Some car insurance companies in Canada voiding policies for even minor modifications:

http://www.autoweek.com/cat_content...._code=02910534

I guess report mods to be on the safe side.

 

Time for all gear heads to get together and form their own insurance co-operative that doesn't discriminate like that!

While it's true that highly modified cars can be dangerous in the hands of imbeciles, it's also true that a lot of us treasure our cars and will do all we can to avoid them getting messed up. I sure do. I am always extra alert for other idiots doing stupid crap when I take the vette out. Clearly I would always prefer to not get hit at all, but I figure if someone messes up my boring 98 Honda Accord, then so long as I'm covered by insurance... I'm not gonna loose any sleep over it.

 

thats straight up BS. if that ever happened i would pull both of my cars from the company, sell my daily driver for a full size truck and trailer, find a new carrier and trailer my fbody to the track. what a crock of ****.

 

that is a load of ****...

 

It wont happen. If one insurance company drops you for that reason, then another one will be there to pick you up. Who will ultimately lose out? The one dropping people.

 

and on the other hand, I bet these insurance company's look the other way when they get their suponsered shops use cheap non oem parts and shortcuts to fix a vehicle for lower costs....


Also, I've heard State Farm is having problems with their autoinsurance branch.. I heard they do all sorts of wacky stuff to minimize costs... like immediatly dropping people after they get in an accident..

 

The insurance company that drops that person actually may gain from dropping them more than anything else.

Whenever a person takes an insurance policy out on a car, they are placed into a certain risk group set by the insurance company. In each risk group, there are similar drivers with similar driving records. Each group has a certain aggregate probability of getting into an accident and if that accident occurs, there exists a certain probability distribution of the damages to that car. Every time you get a ticket or get into an accident, your premiums go up because you're placed into a new risk group. However, to ensure that the insurane company will make money in the long run over a series of random variables and random risks (the individual drivers), the firm needs to charge a set percent more than the expected loss on each driver (this is usually around 4-5% more).

Now people who modify their cars have a different set of probabilities of getting into an accident, therefore are placed into a different risk group. However, the expected loss on that group is extremely high. You could say that the 4-5% more over the expected loss would be enough to cover them, but really it is not, since the variance of the losses is very high. Therefore the amount you would need to charge each individual ideally is much more than 4-5% around (7-10% I would assume), but the firm is compelled to keep the 4-5% rule. Therefore, if you go through models of ruin probabilities, there is much greater chance that the insurance firm will have greater losses in the coming year because of the higher variance of that one group. So, actually dropping those drivers increases the likelihood of profits being at a certain level.

Hope that all made sense. Trying to cram ruin theory from my actuarial studies into a single post can be sorta difficult. And yes, I'm going through the professional exam process to become the guy who sets your car insurance rates and your life insurance rates.

 

I wouldn't know what State Farm's financial status is, but that means if they are in trouble that they only want to take on customers with low risks of an accident. Figure this, the profits of a firm are random every year because the number of accidents is random. So what they are doing is only insuring those with a small chance of making a claim. You give them your premiums, and they know most likely they won't have to give you anything. It's a very secure stream of income. Therefore the randomness of their profits is reduced, but the profits are smaller. Greater risk could give greater profits, but could lead to greater losses, just like that of the stock market.

 

Yea, in other words, they feel/calcuate/trend people that modify sport compact cars are more likely to get into an accident and report an expensive claim.


An insurance company makes money by trying to make sure over the life of your policy, you end up giving them more money than you claim.


So, they rather not have your business, for the sake of playing it safe. Other companies would take you, but they would most likely charge you a nice premium..


This is why you hear some people with really bad driving records getting their coverage dropped, and having a hard time get a new one elsewhere... and when they find one, its very costly..

 

yea...that company simply wouldnt get my business... Id also make sure to spread the bad word to all my friends. Theyre gonna hurt themselves.

and finally... AS IF they arent making enough money off us

All insurance companies for sure wouldnt do that... how else could that collector car insurance company exist? Also if 3 out of 4 companies ban mods... guess what!? the 4th one gets all the business the other 3 reject. Bad idea IMO.

Also whose to stop you from returning your car to stock for the inspection, and then re-modding it as soon as you get home. I guess insurance companies didnt think of that. "duh..."

 

It's not that it's a bad idea or a good idea, it's just one firm willing to take more risk than another firm. Here's two insurance firms and their profits at the end of the year:

Company A
1995- 5000
1996- 5750
1997- 4250
1998- 5000
1999- 5500
2000- 4500

The profits seem to have a pretty consistent average (around 5000 a year) and there is low risk involved. You're pretty much guaranteed positive profits at the end of the year.

Company B
1995- 8000
1996- 3000
1997- 2500
1998- 10000
1999- -1000
2000- 12000

Company B has higher profits (an average of 5750) but the returns go from -1000 to 12000. You could get a lot, or not much at all. Joelius, it's not that it'd bad or good, it's just that 3 of the 4 firms you mentioned would rather have Comapny A's returns, while that one hypothetical firm you depicted would pick B. High risk drivers have a high variance of claims and that is represented in the profits. Some people want to put all of their money in AAA bonds, and some want the high risk of Junk bonds. It's your choice on how much risk you want.

 

i still think insurance is the biggest scam of any kind. you are handing your money over to a man in a suit who then puts it into a mutual fund and makes money off of you while you get nothing out of it "until" that one rainy day when you really do need their help and at which point they raise your premiums to the point you can't even afford insurance any longer (i mean why did I pay them? to hold onto my money for me?) or worse yet, they null your whole coverage because your light bulbs aren't OEM.

at least in Vegas you get the atmosphere and some degree of satisfaction from gambling when you hand your money over to the casinos...

 

What about things such as suspenion mods that would make the car handle better and possibly reduce the risk of an accident? I dont know much about insurance, but I know that being a 21 year old male with an RWD V8 car, they like my money more than I do evidently lol.

 

i hear you on that one
i think by now i have payed over 4000$ in insurance and i havent had one thing they needed to cover me for
i could've invested it in the stock marketand taken a risk and gotten some money or i could've jut put it in the bank and made interest
no way in heck will i ever get that 4000$ back now anyways, my car aint even worth that much
insurance is the biggest ripoff

 

It won't happen in the U.S. Because SEMA would lobby Congress and or states for laws against suchs voids....like they did with the OEMs and new vehicle warranties.

The aftermarket is a multi billion dollar industry...they wouldn't just take it lying down.