10 car upgrades that look great, but could increase your premium

In this guide, we have discussed the top ten car modifications that no doubt look good but often increase your insurance premiums. So, before you go ahead and spend your hard-earned money on upgrades, it is wise to understand their aftereffects.

Let us start by understanding how car insurance providers calculate premiums, then move on to discussing upgrades that Filipino car owners love.

Car modifications & effect on premium

How do insurance providers calculate premiums? The premium is calculated based on risk. So, the higher the risk, the higher the premium.

How do insurers assess vehicle risk? This is the next essential question. To assess a vehicle’s risk, insurers consider several factors, including vehicle age & model, location, driver history, usage, repair costs, theft risk, and modifications.

Let us discuss the last factor, i.e., vehicle modification, in detail. When a car is upgraded, the insurer may see it as a high-value, high-risk asset, which might increase the claim payout.

For example, a stock sedan may cost less to insure, but the same car with a turbo upgrade or an expensive aftermarket sound system may cost you more in premiums.

Also Read: How regular car maintenance can protect your insurance claims: Let’s find out!

Reasons why modified cars cost more to insure

Coming straight to the point, modified cars are expensive to insure, because they often are -

• Expensive to repair
• Attract thieves
• Encourage aggressive driving
• Require special & expensive replacement parts
• Increases the risk of an accident

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Car upgrades that can hike your premium

Upgrade #1. Custom alloy wheels

Do you know that alloy wheels are among the most commonly chosen car modifications among Filipino drivers? They come with dual benefits: improved style and a higher handling quotient.

Why does it hike the premium?
The reason is simple: you see, custom, high-end rims are expensive, and so is their replacement. Also, they are common targets for theft. All these make your vehicle quite expensive to repair or recover for insurance providers. Therefore, car owners with premium aftermarket wheels experience higher premiums.

If you fail to declare this mod, it could affect your future claims.

Upgrade #2. Performance exhaust units

Do you know why car owners love performance exhaust systems so much? For its loud and aggressive sound. Most drivers love the performance look it creates for their vehicle.

Why does it hike the premium?
Insurance providers often associate performance exhaust systems with aggressive driving choices. It doesn’t matter if your intentions are clear and the inclusion is just a childhood dream you are fulfilling; this mod will make your insurer assume you are into high-speed & rash driving, thereby increasing your accident risk.

All these assumptions often lead to higher insurance costs.

Upgrade #3. Turbocharger & engine tuning

When it comes to serious performance upgrades, getting a turbocharger or tuning the mill are among the common choices. What changes do they bring? They dramatically increase the car’s power.

Why does it hike the premium?
More power often translates into a higher premium because the former often translates to -

• Faster acceleration
• Greater engine strain
• Higher accident potential
• Expensive repairs

All this reflects your vehicle as a high-risk unit in the insurer's eyes, leading to an increase in the premium

Also Read: Is your car insurance still worth it? 5 signs it’s time to review your policy

Upgrade #4. Low suspension kit

This particular car modification is common among owners of sedans and hatchbacks for two reasons: a sportier look and to improve cornering capabilities.

Why does it hike the premium?
A car with lowered suspension faces risks and challenges, including damage to the undercarriage from potholes, frequent undercarriage repairs, difficult handling during floods, and increased road-hazard claims.

Further, given the country's road conditions, a low-car is a high risk for insurers, and therefore it is charged a high premium.

Upgrade #5. High-end sound system

Who doesn’t appreciate a premium sound setup in their car and the driving experience it offers? In the car accessories aftermarket, subwoofers, amplifiers, and touchscreen head units are very popular.

Why does it hike the premium?
Expensive audio systems attract thieves, are expensive to repair, and often disturb the original setup and wiring. Also, these units increase the risk of break-in. All this often leads to an increase in the premium.

Upgrade #6. Custom paint job and wraps

Wanna make your car stand out? Getting a custom paint job or full-body wraps is the easiest way to do so. They give your car a stylish, highly personalised look & feel.

Why does it hike the premium?
There are a few reasons -

• Custom paint & wraps are expensive to repair
• Even a small accident or bump may require repainting or rewrapping

So, the more expensive it is to repaint or rewrap your car, the higher your premium will be.

Also Read: Common roadside emergencies & coverage that will be your saviour

Upgrade #7. Body kits & spoilers

Any car owner looking to give their car an aggressive look opts for body kits. This includes upgrades like bumpers, spoilers, and splitters.

Why does it hike the premium?
Such cosmetic upgrades often concern the insurers as they are fragile and expensive. Even a minor collision may result in costly repairs. Also, such body kits are often associated with rash driving, which increases the risk of accidents.

Upgrade #8. LED lighting & underglow

There’s no doubt that custom LEDs create a strong visual impression. And so, car owners often add features such as LED headlights, interior ambient lighting, and underglow.

Why does it hike the premium?
These lighting units sometimes violate local regulations and can create distractions on the road, increasing the risk of accidents. Therefore, on the grounds of safety and compliance, providers may charge a higher premium.

Upgrade #9. Window tint

Window tinting is extremely common in the Philippines; car owners opt for it to get some relief from the extreme heat. Further, it adds to privacy and comfort.

Why does it hike the premium?
Dark tints often create visual issues, and if they exceed the legal limit, insurers view them as a safety concern.

Overall, opting for this mod may affect premium pricing and claim approvals. It is therefore recommended to always stay within the legal tint level (you can confirm this via the LTO website).

Upgrade #10. Luxurious interior upgrades

Wanna make your car look and feel luxurious? Mods like leather seats, ambient lighting, a premium dashboard, and rear entertainment units will do the job.

Why does it hike the premium?
Adding luxury items to your car increases the vehicle’s value, attracts thieves, and raises repair/replacement costs. If these upgrades are included in your coverage, your premium will increase accordingly.

Also Read: Accident on the highway? What to do while towing coverage comes into play

Tips to avoid higher premiums after an upgrade

The goal here is not to avoid car modifications altogether, but to choose and proceed smartly. Here are some tips -

Tip #1. Declare all car modifications

Be honest and declare all car modifications to your insurer; never hide anything. Why? You see, undeclared modifications may result in consequences like denied claims, policy cancellations, and reduced payouts.

It is best to be transparent, as it is rewarded with financial security.

Tip #2. Compare policies before modification

Some providers offer more car modification-friendly policies than others. Therefore, before upgrading, request quotations from your existing and other insurers. Inquire how mods affect premium, and compare comprehensive coverage.

A little research can help you get a better deal that not only gets you to upgrade your car without a significant premium hike but also offers financial protection when needed.

Also Read: Top 7 benefits of zero-depreciation car insurance for car owners

Bottom line

No doubt that car upgrades are popular among Filipino car owners, especially among enthusiasts and young owners. These mods not only make your car look more stylish, but some also enhance its comfort and performance.

By analysing market trends, we have shortlisted ten car upgrades that look good but also affect your car insurance premium, adding a few more pesos to your premium. This increase might be worrisome for many car owners, especially if it wasn’t expected and you are on a tight budget.

So, if you are planning for modification, give this guide a thorough read and make smarter decisions that you won’t regret later.

According to experts at Carmudi, the best practice is to create a balance, i.e., choose the upgrades wisely, enjoy them thoroughly, stay honest with your insurer, and keep the long-term cost under control.

Remember, the aim is to beautify the car so it feels rewarding, not a financial burden.

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