Vehicle insurance for modified cars: What are the risks and solutions?

Vehicle insurance for modified cars: What are the risks and solutions?
Vehicle insurance for modified cars: What are the risks and solutions?

Modified cars are one of the ways to express yourself and driving style. Many people like to change the appearance or performance of their car to better suit their tastes and needs. However, did you know that car modifications can affect the vehicle insurance you have?

Car modifications can increase the risk of damage, accidents, or theft that is not covered by the insurance policy. If you do not report your car modifications to the insurance, you could have difficulties when filing a claim. In fact, your claim can be rejected or your coverage can be stopped by the insurer.

Then, how to avoid vehicle insurance problems for modified cars? Here are some things you need to know and do:

What is car modification?

Car modification is a change or addition of components in a car that affect the appearance, function, or performance of the car. Car modifications can be done on the interior, exterior, engine, legs, electrical, or other accessories.

Car modifications can be light or heavy, depending on the degree of change made. Examples of light modifications are installing window film, spoilers, racing wheels, or LED lights. An example of a heavy modification is replacing the engine, turbocharger, suspension, brakes, or body kit.

Why do car modifications have to be reported to the insurance?

Modification of the car must be reported to the insurance because it can increase the risk covered by the policy. These risks include:

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  • Damage from modifications. For example, an electrical short circuit due to the addition of an LED lamp caused a fire.
  • Accidents due to modifications. For example, loss of control as a result of an increase in speed that does not correspond to the capabilities of the brakes or suspension.
  • Theft due to modification. For example, being targeted by thieves because of a flashy display or having a high selling value.

If you do not report the modification of your car to the insurance, then the insurance has the right to reject your claim in the event of losses related to the modification. The reason is because you have violated the risk change clause listed in the policy.

Based on the Indonesian motor vehicle insurance standard policy (PSAKBI), Article 8 regarding changes in risk in paragraphs one and two, it is stated that the owner must notify the insurer or insurer of any changes in the circumstances of the insured car. In this case it is a modification to the car.

Here is the sound of the article:

Article 8: Risk Changes

  1. The insured is obliged to notify the insurer of any circumstances that increase the risk guaranteed by the policy, no later than within 7 (seven) calendar days if there is a change in the part and / or use of the Motor Vehicle.
  2. In connection with the change in risk in Paragraph (1) Above, the insurer has the right :
    2.1. set this coverage to continue with the existing premium rate or with a higher premium rate, or
    2.2. terminate the coverage by returning the premium as stipulated in Article 27 paragraph (2).

How to report car modifications to the insurance?

How to report car modifications to the insurance is to contact the insurance agent or branch office that you follow. You must provide complete information regarding the type, specifications, and cost of the modifications you make to your car.

The insurer will then reassess the risks faced by your car. The insurance company will also conduct a survey or inspection to ensure the condition and feasibility of your car after it is modified.

After that, the insurer will tell you whether the coverage can be continued or not. If continued, the insurer will set a new premium rate in accordance with the new level of risk. If it is not continued, the insurance will stop the coverage and return the premium that has been paid proportionally.

What are the tips for insuring modified cars?

The following are some tips that can help you to insure a modified car:

  • Choose the type of insurance that suits your needs and budget. There are two types of motor vehicle insurance commonly offered in Indonesia, namely Total Loss Only (TLO) and Comprehensive (All Risk). TLO only guarantees total losses due to accidents, theft or natural disasters. Comprehensive guarantees total and partial loss due to accident, theft, natural disaster, or other damage.
  • Choose the extension of the guarantee that corresponds to the type of modification you make. Extended warranties are additional protections that you can choose to cover certain risks that are not covered by a standard policy. Examples of extended warranties are floods, earthquakes, riots, third party legal liability, additional accessories, or towing costs.
  • Compare quotes from various insurance providers. You can compare premium prices, guarantee coverage, claims process, customer service, and reputation of various insurance providers. You can use an online insurance comparison website or app to make your search easier.
  • Make modifications in accordance with safety and roadworthiness standards. You must ensure that the modifications you make do not violate traffic rules, exhaust emission standards, or other applicable regulations in Indonesia. Otherwise, you can get a sanction from the authorities or be refused by the insurer.
  • Perform routine maintenance on your car. You must maintain the condition of your car to keep it Prime and safe to use. You should perform periodic servicing, oil changes, tire pressure checks, brake checks, light checks, and other repairs if needed.


Car modification is one of the ways to express yourself and driving style. However, car modifications can also affect the vehicle insurance you have. Therefore, you must report the modification of your car to the insurer so as not to have problems when filing a claim.

You should also choose the type of insurance, the extension of the guarantee, and the insurance provider that suits your needs and budget. In addition, you must make modifications in accordance with safety and roadworthiness standards and carry out regular maintenance on your car.

Thus, you can enjoy your modified car without worrying about the risks of vehicle insurance.

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