Make sure the vehicle you insure is compliant with all the terms of your policy
As with any other contract, the exact details of your insurance policy are critical when making a claim, as we all know. However, it is easy to assume that minor details such as modifications to the vehicle are not part of this.
This can result in a claim being refused, being only partially paid or the whole policy being invalid because incorrect premiums have been paid since the beginning.
The exact details of modifications determine how they might affect your cover and how this is applied varies between insurers and policies. For example, most policies will be unaffected by fitting alloy wheels or a towbar, while they could be affected by fitting a roof rack or having a custom paint finish. This might appear illogical but the details of any policy depend on the anticipated risk. These risks include mechanical or electrical modifications that could affect the performance of the vehicle and/or how it is used, as well as less obvious changes to vehicle appearance or fittings which might make it a target for theft or materially increase the value of the vehicle..
These modifications often include “optional extras” that can be added when purchasing a new vehicle or, in the case of a pre-owned vehicle, any changes that were made by the previous owner(s). Again, these changes that could affect your policy go beyond obvious matters, such as increasing the engine horsepower, and can include paint finishes, a range of interior fittings or improvements like leather seats.
Typical decisions made when individual disputes are brought before the financial services ombudsman offer some helpful insight into how contract terms are applied, in general. If a policy is not precise in defining what it considers significant modifications, the insurer can be obliged to pay out in full. Conversely, if a vehicle owner does not disclose required details in full, they can lose all rights to being paid out or only receive a partial payout. Much of this depends on CIDRA – the Consumer Insurance Disclosure and Representations Act (2012). This legislation provides a framework for what customers can reasonably be expected to know and disclose when taking out a policy.
Ultimately, the details involved are extensive and applied differently by different insurers. To avoid rejected claims or becoming involved in dispute processes that impose heavy burdens on a private individual’s time and money, it is really necessary to work through a professional broker and have full documentation on any modifications made at the time of purchase, or prior to purchase by a previous owner.
Probably the most essential advice if to err on the side of caution: disclose everything, however trivial, and do this through a broker who can make sure there are no problems at the start and who can also provide support at a later stage if a claim is disputed.
