Performing an Engine Upgrade and Its Impact on Your Auto Insurance

Many car enthusiasts and owners consider upgrading their engine as a way to enhance the performance and efficiency of their vehicles. However, it is crucial to understand how such modifications might affect your auto insurance premiums. This article will explore the factors that insurers consider, the steps you should take, and real-world experiences of those who have made similar changes.

What Insurers Consider

Insurance companies assess the risk of insuring a vehicle based on various factors, including the make, model, and ownership history. When you make significant modifications, such as an engine upgrade, it generally falls under the category of altering the vehicle's performance capabilities. Insurers often view these changes as increasing the likelihood of accidents or theft.

Types of Engine Upgrades

The type of engine upgrade you choose can significantly impact your insurance costs. High-performance modifications, such as custom exhaust systems, turbochargers, and intercoolers, are more likely to lead to an increase in premiums. On the other hand, standard upgrades like replacing a stock engine with a comparable or slightly smaller engine may not cause a noticeable change.

Communication and Disclosure

It is essential to communicate with your insurance provider about any modifications you make to your vehicle. Failing to disclose information can lead to several complications, including:

Policy Denial: If you file a claim and omit details about the engine upgrade, your insurance provider may deny coverage. Invalidated Coverage: Non-disclosure can invalidate your insurance policy, leaving you without coverage if the worst happens. Increased Premiums: If you do not inform your insurer, they may consider your vehicle riskier, potentially leading to higher premiums in the future.

Potential Discounts and Agreed Value Coverage

Some insurance providers offer discounts for certain engine upgrades, particularly those that improve safety features, such as performance exhaust systems or safer fuel delivery systems. Additionally, choosing an insurer that offers agreed value coverage can be beneficial. This type of coverage ensures that the insurer will pay the specific, agreed-upon value of your vehicle, regardless of current market values, which can provide you with more peace of mind.

Your Personal Experience

Swapping Engines and Insurance Impact: When I swapped my D16Y8 engine for a B16 in my old Honda, I decided to have the work done professionally and ensure it still passed emissions testing. Interestingly, my insurance premiums remained the same with the major insurers. However, when I made several additional modifications, I decided to switch to a different insurer, Hagerty, which offers an agreed value policy. This choice has been particularly advantageous for my car, which was unfortunately involved in a fire incident and subsequently totaled.

The agreed value policy I opted for has provided me with enough coverage to at least break even in the event of an accident. Contrarily, if I had a typical 2000 Honda with an 8k engine upgrade and it had to be totaled, the insurance company would only value it based on its original stock value, not its current enhanced performance or agreed-upon worth.

Notify Your Insurer

Any change from the factory-issued engine must be reported to your auto insurance company. Failing to do so may result in your insurance being invalidated or denied in the case of a claim. Even though the insurance company may not increase your premium, complete transparency ensures that you are not left without coverage in case of unexpected events.

Conclusion

While performing an engine upgrade can certainly change the value and performance of your vehicle, it is imperative to be transparent and communicate these changes to your auto insurance provider. This will not only help protect your investment but also ensure that you maintain the proper coverage levels. If you have doubts or need specific advice, consulting with your insurer is the best course of action.