Have you ever marvelled at a modified car? You've likely come across a few, whether on the road or in photos. Their allure is undeniable. However, did you know that not all modifications are purely aesthetic? Some are subtle, designed to boost a vehicle's power rather than its looks. It could be a striking body kit or a high-performance engine; car modifications come in a fascinating array of forms.
With the market trend showing a significant rise in the number of Filipinos embracing car modifications, it’s crucial to understand the impact of these changes on car insurance. In this article, we’ll delve into the world of modified car insurance in the Philippines.
Is this article for you? Especially if you're a car owner with plans for car modifications. Here, we’ll delve into the world of car modifications and insurance for such vehicles in the Philippines. This knowledge will not only inform but also empower you to make confident decisions about car modifications and ensure you're always financially covered by an insurance policy in case of an unfortunate incident.
So, let’s begin discovering the world of car modifications and insurance of such units…
What counts as a ‘Modified Car’
A vehicle is considered a modified car when any change made by the owner affects the unit's appearance, functionality, or performance. A few common types of vehicle modifications that car owners generally opt -
- Engine upgrade, installing a turbo or supercharger
- Custom exhaust system
- Upgraded suspension
- Body kit & spoilers
- Custom paint
- Tinted windows
- High-end audio system
- Advanced electronic installation
- Lighting modification
- Upholstery modification
Legal vs. Illegal car modification
Are car modifications legal in the Philippines? It depends; yes, if the modification falls within the parameters set by the Land Transportation Office (LTO).
Did you know that LTO has its definition and rules regarding car modifications?
- It defines motor vehicle modification as a physical change or alteration to the existing vehicle.
- Every modified vehicle is most probably subject to registration and reclassification.
- A modified vehicle is not registered by the LTO until it has been inspected by the Motor Vehicle Inspection Centre and has gained a Certificate of Road Safety from the assembler or manufacturer.
- Modified cars that violate the guidelines set by the LTO receive an ‘On Alarm’ status and are not registered. This means that the vehicle is not legally allowed to be on the road, and if caught, the owner could face fines, penalties, or even have their vehicle impounded.
Let’s now check out the rules on car modifications, what is permitted and what’s not -
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Legal (permitted) |
Illegal (not permitted) |
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Note that illegal modifications are not covered by insurance; therefore, it’s better to always check with your insurer and LTO.
Photo by FreepikCar modification & insurance
Is it possible to insure a modified car? Or does the standard car insurance policy cover a car after modifications have been made to it? Again, the answer is not definitive and depends on the insurance provider. While a standard car insurance policy typically does not cover certain revisions or upgrades, it is best to consult with your insurance agent and read the policy thoroughly to gain clarity on this subject.
However, modified cars do enjoy coverage from the insurance provider, given that the policyholder shares all the details regarding the changes with the provider. Why? For risk assessment and premium adjustment. You see, modified cars are riskier to insure than standard cars; therefore, the insurer is extra cautious. For instance, in the case of performance modifications, the insurer fears the risk of speeding and accidents, and when an expensive body kit is installed, there’s a higher risk of theft.
What if a modification isn’t declared to the insurer? In such cases, if an incident occurs and the policyholder files a claim, it will be rejected. In the worst-case scenario, the policyholder may be accused by the insurer of misrepresentation, leading to policy cancellation, denied payouts, and being held liable for third-party claims in the event of an accident. This highlights the potential risks of not declaring car modifications, making it crucial to always be upfront with your insurer and take responsibility for the changes made to your vehicle.
Car insurance coverage for modified cars
Here are a few coverage recommendations for modified cars (more add-ons can be included, as per the prerequisites).
Third-Party Liability - In the Philippines, every car owner (whether brand-new, used, or modified) is required to obtain Compulsory Third-Party Liability (CTPL) insurance, which protects against third-party injury or death.
Comprehensive insurance - This one is highly recommended for modified cars, as it provides financial protection against theft, accidents, fire, vandalism, and other risks.
Acts of God coverage - This one is crucial for car owners in the Philippines, a disaster-prone country. It offers financial protection against natural disasters such as earthquakes, floods, volcanic eruptions, and typhoons, which can cause significant damage to a car, especially a modified one.
Personal Accident coverage - Modified cars are considered riskier than standard units, and therefore, their chances of being involved in an accident are higher compared to those of standard units. Personal Accident coverage serves as a safety net, providing financial protection in the event of injuries, disability, or death resulting from an accident.
How to get insurance for a modified car
Getting insurance for a modified car is similar to insuring a standard car; however, due to the vehicle's riskier nature, a few additional steps are required. Let's walk through the process.
Step 1: Get the modified car inspected at the Motor Vehicle Inspection Centre and procure the Certificate of Road Safety from the manufacturer. Note that if the modification requires reclassification, the modified car must be re-registered.
Step 2: Contact the insurance provider and disclose all information related to the car modification; do not withhold any details. Remember to carry essential documents related to the modification, such as receipts, photos, and videos.
Step 3: Obtain coverage for the modified car as required. Consider getting an add-on.
Coverage, if the standard policy doesn’t cover certain revisions.
Step 4: Read the modified car insurance policy thoroughly, and if everything is in place, sign the papers.
Documents required for insuring a modified car
- Vehicle’s OR and CR
- Photo of the car, and the modification done
- Receipts/invoices related to the modification
- LTO approval and required certification
Photo by FreepikFactors affecting the cost of modified car insurance
When a modified car is insured, the insurer considers several factors to determine the premium. The type, value, and purpose of the modification will determine the cost that the policyholder will ultimately pay to benefit from the coverage.
The following factors can increase the premium: a boost in engine power or speed, an increase in the car’s value, and the likelihood of being stolen.
Further, making things easier, here’s a little breakdown on the modification type and its effect on the premium -
- High increase in premium: Engine upgrade
- Moderate increase in premium: New sound system, new paint, body kit installation, spoiler
- Reduction in premium - Installation of security system
Insurance providers to consider for modified car insurance
Here are a few insurance providers that offer coverage for modified cars, along with their respective highlights.
- AXA Philippines - Acts of god coverage available
- Malayan Insurance - Offers custom plans to clients
- FPG Insurance - Strong online presence, provides quotes fast
- MAPFRE Insurance - Good claim service
Tips to save money on modified car insurance
- Go for higher deductibles.
- Bundle all your insurance policies, such as car, home, health, and others.
- Install safety and security devices in the vehicle.
Bottom line
Getting insurance for your modified car isn’t just a legal formality; it’s much more than that. Doing so helps you protect your passion and investment, giving you peace of mind. As car modifications become more common, understanding their impact on insurance premiums is essential.
Remember to keep modifications within legal limits, be honest about the revisions with your insurer, compare different options, keep all necessary documents ready, and read the fine print. These steps help you find the right policy for your modified car, which not only enhances its appearance but also helps prevent it from becoming a liability.
FAQs
Q1. Is it legal to modify a car in the Philippines?
Ans. Yes, but the car’s modifications must comply with LTO regulations.
Q2. How do modifications affect insurance premiums?
Ans. Typically, car modifications increase premiums because performance upgrades make the vehicle riskier. However, safety-related modifications can sometimes lower insurance costs.
Q3. I recently modified my used car. Can I get insurance?
Ans. Yes. Many insurance providers offer coverage for used cars with legal and declared modifications.
Q4. How do I notify my insurance provider about a modification to my car?
Ans. Contact your insurance agent and give details about the modifications. Share photos, receipts, and other relevant information.
Q5. Does CTPL cover modified cars?
Ans. CTPL provides coverage for third-party injury or death claims, whether for standard or modified cars. It does not cover your vehicle or its modifications.
Q6. What if a policyholder doesn’t declare modifications?
Ans. Failing to declare modifications can result in policy cancellation, claim denial, and potential legal issues.
Q7. Are aftermarket parts covered under insurance?
Ans. It depends on the insurer and policy. It’s important to declare these parts and include them in the coverage.
Q8. Are racing modifications covered?
Ans. Usually, insurers do not cover modifications related to racing, as such activities are often illegal.
