Learn about the types of car modification that affects the insurance premium.

Vehicle modifications and car insurance: what affects your premium and what to disclose

Q: Do car modifications affect insurance in India?

Yes. Modifications that alter a vehicle's performance, value, or risk profile can affect the insurance premium and must be disclosed to the insurer. Undisclosed modifications that are material to a loss may result in claim rejection.

Q: Does engine remapping void car insurance?

Not automatically. Engine remapping does not void car insurance if it is declared to the insurer and endorsed on the policy. However, an undisclosed remap may lead to claim rejection if it contributes to an accident or loss.

Q: Which car modifications do not affect insurance premiums?

Minor cosmetic additions that do not materially change the vehicle's value or risk profile generally do not affect insurance premiums. Examples include seat covers, floor mats, and small decorative stickers. Modifications that increase value or alter performance should be disclosed.

Q: Is it mandatory to inform the insurer about modifications?

Yes. Any modification that materially affects the vehicle's value, performance, or risk profile should be disclosed to the insurer. Failure to do so may be treated as material misrepresentation and could result in claim rejection or policy cancellation.

Q: Can car modifications reduce my premium?

Yes, in some cases. ARAI-approved anti-theft devices may qualify for insurance discounts if the insurer recognizes them as reducing theft risk. Eligibility criteria vary by insurer.

Q: Do I need RTO approval for performance modifications?

Yes. Modifications that alter the engine, structure, or vehicle specifications beyond the manufacturer's approved limits generally require RTO approval. Unauthorized alterations may violate applicable vehicle regulations.

Q: How do I update my policy after a modification?

Inform Zurich Kotak General Insurance about the modification and provide the necessary documentation. The insurer may reassess the vehicle's Insured Declared Value (IDV) and revise the premium. Request a written policy endorsement to confirm that the modification is covered.

Arjun is 26 and has been eyeing a custom exhaust and engine remap for months. It is past midnight. He has three browser tabs open: an aftermarket parts website, a tuning forum and a YouTube review of the exact setup he wants. His cursor is on Buy.

Then the question stops him: will this void his insurance? Not just raise the premium but actually invalidate his coverage if something goes wrong at speed? He closes the parts tab and searches: "do engine mods void insurance."

The short answer is no. Modifications do not automatically void insurance. But the longer answer matters. The difference between a valid claim and a rejected one often comes down to what you declared and when. This guide covers which modifications affect your premium, which require disclosure, what the law says and how to keep coverage intact.

What is a car modification?

A car modification is any change made to the vehicle after purchase that alters its original factory specifications. This includes changes to performance, appearance, safety systems, fuel systems or interior fittings.

Types of modifications:

Cosmetic. Paint jobs, decals, alloy wheels, body kits.
Performance. Engine tuning, turbochargers, exhaust system changes, suspension and brake upgrades.
Functional. CNG or LPG kits, advanced audio systems and security devices.
Interior. Premium upholstery, infotainment systems and custom dashboards.

Minor cosmetic changes often do not affect premiums. Performance and value-enhancing changes typically do. Both may require disclosure. Zurich Kotak General Insurance assess modifications based on their impact on vehicle value, performance and risk.

Legal framework for vehicle modifications in India

In 2019, the Supreme Court of India ruled that unauthorised alterations to original specifications are restricted. Certain modifications require prior approval from the Regional Transport Office (RTO). This applies under the Motor Vehicles Act, 1988.

Permissible modifications, subject to proper process:

Colour change with RTO intimation and RC update
ARAI-approved CNG or LPG fuel conversion kits
Tyre changes within the vehicle's type approval limits
Engine modifications with prior RTO approval and emissions compliance
Accessories such as audio systems, rain visors and seat covers
ARAI-approved Modifications outside these guidelines may render the vehicle non-compliant. This affects both insurance validity and legal standing on the road.

How car modifications affect your insurance premium

Premiums are based on risk. The vehicle's IDV, performance, safety features and theft risk all feed into the calculation. Modifications change one or more of these.

Modification	Impact on premium	Disclosure required	Notes
Minor cosmetic changes (stickers, seat covers)	Usually no impact	Optional	Do not affect value or risk for most insurers.
Full colour wrap or paint change	No premium impact but RC and policy must be updated	Yes	Must be updated in the RC and reflected in the policy.
Alloy wheels and tyre upgrades	Moderate increase	Yes	Increases vehicle value and may change handling.
Custom exhaust system	Moderate to significant increase	Yes	Alters performance profile. May require RTO approval.
Engine remap or performance tuning	Significant increase	Yes	Material change to specifications. Must be declared.
Turbocharger or supercharger	Significant increase	Yes	Substantially alters performance. RTO approval required.
CNG or LPG fuel conversion kit	Slight increase	Yes	Must be ARAI-approved and endorsed on the RC and policy.
High-value audio or infotainment system	Moderate increase	Yes	Increases value and theft risk.
ARAI-approved anti-theft devices	Potential reduction	Yes	May qualify for a discount if ARAI-approved and accepted by the insurer.

What happens if you do not declare a modification?

Non-disclosure has specific consequences under IRDAI regulations.

Claim rejection. If the surveyor identifies an undisclosed material modification, the insurer can reject the claim. This applies even if the modification did not directly cause the damage.
Policy cancellation. Undisclosed modifications constitute material misrepresentation. The insurer can cancel the policy from the date of the modification.
No coverage for the modification. Undeclared parts and accessories will not be included in any settlement.
Legal non-compliance. If the modification was done without RTO approval and the vehicle is in an accident, the owner may face additional liability under the Motor Vehicles Act, 1988.

The insurer agreed to cover a specific vehicle with specific specifications. Changing those specifications without informing the insurer changes the contract.

How to manage insurance for a modified car

Disclose all material modifications promptly. Do not wait until renewal.
Keep all documentation. Invoices, receipts, technical specs and RTO approvals where applicable.
Request a policy endorsement. Verbal acknowledgment is not sufficient. Get a written endorsement on the policy document.
Confirm the revised IDV. Make sure the IDV reflects the modification's value. A shortfall at claim time is avoidable.
Consider relevant add-ons. Zero depreciation removes depreciation deductions on aftermarket parts. Engine protection is relevant for performance modifications.

Example: impact on premium

A four-year-old hatchback with an IDV of ₹ 5 lakh. The owner adds alloy wheels and a custom audio system worth ₹ 50,000.

Revised IDV: ₹ 5.5 lakh
Premium increase: 5% to 10% on the own-damage component
New premium range: ₹ 12,600 to ₹ 13,200 before 18% GST

The owner now has a policy that reflects what the car is actually worth. In a total loss or theft, the payout is based on ₹ 5.5 lakh, not ₹ 5 lakh. These figures are illustrative. Actual changes depend on the insurer's guidelines and the type of modification. Actual premium adjustments depend on Zurich Kotak General Insurance guidelines.

Conclusion

Car modifications do not automatically void insurance. They need to be declared to keep coverage valid. Performance upgrades, value-enhancing changes and fuel system modifications all affect the risk profile and must be disclosed. The consequence of not declaring is not a higher premium. It is the risk of having a claim rejected when it matters most.

If you are planning a modification, notify Zurich Kotak General Insurance, provide the documentation and request a policy endorsement before or immediately after the work is done.

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Frequently asked questions (FaQs)

Q. Do car modifications affect insurance in India?

Yes. Modifications that alter the vehicle's performance, value or risk profile affect the premium and must be disclosed. Undisclosed modifications that are material to a loss are grounds for claim rejection under IRDAI regulations.

Q. Does engine remapping void car insurance?

Not automatically. An engine remap does not void insurance if it is declared and endorsed on the policy. An undisclosed remap can result in claim rejection if an accident occurs.

Q. Which car modifications do not affect insurance premiums?

Minor cosmetic additions that do not change the vehicle's value or risk profile. Examples include seat covers, floor mats and small stickers. Changes that increase value or alter performance require disclosure.

Q. Is it mandatory to inform the insurer about modifications?

Yes, for any modification that materially affects value, performance or risk. Non-disclosure is treated as material misrepresentation and can result in claim rejection or policy cancellation.

Q. Can car modifications reduce my premium?

Yes, in specific cases. ARAI-approved anti-theft devices may qualify for a discount if the insurer accepts them as theft-risk reducers. Confirm eligibility before purchase.

Q. Do I need RTO approval for performance modifications?

Yes, for modifications that alter the engine, structure or specifications beyond the manufacturer's type-approval limits. The Supreme Court's 2019 ruling prohibits unauthorised alterations.

Q. How do I update my policy after a modification?

Notify Zurich Kotak General Insurance with documentation of the modification. The insurer revises the IDV and adjusts the premium. Request a written policy endorsement confirming coverage.

Q. Can I buy car insurance online for a modified vehicle?

Yes. You can buy car insurance online for a modified vehicle, provided you accurately disclose all modifications during the purchase process. The insurer may assess the impact of the modifications on the vehicle's value and risk profile before determining the premium and coverage terms. Failure to declare modifications can lead to claim disputes or rejection in the future.

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Team Zurich Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Zurich Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.

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