The world of car customization has gone mainstream with TV shows like West Coast Customs, OverHaulin and Pimp My Ride. But when you shell out the cash for your custom 24′s, the widescreen headrest LCD’s and the hood bling, what happens if (when) it gets stolen? Will your car insurance company pay you the actual cash value of your pimped out ride or the original shell of a car it was before you pumped 30 grand into it?
Custom parts and equipment are an often overlooked part of auto insurance, and many consumers mistakenly assume their new spinners are automatically covered by their car insurance policy. You need to know that car insurance companies settle losses on an actual cash value basis, which means they take the cost to replace your car and subtract out depreciation or “wear-and-tear”. If you tricked out your ’83 Olds, you will get paid the actual cash value of your ’83 Olds… which isn’t much.
The key to making sure your after-market additions are properly insured is to add coverage onto your car insurance policy for custom parts and equipment. This coverage may also be called additional customized parts or equipment. Most companies allow you to insure your vehicle for an additional amount of coverage for items such as special wheels, tires, hydraulics, suspensions, audio and video systems, custom paint and more.
There may be a limit as to the amount your car insurance company will be willing to insure your vehicle for, so you may actually have to insure your pimped-out ride with a specialty insurer that specializes in high-value vehicles. If you’ve invested tens of thousands of dollars into your car, you’re probably going to need to contact one of these companies.
You may need to insure your car on an “agreed value” basis, which means the actual cash value of the car is not used to settle a claim but rather a value that is determined through appraisal. Many classic cars are insured this way as the actual cash value of the cars would be near zero.