Thinking of car modification? Know how it will affect your policy

Car modification is becoming increasingly popular among car owners in the country. Whether for style, performance, or comfort, drivers are upgrading their vehicles to match their personality and driving needs. But here’s the thing - modifying your car affects your insurance.

While customising your car can be exciting, it can also impact your insurance in ways you might not expect. Let’s break it down simply so you can make smarter decisions.

Why Filipino car owners modify their vehicles

There are several reasons why car owners in the Philippines choose to modify their vehicles:

• To experience a better driving experience, improve the car’s performance
• To make the car stand out by enhancing its aesthetics
• To increase the car’s comfort and convenience
• To make the car more secure and safe

In cities like Manila or Cebu, where traffic conditions vary, modifications can even make daily driving more manageable.

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Popular car modifications in the Philippines

Some common upgrades include:

• Alloy wheels
• Body kits
• Fine engine tuning or adding a turbo
• Tinting the windows
• Upgrading the sound systems
• Fine suspension adjustments

While these upgrades may seem harmless, they can significantly affect your insurance coverage.

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Understanding car insurance basics

Before diving deeper, it’s important to understand how car insurance works locally.

Types of car insurance coverage

Some of the most common types of car insurance offered by providers and opted for by car owners include -

• Compulsory Third Party Liability (CTPL) - Mandatory, required by law
• Comprehensive Insurance - Highly recommended; covers damage, theft, and natural disasters
• Add-ons - Optional coverage that car owners opt for as per their specific requirements

How premiums are calculated

Providers usually consider the following factors when calculating insurance premiums -

• Car model and age
• Market value
• Driver’s profile
• Usage of the vehicle
• Coverage
• Deductible

Now here’s where modifications come in—they can change how insurers assess your car’s risk.

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How car modifications affect your insurance policy

Increased risk and premium adjustments

When a car is modified, insurers often view it as a high-risk vehicle. For example:

• Performance upgrades in a vehicle can increase accident risk
• Expensive accessories translate into high repair costs and risk of theft
• As a result, your premium may go up.

Impact on claims approval

If your car is modified and not properly declared, your insurer might:

• Reject your claim
• Only partially covers damages
• Cancel your policy

Pro Tip: Be transparent, update your provider about the smallest upgrade or modification.

Declared vs undeclared modifications

Why is modification disclosure essential?

Insurance companies need accurate information from their clients, whether it's personal details or vehicle information. Further, this information needs to be updated in case of any revision. When it comes to car modification, it ensures the following -

• Proper valuation of your car
• Correct premium calculation
• Smooth claims processing

Risks of non-disclosure of modifications

Failing to declare modifications can lead to several consequences, including:

• Claim denial
• Policy cancellation
• Financial loss

In simple terms, hiding upgrades is never worth the risk.

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Types of car modifications and their impact on insurance

There are three main types of modifications - cosmetic, performance, suspension-related, and safety; all of which impact your insurance policy. Let us understand each in detail -

Cosmetic modifications

It includes: Paint jobs, wraps, and body kits.
Impact on premium: Such changes have a moderate impact on the premium. Why? Custom paint or wraps may increase your car’s value and require additional coverage. Similarly, body kits are usually expensive to repair.

Performance modifications

It includes: Engine & suspension upgrades
Impact on premium: Turbochargers or engine swaps can enhance performance, increase speed, and thus increase the risk & insurance costs. Suspension upgrades, such as lowering or lifting your car, can affect handling, which is considered risky.

Safety modifications

It includes: Installation of dashcams and anti-theft devices
Impact on premium: Good news! Such modifications lower your premium and improve your chances of claim approval. You see, not all modifications are bad—some actually work in your favour.

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Legal considerations (modification-related)

What does LTO say on car modifications?

The Land Transportation Office (LTO) regulates vehicle modifications in the Philippines. Some changes require approval, including engine alterations and structural modifications.

Compliance and documentation

When you are part of the car modification club, you need to make sure the paperwork is in place and readily available. This includes - vehicle’s OR/CR, modification permits, and inspection documents.

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How to modify your car without affecting your insurance (negatively)

Tips for smart modifications

• Inform your insurer before making changes
• Choose practical upgrades over risky ones
• Keep documentation organized

Choosing the right insurance provider

Look for insurers that:

• Allow customization coverage
• Offer flexible policies
• Understand local driving conditions

This can save you a lot of trouble in the long run.

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Car Modifications: Pros and Cons

Advantages	Disadvantages
Personalised & customised driving experience Enhanced performance Better cabin comfort  Improved the car’s safety	Increased premium Possible claim problems  Legal complications

It is essential for car owners planning modifications to weigh the pros & cons carefully before moving forward.

Cost implications of modification (beyond insurance)

Maintenance costs

• Modified cars often require:
• Specialized parts
• Frequent servicing

Resale value

While some mods increase value, others may:

• Limit buyer interest
• Reduce resale price
• Keep future selling in mind when modifying your vehicle.

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Expert tips for car owners

Tip #1. Always notify your insurer

• Before making major modifications
• Immediately after completing upgrades

Tip#2. Best practices for documentation

Keep a record of the following to ensure hassle-free claim processing

• Images of the modification work
• Receipts and invoices from the mod work
• Certification from mechanics

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Conclusion

Are you planning to modify your car? If so, you should know that enhancing your car has implications beyond its appearance. Therefore, modifications should be considered a luxury that comes with added responsibility, and a car owner should take them seriously.

It is a fact that most car modifications enhance the vehicle’s look and performance, but they also impact the premium. So, what to do, what is the right course of action?

• Be transparent
• Stay compliant
• Choose your upgrades wisely

Remember, when done right, you can enjoy a customised ride without compromising your insurance coverage or financial security.

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