aftermarket items and insurance coverage questions answered
#1
01-29-2010, 11:41 PM
aftermarket items and insurance coverage questions answered
I have been on many forums, supraforums, my350z, g35, etc.. And I always run across threads about this topic. Well I work for an insurance carrier and I am an adjuster and deal with A/M items, policies, interpretation etc... so I wanted to share my minimal knowledge about this to others because there are many confused, misperceived notions about coverage to a.m items
Please keep in mind, that all policies are different and different coverages apply to different people/police. I urge you to read your policy to grasp what is or is not covered for you in particular.
hopefully I can help shed some light on this topic. I am an adjuster and I also investigate fraud. I deal with Total Loss Auto values regarding thefts, vandalism and Fire losses. I also investigate them. Insurance policies are never fun, but READ your coverages and **EXCLUSIONS. Most companies are not going to cover any aftermarket items installed on your vehicle unless you have provided receipts and or put extra endorsements on them. Which means higher premium. You are adding thousands of dollars to a vehicle that is no longer OEM and rates are based on unmodified vehicles. Your premium has to do with the exposure of any losses you might endure. SO in turn, the more value on your vehicle, the higher exposure, the highter the risk, therefore the higher the premium. Some policies have a limited amount, like an additional 1K for a/m parts and no more. While others exclude them all together which is typical.
Some tips:
check your policy under the COVERAGE FOR YOUR AUTO and read the coverages AND exclusions. Read any extra endorsements or limits attached to your policy. If you are confused, ask your agent. (but really your agent might not know because they are licensed to sell, not handle or adjust claims so you will run into agents that might not really know. Just keep in mind what they told you because if they told you wrong, and you file a claim and it is wrong per your agent they can investigate coverage and possibly extend on an agent error. Agents have insurance too for this kinda stuff.)
If you don't report your a/m items to the insurance company, they are not going to deny you coverage all together for a loss, just to the a/m parts (although they will send a risk advice if they find out during an accident with all the stuff on there and exposure to possibly premium increase or cancellation might apply) ultimately, they will just not pay for the a/m items and pay for the repairs on OEM parts, or actual cash value of the vehicle at time of the loss.
Sometimes, there are policies that cover a/m items but only those installed in a factory opening that is an option you could have gotten from a dealer. IE NAV. Or the items must be permanently attached to your vehicle. ALL policies will have examples or definitions so pay attention that as well.
Another method is that they will consider receipts and what you have done but will have to figure out what is in EXCESS of the OEM product you removed. Just because you put custom stuff on your vehicle doesn't mean it added that full value, or any. Most of the time you are taking OEM Items off that have value and putting the a/m part on and there is really not much difference between the prices of the two items. For example, wheels or suspension. If you take off the OEM 18 or 19" wheels to put on some VOLKS the adjuster will get a quote for the OEM wheels (which is pricey from a dealer) Then they will see what was spent on the volk wheel and find the difference. If the value is in excess of the OEM product then they might be able to apply any additional amount to the repair, or total loss value of the vehicle, or pay up to the OEM price. You end up not being out of pocket too much unless you went really crazy with some items, like the AMUSE R1 exhuast (YUM) :0)
In the end, a/m parts and modding, although fun, actually devalue your vehicle to the "market" They are individual tastes and preference items and we on the board have an appreciation for it, but trying to sell your car with a/m items is harder because your market is now narrowed to people like us on the forum instead of the regular market. which is why when most people sell their cars, they part it out to make as much back as they can. It just is worth more off the car, than on it come time to sell.
The best thing to do is to KEEP ALL OEM parts and if you are in a total loss, take off the a/m parts and put your OEM stuff back on. You will get the same value as they were going to give you with the a/m parts (depending on coverages) Or take the excess parts such as Turbo or supercharger off the vehicle and sell individually to make some of the money back. THIS IS THE WAY TO GO!
Fraud is a very difficult thing to prove on a side note, it is very risky for an insurance company to deny a claim based on fraud because you are trying to prove someone's intention and that opens us up to bad faith lawsuits. Jury's tend to rule in favor of the insured and not the insurance co. It is not fraud when you don't tell the insurance company you have added a/m parts, however it would be if, for example, if you never added the parts and are asking for coverage. You do run the risk of being dropped or cancelled next period if they find out all this stuff on your car. A lot of people ASSUME it is covered and, usually it isn't Just because you THINK it is covered doesn't get you a free pass...
Also, insurance provides a coverage. They cover stupidity, literally. We say it all the time. Insurance isn't the police or the law. If you are driving drunk and you get in a wreck, it's covered. Unless you have an exclusion on your policy. If you have a supercharger and the insurance didn't know about it and you were in a wreck, they will cover it if you have liability even though you didn't tell them. (again unless you have a specific exclusion about this which I have never seen) The only thing that will happen is that they won't cover all the a/m parts on the car because they did not know about it.
you can take a few routes. If you want it covered, the best thing to do is talk to your agent. Make copies of receipts and give it to them, keep some for you so if you are in an accident you can give them receipts of exactly what was put on, for how much and the date. Most policies are actual cash value, so depreciation is taken.
If you don't want your rates to move up, or don't care about having the items covered, then there is no need to say anything to your insurance company, just know if you are in a wreck you probably won't get those items reimbursed or replaced, just OEM.
You can get your vehicle appraised and present to you insurance agent, you will get a stated value but read the fine print. Even though you insure your car for a certain amount like (50K) doesn't mean you will get that. It just LIMITS the pay out. The policy will still typically pay out on a (what is your vehicle worth today, depreciation basis) These aren't collector cars yet. So I would say this is NOT the way to go, unless you have a REPLACEMENT COST Policy which is very rare and $$$. The higher the risk, the higher the possible payout on a loss, the higher your premiums. OR you could just be denied coverage because the risk is too high...
**typically OEM prices from dealerships are $$$ anyways, and your policy covered replacement for the OEM part, so you would only be out the difference to the a/m item. So in most cases it won't be much at all. ***
In the end, even with all this knowledge, I mod the hell out of my cars and don't say anything to my insurance company because I choose to take on the risk of a loss myself. IMO the premiums to pay out on a/m items isn't worth what you will get back if you are in a loss. Because again, the policy already covered the cost of the OEM item, therefore I won't be out of pocket much when I apply the difference myself. This would mainly apply to wheels, exhaust, suspension, but not Turbo or Supercharger because you never had an OEM one in place.
Hopefully this helps anyone that reads.. I tried to cover questions I tend to come across on forums, friends or even when I handle claims. Let me know if you have questions.
Please keep in mind, that all policies are different and different coverages apply to different people/police. I urge you to read your policy to grasp what is or is not covered for you in particular.
hopefully I can help shed some light on this topic. I am an adjuster and I also investigate fraud. I deal with Total Loss Auto values regarding thefts, vandalism and Fire losses. I also investigate them. Insurance policies are never fun, but READ your coverages and **EXCLUSIONS. Most companies are not going to cover any aftermarket items installed on your vehicle unless you have provided receipts and or put extra endorsements on them. Which means higher premium. You are adding thousands of dollars to a vehicle that is no longer OEM and rates are based on unmodified vehicles. Your premium has to do with the exposure of any losses you might endure. SO in turn, the more value on your vehicle, the higher exposure, the highter the risk, therefore the higher the premium. Some policies have a limited amount, like an additional 1K for a/m parts and no more. While others exclude them all together which is typical.
Some tips:
check your policy under the COVERAGE FOR YOUR AUTO and read the coverages AND exclusions. Read any extra endorsements or limits attached to your policy. If you are confused, ask your agent. (but really your agent might not know because they are licensed to sell, not handle or adjust claims so you will run into agents that might not really know. Just keep in mind what they told you because if they told you wrong, and you file a claim and it is wrong per your agent they can investigate coverage and possibly extend on an agent error. Agents have insurance too for this kinda stuff.)
If you don't report your a/m items to the insurance company, they are not going to deny you coverage all together for a loss, just to the a/m parts (although they will send a risk advice if they find out during an accident with all the stuff on there and exposure to possibly premium increase or cancellation might apply) ultimately, they will just not pay for the a/m items and pay for the repairs on OEM parts, or actual cash value of the vehicle at time of the loss.
Sometimes, there are policies that cover a/m items but only those installed in a factory opening that is an option you could have gotten from a dealer. IE NAV. Or the items must be permanently attached to your vehicle. ALL policies will have examples or definitions so pay attention that as well.
Another method is that they will consider receipts and what you have done but will have to figure out what is in EXCESS of the OEM product you removed. Just because you put custom stuff on your vehicle doesn't mean it added that full value, or any. Most of the time you are taking OEM Items off that have value and putting the a/m part on and there is really not much difference between the prices of the two items. For example, wheels or suspension. If you take off the OEM 18 or 19" wheels to put on some VOLKS the adjuster will get a quote for the OEM wheels (which is pricey from a dealer) Then they will see what was spent on the volk wheel and find the difference. If the value is in excess of the OEM product then they might be able to apply any additional amount to the repair, or total loss value of the vehicle, or pay up to the OEM price. You end up not being out of pocket too much unless you went really crazy with some items, like the AMUSE R1 exhuast (YUM) :0)
In the end, a/m parts and modding, although fun, actually devalue your vehicle to the "market" They are individual tastes and preference items and we on the board have an appreciation for it, but trying to sell your car with a/m items is harder because your market is now narrowed to people like us on the forum instead of the regular market. which is why when most people sell their cars, they part it out to make as much back as they can. It just is worth more off the car, than on it come time to sell.
The best thing to do is to KEEP ALL OEM parts and if you are in a total loss, take off the a/m parts and put your OEM stuff back on. You will get the same value as they were going to give you with the a/m parts (depending on coverages) Or take the excess parts such as Turbo or supercharger off the vehicle and sell individually to make some of the money back. THIS IS THE WAY TO GO!
Fraud is a very difficult thing to prove on a side note, it is very risky for an insurance company to deny a claim based on fraud because you are trying to prove someone's intention and that opens us up to bad faith lawsuits. Jury's tend to rule in favor of the insured and not the insurance co. It is not fraud when you don't tell the insurance company you have added a/m parts, however it would be if, for example, if you never added the parts and are asking for coverage. You do run the risk of being dropped or cancelled next period if they find out all this stuff on your car. A lot of people ASSUME it is covered and, usually it isn't Just because you THINK it is covered doesn't get you a free pass...
Also, insurance provides a coverage. They cover stupidity, literally. We say it all the time. Insurance isn't the police or the law. If you are driving drunk and you get in a wreck, it's covered. Unless you have an exclusion on your policy. If you have a supercharger and the insurance didn't know about it and you were in a wreck, they will cover it if you have liability even though you didn't tell them. (again unless you have a specific exclusion about this which I have never seen) The only thing that will happen is that they won't cover all the a/m parts on the car because they did not know about it.
you can take a few routes. If you want it covered, the best thing to do is talk to your agent. Make copies of receipts and give it to them, keep some for you so if you are in an accident you can give them receipts of exactly what was put on, for how much and the date. Most policies are actual cash value, so depreciation is taken.
If you don't want your rates to move up, or don't care about having the items covered, then there is no need to say anything to your insurance company, just know if you are in a wreck you probably won't get those items reimbursed or replaced, just OEM.
You can get your vehicle appraised and present to you insurance agent, you will get a stated value but read the fine print. Even though you insure your car for a certain amount like (50K) doesn't mean you will get that. It just LIMITS the pay out. The policy will still typically pay out on a (what is your vehicle worth today, depreciation basis) These aren't collector cars yet. So I would say this is NOT the way to go, unless you have a REPLACEMENT COST Policy which is very rare and $$$. The higher the risk, the higher the possible payout on a loss, the higher your premiums. OR you could just be denied coverage because the risk is too high...
**typically OEM prices from dealerships are $$$ anyways, and your policy covered replacement for the OEM part, so you would only be out the difference to the a/m item. So in most cases it won't be much at all. ***
In the end, even with all this knowledge, I mod the hell out of my cars and don't say anything to my insurance company because I choose to take on the risk of a loss myself. IMO the premiums to pay out on a/m items isn't worth what you will get back if you are in a loss. Because again, the policy already covered the cost of the OEM item, therefore I won't be out of pocket much when I apply the difference myself. This would mainly apply to wheels, exhaust, suspension, but not Turbo or Supercharger because you never had an OEM one in place.
Hopefully this helps anyone that reads.. I tried to cover questions I tend to come across on forums, friends or even when I handle claims. Let me know if you have questions.
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