Odd one - how does car insurance work in the US?

[m1tch]

Hi all,

Really curious about this, I know most of you guys are over in the US and I am over in the UK, its about car insurance and modifications done to cars. I have seen a lot of shows etc where there are build threads for race cars and they simply bolt on XYZ to the car and then all they are worried about is the cost of the parts.

In the UK for our insurance we have to declare each and every mod on the car and it makes the insurance premiums really very high as soon as you want to do anything past changing out exhausts or air filters.

Just wondering how car insurance works in the US - is it just the person who is insured rather than the vehicle and driver? The reason why my project is taking so long is not due to the lack of parts (I basically have everything) but its the insurance that I will have to pay once I install them which is why I am doing everything in stages.

[t walgamuth]

There are companies who specialize in hobby cars, such as Hagerty. Modifications to the car are disclosed to them and they decide what rates to charge. Rates are very reasonable but mileage driven is restricted. Perhaps some of these companies work in England.

[JB3]

Ive never had any car insurance company request more information than the VIN and mileage used per year. Even work car insurance only wants number of estimated stops and range.

Thats rough

[BrianCostello]

In the US it's all about what type of coverage you want.

If you want to modify your car like crazy, wheels, huge stero, custom paint etc. you can do all that. And then tell your insurance company all about it and show them the recites. Then they will value your car higher and charge you more $$$$

Or you can say nothing and they will value your car the same as a stock one.

[Dan Stokes]

The short answer is "Not very well."

But seriously, the US is a semi-loose organization of semi-independent states and so laws and regulations vary from state to state. Here in North Carolina they're pretty loose - no one has ever asked me what modifications I've done to a car. Across the continent in California the emissions people are a little Gestapo but I've never heard of the insurance folks being an issue.

So I guess it depends on where you live. What the guys said about Haggerty, Mecham and others is true and insuring with them would make it more likely to get your investment back in the event of an accident.

Dan

[Bob338]

It's been a while since I've been in the insurance business and there have been some minor changes. However, policies are generally the same all over the US with minor modifications by endorsement from state to state. The mobility of the population makes that almost essential, particularly on the liability side of the policy. I was in that business for 30 years.

For the physical damage or loss to the vehicle and insurance company bases rates on a stock automobile as from the factory. Add-ons in most instances are not part of that, such as radar detectors, added camera's etc. Those can be insured specifically for that and many companies have standard rates. It usually requires a receipt. For major modifications most companies don't cover that except by agreement at time of purchase of the policy and many won't even write the coverage because of the issues and disagreements at time of loss. But bottom line, you can insure most anything for a price. You have one of the most famous congregations of underwriters in the UK, Lloyd's of London. They will even insure body parts of celebrities, but the premiums are steep. I worked for a company that was at one time the largest underwriter outside the UK for Lloyd's. They also handled domestic insurance as insurance company owners and managers so I had experience in most states and several countries. Truly not much different anywhere you go but subject to some peculiarities everywhere.

[Assault]

To put it simply, they don't care unless your building a custom car. You can completely modify the suspension, the exhaust (which is federally illegal, but disregarded law), the engine, etc just leave the safety system intact and functioning. You can purchase additional coverage for most modifications (speaker system for example) but it will understandably cost more.

[Ceristimo]

The insurance fee based on your cars modifications does not apply in The Netherlands either (where I'm originally from), so that doesn't even appear to be a Euope-wide thing.

My biggest surprise when I immigrated to the US was the fact a lot of states here do not do annual inspections.
I'm used to the MOT test every year, but here in Alaska that does not exist. They don't even do emissions testing here.

The good news is that I don't ever have to worry about that MOT anymore (yaaay), the sad news is that I've seen a whole bunch of very broken cars that are still on the road, but really really shouldn't be anymore.

[sixto]

m1tch and Ceristimo, is there a negative consequence to not declaring that you upgraded the wheels other than not getting reimbursed for the increment when you file a claim? Can you negotiate for a replacement set of BBS wheels that probably costs less than the dealer wants for a set of new OE wheels?

Sixto
83 300SD

[97 SL320]

There are two components to insurance in the US. Liability and comprehensive.

Liability is to cover other parties if you cause / are involved in a crash.

Comprehensive is to cover your car if yo are at fault / only car involved.

Liability is mandatory in most states, comp is optional. In many states, liability is "no fault" where the two companies work out who is actually at fault trading $ amongst themselves.

Keeping comp on a car older than 7 or so years is a waste of money since it does not take much to push a car into the total loss category. The older the car gets the more likely you are only going to get a few thousand $ or less even for a car that is still running , driving and passes safety inspection.

[Junkman]

Originally Posted by sixto

m1tch and Ceristimo, is there a negative consequence to not declaring that you upgraded the wheels other than not getting reimbursed for the increment when you file a claim? Can you negotiate for a replacement set of BBS wheels that probably costs less than the dealer wants for a set of new OE wheels?

Sixto
83 300SD

Not sure what you're really asking. Carriers price policies based on expected claim. "Expected"= dollar amount of claim x probability of claim. There is a range based on condition of a "standard" car given its Yr/Make/Model. Documented or observed condition of stock items pushes the value up or down within the range.

Conceptually, non-stock items need to be listed and insured separately because they push the base value not taking condition into account above what is collected in premium.

The other thing is insurance is only supposed to "make you whole" as in replace what you lost with item of like quality and condition. You are not supposed to gain otherwise people would have an incentive to file a claim.

If something might happen, that is an insurance issue. When something will happen, it becomes a budget item. Never give an insurance company more information than they ask for unless it will help you. An underwriter once said "I don't ask for more than I need and I use everything I have." Kind of like the police - everything you say can & will be held against you.

[Bob338]

Originally Posted by 97 SL320

There are two components to insurance in the US. Liability and comprehensive.

Liability is to cover other parties if you cause / are involved in a crash.

Comprehensive is to cover your car if yo are at fault / only car involved.

Not quite. By that description there are actually THREE components. Liability is to cover your legal obligations to others.

Comprehensive is to cover non-collision damage or loss to your own property. The third one is Collision, which is as the name says, damage sustained by impact with another object, person or vehicle. It usually has a deductible though no deductible policies can be available at a very high price. Those are subject to state laws. Comprehensive covers the balance of most losses or damage not involving collision. They usually have no deductibles but many do. If you want to get into the nuisances there are horizontal collisions and vertical ones, as with falling objects. The latter is comprehensive by definition in the policy, (no deductible if your comp coverage doesn't have a deductible. Many do.) while the other is unquestionably comprehensive. Theft is comprehensive. What happens when the stolen car is wrecked? It's still as a result of the theft. No deductible.

[sixto]

Originally Posted by Junkman

Not sure what you're really asking. Carriers price policies based on expected claim. "Expected"= dollar amount of claim x probability of claim. There is a range based on condition of a "standard" car given its Yr/Make/Model. Documented or observed condition of stock items pushes the value up or down within the range.

Conceptually, non-stock items need to be listed and insured separately because they push the base value not taking condition into account above what is collected in premium.

The other thing is insurance is only supposed to "make you whole" as in replace what you lost with item of like quality and condition. You are not supposed to gain otherwise people would have an incentive to file a claim.

If something might happen, that is an insurance issue. When something will happen, it becomes a budget item. Never give an insurance company more information than they ask for unless it will help you. An underwriter once said "I don't ask for more than I need and I use everything I have." Kind of like the police - everything you say can & will be held against you.

I'm asking two questions from their experience/knowledge across the pond:

- what happens if you curb an aftermarket wheel - do they deny the claim, give you an OE wheel, give you the value of an OE wheel... ?

- is there an automatic penalty for having undisclosed modifications in your car?

Sixto
83 300SD

[m1tch]

Originally Posted by sixto

m1tch and Ceristimo, is there a negative consequence to not declaring that you upgraded the wheels other than not getting reimbursed for the increment when you file a claim? Can you negotiate for a replacement set of BBS wheels that probably costs less than the dealer wants for a set of new OE wheels?

Sixto
83 300SD

If you don't declare all modifications then the insurance is void - you will then be liable for prosecution.

[bricktron]

Originally Posted by m1tch

If you don't declare all modifications then the insurance is void - you will then be liable for prosecution.

by this you mean both that undeclared mods are criminal acts, and that you annul your insurance? if so, that is hardcore! is this just mods to the engine, not, say, the upholstery?