holder has the single biggest impact on car insurance premiums of anything, with age and levels of experience being the two major considerations in this regards. There isn’t much we can do about our age, but we can do something about our experience levels. Completing advanced driving courses such as pass plus will significantly lower car insurance premiums by providing a quick boost to experience levels.
• Named drivers- Adding an older and more experienced motorist onto your policy as a ‘named driver’ is another great way to lower premiums. This person should be both older and more experienced in order to have the desired impact. If this person happens to be female, then that would likely be an added bonus.
• Security features- Not all modifications will be discouraged by insurers, with security enhancing modifications such as the addition of recognised alarms and/or immobilisers actually attracting cheaper premiums.
• Consider your cover- There are three different levels of cover to choose from called third party, third party fire and theft and fully comprehensive. Fully comprehensive is the most complete level of cover as it agrees to cover the cost of repairs to your vehicle and to other people’s property. Third party is the other end of the spectrum and will only agree to cover the costs of repairs to other people’s property, with no cover for the policy holders own vehicle. If you are desperate to save money, then third party could be the right option but it is risky.
• Live to excess- The higher the excess you set, the less of a financial burden you will be to the insurer if a claim is made. You should therefore set a higher excess level if you are keen to get cheaper premiums, but remember not to offer to pay more than you can afford.
• Get on your bike- The more miles your drive; the more likely it is that you will have an accident. Insurers will therefore offer cheaper deals to people who spend less time behind the wheel. It therefore pays to set the lowest mileage allocation you can.
• Parking- Parking your car in a locked garage rather than on a public road while at home is a cheap way to reduce your insurance expenditure. This works through making your car less susceptible to theft or vandalism.
• Think about excess- Excess is the amount of money you are willing to pay towards any costs the insurer has to face. Therefore the higher your excess, the cheaper your basic car insurance premiums will be as the insurer will reward you for reducing their financial obligation if a claim is made. However, be careful not to offer to pay more than you know you will be able to afford.
• Shop around- comparing prices available through a large number of car insurance companies will give you a better chance of finding the cheapest deals available to you. It could be that one insurance company is far less discriminating when it comes to modifications than all the others. You can cut down the amount of time it takes to do this by utilising price comparison websites, which will compare prices available through hundreds of insurers in seconds.