Car insurance companies act on the assumption that anyone who makes modifications to their vehicles is a “boy-racer” character who lacks driving skills and is inexperienced, making them more likely to have an accident and make a claim.
Car insurance discrimination
Whether or not discrimination in insurance is fair practice is something which has been debated for decades. However, a campaign by the Test-Achats consumer group in Belgium recently resulted in the European Court of Justice (ECJ) ruling that from the 21st December 2012 it will be illegal for car insurance companies to discriminate on the grounds of gender.
In theory this ruling will only impact on the European community, but it is likely to result in governing bodies from countries outside of Europe introducing similar rulings. This is due to the fact that many insurance companies operate globally and will be keen to see a standardised set of legislations.
It is possible that this ruling could open the flood gates, with campaign groups now calling for age based discrimination to be eradicated as well. This would likely impact upon auto insurance premiums that are offered to owners of modified vehicles because the “boy-racer” stereotype would no longer be permitted.
What counts as a modification?
Modifications are not always blatantly obvious features such as body kits, but may be something small like replacing a cassette player in a car with a CD player. It is basically any change which makes the vehicle deviate from its original manufacturer specifications.
However, the financial penalties assigned to motorists will vary depending on the type of modification made. With most insurers CD players will be unlikely to impact on premiums at all but may be used as a loophole to avoid paying out in the event of a claim being made if the driver has failed to inform the insurer about the modification prior to an accident. Modifications which improve the performance of the vehicle, such as body kits or alloy wheels, tend to have the biggest impact on premiums.
Premium reducing tips
Until any new legislations regarding age based discrimination are introduced, insurers are likely to continue discriminating against motorists whose vehicles have been modified. However, in the meantime there are a number of things you can do to lower your annual car insurance bill if you fall into this category:
• Improve yourself- You can not alter you age, but you can do something about your experience levels. Completing advanced driving courses will reduce your premiums by reducing the perceived likelihood of you having an accident in the eyes of insurers, as you will be viewed as being a safer driver.
• Add an older driver- Adding an older and more experienced driver to your policy will help to lower your premiums as the insurer will assume that you will be spending less time behind the wheel over the duration of the contract.
• Shop Around- Compare prices with as many different insurers as possible in order to give yourself the greatest chance of getting the best deal available to you. Utilising price comparison websites, which compare prices with hundreds of different insurers in a matter of minutes, is a much easier and less time consuming way of doing this.
• Reduce your mileage- the more miles your complete, the more likely it is that you will have an accident. Insurers recognise this by offering cheaper premiums to motorists who set a smaller mileage allocation. Take advantage of this fact by making sure you are not paying for miles which you are not planning on using, but don’t set a mileage allocation you know you will exceed as this could render your policy void. It is a difficult balancing act.
• Consider your excess- excess is the amount of money you are willing to pay towards insurer’s expenses when you make a claim. Insurer will therefore offer cheaper premiums to drivers with higher excess levels, but remember not to offer to pay more than you will be able to afford!
• Security modifications- not all modifications will make your auto insurance policy more expensive. Adding approved immobilisers and/or alarms will reduce the statistical likelihood of your vehicle being stolen and will therefore result in cheaper premiums.
• Park carefully- Where you park your car will also impact on auto insurance prices. A vehicle parked in a locked garage is far less likely to be stolen or vandalised than one which is parked on a local road, and will therefore attract cheaper premiums. Take advantage of this loophole if you can but remember not to lie as it is another way to jeopardise your chances of getting a pay out when a claim is made.
