With vehicle manufacturers offering a range of options on new vehicles from paintwork to wheels to performance upgrades, very few cars are now delivered to their customers as factory standard. But did you know that these are classed as modifications by some Insurers?
The OED defines ‘modify’ as ‘make partial or minor changes to’. In the context of a car, a partial or minor change could range from something as innocuous as a heated steering wheel, to having the engine tuned for performance.
Insurers ask about modifications for a number of reasons. Modifications cost money, therefore increase the value of a vehicle and subsequently the repair costs. Some modifications also make vehicles more theft attractive or enhance the vehicles performance above the usual standard, which may mean they require a more experienced driver.
So what do you need to tell your Insurance company? The British Insurance Brokers Association and Ageas Insurance have teamed up to provide a guide on vehicle modifications and in what circumstances these need to be disclosed.
The guide can be viewed here Report on Modified Vehicles and we have summarised some key points to consider:
What question did your insurers ask?
Did they ask if the vehicle was simply ‘modified’, or did they ask if the ‘engine, breaks, suspension and paintwork have been modified’? Arguably, in the former scenario the safest option would be to disclose any changes to standard specification. In the latter, heated seats and upgraded manufacturer fitted alloys would not need to be disclosed, but a performance pack would be.
What if you bought a used vehicle and don’t know if it’s been modified?
You have an obligation to answer Insurers’ questions honestly to the best of your knowledge and belief. If you didn’t know the lights weren’t the standard specification or that the previous owner had to pay for the heated windscreen option, this would be unlikely to cause an issue in the event of a claim. If, however the car had a spoiler or artwork, it would be difficult to argue that you thought it was the norm. Our advice would be if in doubt, ask your Insurer.
What would happen in the event of a claim if I didn’t disclose a modification?
This would depend upon the circumstances. If your failure to disclose vehicle modifications is judged to be deliberate and reckless, Insurers are within their rights to avoid payment of claims and treat your insurance as invalid.
If the disclosure is deemed to not be deliberate, but the Insurers can prove they would have charged an additional premium for the risk, they are able to proportionately reduce the settlement of any claim to reflect this.
The Financial Ombudsman Service can provide assistance in the event of refusal of a claim which you believe should have been paid. The aforementioned modifications guide has some examples of FOS rulings on modification disputes.
Our advice at Firth & Scott would be, if in doubt, ask your Insurance Broker or Insurance Company so that you don’t have any room for doubt in the event of a claim. Please do not hesitate to contact us with any questions.