If Aftermarket Car Parts Are Installed, Are They Covered by Insurance?

When it comes to customizing vehicles, American car owners have a long-standing love affair with aftermarket parts. From performance-boosting engines to custom rims and sound systems, these enhancements can make a car feel truly personal. But here’s the kicker… many drivers don’t realize the potential coverage gaps these upgrades may create until it’s too late.

Aftermarket modifications can affect your car insurance claims, premiums, and even eligibility for coverage. If you’re wondering, “If aftermarket car parts are installed, are they covered by insurance?”—you’re asking the right question. 

Let’s dive into everything you need to know.

What Are Aftermarket Car Parts?

To understand how they’re treated by insurance companies, we must first define what aftermarket car parts are. These are components not manufactured by the original equipment manufacturer (OEM). Whether you’re swapping out your car’s exhaust system for a sportier version or installing a custom LED light kit, these changes are classified as aftermarket modifications.

Common aftermarket parts include:

• Custom rims and tires
• Turbochargers and superchargers
• Upgraded suspension systems
• Enhanced stereo systems
• Window tints
• Performance exhausts
• Body kits and spoilers

Now, let’s answer the burning question.

Does Standard Car Insurance Cover Aftermarket Parts?

In most cases, standard auto insurance policies in the U.S. do not automatically cover aftermarket car parts. Policies are typically designed to restore your vehicle to its pre-loss OEM condition, not the upgraded version you’ve built over time.

However, that doesn’t mean all hope is lost. Many insurance providers offer custom parts and equipment (CPE) coverage as an optional add-on. This is the key to ensuring your valuable modifications are protected.

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The Reality of Claim Denials: A Real-Life Case

A few years ago, I had a client named Brandon from Tampa, Florida. He owned a 2016 Dodge Challenger that he had invested over $12,000 in aftermarket upgrades, including racing seats, a new sound system, and a performance exhaust.

One night, the car was stolen from outside his apartment. When he filed the insurance claim, he was shocked to learn his policy only covered the OEM value of the vehicle, completely ignoring the $12,000 in enhancements. Why? He never disclosed the upgrades to his insurance provider and never purchased additional coverage.

Brandon’s story is not uncommon. Sadly, it’s a harsh lesson many car owners learn the hard way.

Why It’s Important to Disclose Aftermarket Parts

Transparency is critical when it comes to insurance. If your car has aftermarket modifications and your insurer doesn’t know about them, there’s a strong chance you won’t be compensated for their value in the event of a loss.

When you disclose the modifications, your insurer may:

• Offer custom parts and equipment coverage
• Increase your premium slightly (depending on risk)
• Evaluate the modifications for safety and insurability

The extra premium is usually minimal compared to the cost of replacing thousands of dollars worth of parts out-of-pocket.

How Do U.S. Insurance Companies Handle Aftermarket Parts?

Let’s look at how some major U.S. insurers approach aftermarket car parts insurance.

1. GEICO

GEICO’s standard policy doesn’t cover aftermarket equipment. However, they offer an optional custom parts and equipment endorsement that covers up to $1,000 worth of upgrades by default. You can increase that limit for an additional premium.

2. State Farm

State Farm’s policies also exclude aftermarket parts unless you purchase extra coverage. Their custom parts endorsement can typically cover up to $5,000 or more, depending on the car and modification level.

3. Progressive

Progressive is one of the more modification-friendly insurers. Their comprehensive and collision policies include up to $1,000 in custom parts by default, with options to increase coverage up to $5,000 or more.

4. Allstate

Allstate does not automatically cover aftermarket parts but offers additional equipment coverage for both cosmetic and performance modifications, as long as they’re disclosed.

5. USAA

For military members and their families, USAA offers strong customization options. Like others, aftermarket coverage isn’t automatic, but it’s available at affordable rates when requested.

What Happens If You Don’t Review or Update Your Policy?

Let me tell you about another client, Cynthia, from San Diego. She installed over $8,500 worth of modifications in stages over three years. Her original policy, purchased in 2018, didn’t include any custom parts coverage.

By 2023, she was involved in a collision that damaged her upgraded suspension and exhaust system. She assumed her insurer would pay because she’d been a loyal customer for years.

The problem? She had never updated her policy or reviewed her coverage. As a result, she lost over $6,000 in uncovered parts.

Annual policy reviews would have saved her thousands.

What Does Aftermarket Car Parts Insurance Cover?

Custom parts and equipment (CPE) coverage usually protects against:

• Theft of aftermarket accessories
• Damage caused by collision or vandalism
• Fire and weather-related losses
• Certain types of wear and tear (limited)

However, not all aftermarket modifications are insurable. Insurers may refuse to cover or insure:

• Illegal modifications
• Unsafe alterations (e.g., excessive lifts)
• Race-only enhancements
• Parts without proper documentation or installation

Always keep receipts and documentation for all upgrades. Insurers will require proof in the event of a claim.

Tips for Getting the Right Aftermarket Car Parts Insurance

Here’s how to protect yourself:

1. Notify Your Insurer Promptly
   Any time you add a new part, contact your insurer immediately. Ask if the part is covered and what documentation is needed.
2. Request a Quote for Additional Coverage
   Ask for a quote to add custom parts and equipment coverage. Often, it’s surprisingly affordable, ranging between $10 and $100 per year, depending on the value of the parts.
3. Keep Detailed Records
   Photos, invoices, and professional installation receipts go a long way. If your insurer requires evidence during a claim, you’ll be prepared.
4. Review Your Policy Annually
   Life changes, vehicles change, and insurance needs change. An annual review can uncover gaps in coverage you didn’t know existed.
5. Bundle Smartly
   If you bundle your home and auto policies, you may be able to absorb the cost of aftermarket part coverage with discounts on your total premium.

Are There Risks to Installing Aftermarket Parts?

Yes, aftermarket parts can introduce risks, and insurers know this. Improper installations can lead to increased accident potential. Additionally, high-value modifications may increase the likelihood of theft or vandalism, which can raise your premium.

However, reputable installation and selecting insurer-approved modifications can minimize those concerns.

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Final Thoughts: Protect Your Custom Ride

Aftermarket modifications can elevate your car’s performance, appearance, and enjoyment. But unless they’re properly insured, they’re at risk every time you hit the road—or even park on it.

Don’t make the mistake Brandon or Cynthia did. Whether your car is a lightly modified daily driver or a heavily customized showpiece, make sure your insurance policy reflects its true value.

As someone who has worked with thousands of policyholders over the past decade, I strongly recommend reviewing your policy annually and updating your insurer every time you upgrade your ride.

It’s not just about protecting your investment, it’s about ensuring peace of mind.

If you are searching for terms like:

• “Aftermarket car parts insurance”
• “Does GEICO cover aftermarket parts?”
• “Car insurance for modified vehicles in the U.S.”

…you’ve landed in the right place. The takeaway is this: aftermarket parts are not automatically covered by your insurance, but with proper disclosure and optional CPE coverage, they can be.