Navigating Modified Car Insurance in the Philippines

According to the Nielsen Global Survey of Automotive Demand, nine out of ten car owners intend to modify their ride once they have extra funds. There are plenty of options for car modifications, and one can not deny the performance and aesthetic value they add to a ride.

How much does car modification cost in the Philippines? The most basic car upgrade in the country, like getting a louder horn, costs PHP 1000. Though expensive, such upgrades keep your car in top condition and line with the latest technology. However, did you know that such upgrades affect your insurance premium - the more the upgrades, the higher the insurance payments. There are more such things about car modification and insurance, a car owner needs to know, and in this article, we’ll be shedding light on all of that and more.

Also Read: No car insurance? Here’s what all wrong can happen in the Philippines

So, without any delay, let us discuss different aspects of car modification and insurance.

Does the LTO approve car modification in the Philippines?

Until the time car modification falls within the approval parameters of the Land Transportation Office, they are permissible.

What is motor vehicle modification? As per the LTO, motor vehicle modification is defined as any physical alteration or change in the existing vehicle. It includes a change in engine displacement, body configuration, etc.

 

LTO guidelines for car modification -

• All modified vehicles, new or used, are subjected to registration and reclassification.
• Before registering a modified motor vehicle, it must be inspected at an LTO-accredited Motor Vehicle Inspection Centre (MVIC).
• Brake system, steering wheel assembly, air conditioning system, suspension, and exterior & interior trimmings are not considered as a change in vehicle type classification.
• LTO does not allow modifications involving environment or safety. It includes modifications involving - axle, chassis, extended body/chassis, rim size, muffler, and handlebar, body dimension & design.
• Along with the MVIC report, a Certificate of Road Safety from the assemblers/manufacturer is also required.
• An ‘On Alarm’ status indicates a modification violation and hints at it not getting registered.

Car modification and insurance - An overview

When it comes to  insuring a modified car, owners are often found wondering if they can insure their customised ride. While standard car insurance policies, CTPL insurance is mandatory, and comprehensive insurance is often included for their immense benefits, whether or not car upgrades or changes are a part of the latter depends on the insurer. Therefore, it is recommended to always read your insurance policy contract thoroughly or ask your agent appropriate questions.

Key points about modified car insurance -

• In some cases, if the insurance company is informed about the upgrades and modifications made to the car, the changes are covered under the policy.
• Insurance policies that include modified cars are usually expensive, i.e., they charge a much higher premium. That’s because such are considered riskier than the standard ones and are more likely to be on the target list of burglars.
• In cases where car modification is illegal or unauthorised, the insurance will become void, leaving you with no protection. Therefore, it is advisable to keep the modifications within the LTO parameters and your insurance company.

Car modification and insurance - Types of coverage

There are two ways to include your car modification in your insurance policy - Supplement coverage and classic/collectible car insurance.

Supplement coverage	It is an add-on policy that covers the cost of replacing the modifications
Classic/Collectible coverage	Next to supplement coverage is collectible car insurance, however, it is advisable to seek a carrier that specialises in such an insurance. Note, such coverage is at the discretion of the provider and is based on what they consider as a classic car.

Car modification and insurance - Documents needed

Typically, the following documents are required for insuring a modified or upgraded vehicle in the Philippines -

• Original Receipt and Car Registration (OR/CR)
• Chassis and engine number
• Invoice
• License and valid government-issued ID
• Conduction sticker

In case of a second-hand car, the owner is required to submit car images from all angles - front, side, and rear. No additional documents are required while insuring the car’s upgrades. Just declare the changes or additional features to the standard application form.

Also Read: 8 Must-ask questions before buying car insurance

Car modification and insurance - Step-by-step guide

Acquiring car insurance for your modified car is the same as insuring your regular car, however, with a few added steps. Below, you will find the step-by-step procedure -

Step 1: A modified car must follow the LTO regulations, in case the vehicle warrants reclassification, re-registration is needed.

Step 2: Next, it’s time to have a word with the insurance agent and discuss the coverage requirements of your modified car. Remember to be fully transparent and tell all about the changes/upgrades done. Here you might need to show modification documents like photos, receipts, videos, among others.

Step 3: Time to sign the insurance contract, but do that post reading the agreement thoroughly.

Step 4: Consider getting supplement coverage, in case the given coverage does not cover your modified car fully.

Note - In case of a classic car that has undergone one-to-many modifications, it is advisable to go for an insurance policy that is designed specifically for vintage cars.

Car modification and insurance -Claim process

The process for filling a claim for your modified car is the same as a regular car, which includes -

• Submit the following documents - a copy of the insurance policy, original receipt of insurance payment, photocopies of your valid IDs, Police Report Affidavit, photographs of damages, and last but not least, the filled-up insurance claim form from the insurer.
• After all the above-mentioned documents are submitted, you’ll receive the Letter of Authorization to repair the damages.

Note, here while the OR represents your innate nature of being up-to-date with the payments, the photographs and the Police Report affidavit prove the events' authenticity.

Also Read: How to claim CTPL Insurance? Here’s what you need to know

Things to consider

It is a given that car modification impacts your insurance policy greatly, therefore it is important to ensure/know the following -

Level of protection - A standard car insurance policy does not cover upgrades or changes done to a motor vehicle. In this case, if something happens to a modified car, you won’t be entitled to any financial benefit concerning the repair and replacement.

Increased premium - In cases where the modified car is covered by your insurance provider, the insured ends up paying a higher premium. Why? This is because of the risk associated with changes /upgrades made to the car’s engine, design, or configuration. Further, opting for an additional or add-on insurance policy will bump the overall insurance cost.

Risk of policy cancellation or rejection - You won’t be able to enjoy the benefits of your car insurance policy, if you fail to declare the modifications made to the vehicle. If you think you’ll hide the modifications from the insurance agent, then you should know that the claim is approved after a thorough investigation of the vehicle. Further, if the modification is found to be dangerous, the policy may even get cancelled.

Tips to manage modified car insurance cost

To efficiently manage the cost of insurance of your enhanced car, swear by the following tips -

• Research and compare - It is very important to compare different insurance providers and their respective polices on modification before making the final call.
• Enhance car’s security - It is a general fact that cars with alarms, tracking devices, dash cam, etc, experience lower premiums.
• Club-up policies - If you choose a solo provider for all your insurance-related needs, there are high chances of them offering you a discount on multiple policies.
• Limit mileage - Cars that are driven less often qualify for low premium. You can take advantage of this scheme by opting for shared or public transportation.

Also Read: Top car insurance picks in the Philippines; know which one is right for you

Bottom line

Careful planning is a must when navigating your way through the narrow lanes of modified car insurance coverage. Some of the crucial steps to work towards protecting your beloved ride include declaring modifications, ensuring its legal compliance, and choosing the right insurer with the best coverage options. However, it is important to remember that while modification enhances your car’s performance and aesthetic quality, it influences the insurance premium and coverage.

Also Read: Car insurance sorted? Now follow these essential steps