It’s been my practice to buy cars and, after three years, modify their parts. How does this affect my motor insurance claim process if these custom parts are damaged in an accident? Do I need to inform my insurer about these modifications when I renew the policy?
Modifying a vehicle every three years, may impact your motor claim processing. The Insurance Market in India is regulated by IRDAI. We would like to draw your attention to The Motor Vehicles Act 1988, Section 52, which reads as follows:
“No owner of a motor vehicle, shall so alter the vehicle, that the particulars contained in the certificate of registration are at variance with those originally specified by the manufacturer.”
Such material changes are required by the aforesaid Act to be reported to the RTA office and getting the vehicle registration certificate endorsed.
Impact on performance, safety
When it comes to insurance, as a thumb rule, one should intimate one’s insurer about any modifications done to their vehicle, including custom parts, if any. This is to ensure that your policy correctly reflects the status of your vehicle and the insurance company is made aware of the material facts, which may affect the risk evaluation due to its impact on performance and safety.
To elaborate further, we cite a few examples:
1. A petrol tank fitted vehicle is modified to add CNG making it bi-fuel
2. Change in colour of vehicle
3. Addition of trailer
4. Changes in engine to improve performance
5. Upgrade of tyres and wheel rims
6. Upgrade in brake and transmission system
Generally, the insurance policy covers all standard factory fitments ( excluding the add-on accessories purchased separately but purchased along with the vehicle) — fitments that include the parts and accessories. Customisation to the vehicle, does not automatically get covered in the policy, without the insured having informed the insurer. Hence, it is imperative for you to apprise your insurer of any changes/modifications/alterations done.
In scenarios where these custom parts get damaged in an accident, and this was not informed to an insurer, chances are that your claim could get rejected or partially denied. The modification carried out in any form may attract additional premium. A simple example could be that, the addition or removal of electrical and non-electrical items/accessories will lead to a change in your motor premium.
You should be open and honest about any modifications made to your car, to make easier the submission of motor insurance claims and to ensure an error-free renewal. Provide as many precise details as you can, including the cost, when renewing the insurance policy. Bills, receipts, and pictures of the changes should be kept on file as these might be crucial documentation for the claim process.
To conclude, if you wish to modify your vehicle, we recommend it is best to inform your insurer with relevant and important details during the policy tenure (i.e., as soon as the changes/modifications/alterations are carried out) or during renewal. In the unfortunate event of a vehicular accident, your insurer should be aware of the modifications. This not only shows transparency on your part but also complies with the statutory requirement.
The writer is Chief – UW, Claims Property & Casualty, ICICI Lombard
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