Modifying your truck isn’t free. Lift kits and wheels can cost thousands of dollars after installation. So can steel bumpers, winches, stereo systems, engine upgrades, etc. etc. Which begs the question: Is your insurance going to reimburse you for modifications if your truck gets destroyed?
Short answer: Probably not, unless you buy extra coverage.
Replacement Value and Factory Built Condition
If your vehicle is damaged, your policy usually requires the insurance company to either:
- Fix/repair your vehicle to restore it to “factory built” condition, or
- Declare your vehicle a total loss and reimburse you for the vehicle’s fair replacement value
The key phrases here are “factory built” and “fair replacement value.”
Factory built condition means that your policy covers factory part replacement. A damaged after-market bumper will be replaced with a factory bumper. If the cost of replacing your after-market steel bumper is higher than the factory bumper, you’re out of luck.
If your vehicle is totaled, you’re usually entitled to fair replacement value. This is the amount of money it takes to replace your vehicle with something similar. The insurance company will find vehicles of the same year, make, model, trim, mileage, and condition. They’ll average the value of those vehicles, and use that average to pay you. Modifications aren’t considered in this calculation.
How To Get Your Modifications Covered
Some insurers offer a small amount of coverage for slight modifications (up to $1,000, maybe less). If your truck has substantial upgrades, it’s a good idea to talk to your insurance agent about a modification endorsement.
A modification endorsement is extra coverage specifically for modifications. Upgraded wheels, lift kits, custom paint, stereo upgrades, etc. are usually covered by one of these endorsements.
However, modification endorsements have some limitations:
- Most insurance companies set an arbitrary maximum value on these endorsements. Sometimes, that value is quite high ($10,000), and sometimes it’s quite low ($2,500). Be sure to check.
- There can be an additional deductible on top of your standard deductible.
- The endorsement may only apply to the “actual value” of your modifications rather than the “replacement value.” Actual value is the price you might pay for a used lift kit, whereas replacement value might cover the cost of buying a new lift kit.
- The installation costs for your add-ons and accessories may not be covered.
- Illegal modifications (like emissions cheat equipment, off-road-only performance parts, illegal window tint) are not covered.
So, when you talk to your insurance agent, be sure to ask questions. Have them walk you thru some scenarios: What would your coverage pay for if your modified truck is totaled? What if the lift kit is damaged in a collision? How are payouts calculated? What documentation is needed? Etc.
Ultimately, standard auto insurance does not offer comprehensive protection for modified vehicles. If you have a modified vehicle, you may want additional insurance coverage. If you buy this extra coverage, be sure to ask lots of questions.