Modified car insurance is yet another type of car insurance coverage that aims to protect the security needs for all types of vehicles. It does not matter if the car is brand-new, second-hand, or customized. In theory, this type of insurance will fit to just about any type of automobile.
However, if you think that this insurance does not come with its own set of problems, you are dead wrong. Because of the nature of how this coverage works, fraud claims are rising up each year, prompting insurance companies to take mitigating actions.
The reason behind this is simple: Anyone whose vehicle is protected by modified car insurance can easily change or replace any insured parts with new ones, which may not be compatible with the other components in the car, increasing the risk element.
The frauds that are happening behind modified car insurance are rather hard to prove due to its nature. If you are the insurer, are you going to account for every single part of the car that has been modified prior to the approval of the coverage? How are you going to prove that such accident is not caused by a newly installed malfunctioning component that was never a part of the original coverage? Even then, it’s hard to prove or trace who made these changes. Insurance companies selling this type of coverage will have to face these questions in due time.
There is no stopping people who are changing functional parts with defective ones in order to provoke an accident. Such parts can be easily bought from any junk shops or black market. To make the situation worse, if the insurer or the driver has no knowledge of the work done on their car, there is the likelihood that the insurance company will insure a defective vehicle.
Of course, insurance companies would not want to refuse any request for insurance since it creates a bad image for them. Groundless refusal is not an option in this cutthroat industry. So, to minimize the risk and avert future problems, the provider could initiate the following actions.
A qualified technician must investigate the vehicle’s mechanical aspects thoroughly. The papers and other documents will have to be reviewed and properly accounted as well. It’s relatively easy for fraudsters or anyone to make false claims if the provider failed to do this beforehand. Most insurance provider these days will require customization receipts, clearance, registration certificates and the driver’s license of the owner. All relevant information is then recorded from chassis number, body tags to serial numbers.
Insurers can’t stop people from changing their car’s appearance from good to better but what the insurers are asking from the car owners is to let them know about these changes for the records to be updated. Failure to do so can void the entire coverage, which is an extremely unfavorable situation, especially if you are in dire need of a medical assistance or legal protection.
