Non-disclosure of modifications could invalidate insurance claims

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The importance of full disclosure was highlighted by a recent article in the insurance trade press:

Concern is growing over the potential increase in the number of motor claims being declined due to non-disclosure of modifications made to vehicles, a trend that is feared will increase as the growing craze of car-customising emerges as part of the wider problem of uninsured driving.

Nigel Bartram, motor underwriting director for Norwich Union, said: "It is a growing trend and television programmes such as 'Pimp My Ride' on MTV are exacerbating it. People are being encouraged to customise their cars and they have - especially the younger generation - more disposable income. What customers need to take into aqccount is how much the car will cost to repair, and also the desirability of the car for theives."

Paul Dyer, Towergate group communications director and co-founder, said: "Many car magazines are offering 'chipping', which replaces the internal fuel management of the car and can increase the power output. Therefore, a car may have the performance of a larger engine, but the insurer may not be informed."

A spokesperson for Admiral Insurance confirmed that one quarter of its monthly claims involving cars with serious modifications were claims that may have to be invalidated. He added that modifications such as tinted windows or nitrous oxide added to the fuel could void the policy."

A spokesperson at the Financial Ombudsman said: "There are four types of non-disclosure; inadvertent - where, for example, the customer may not have been aware of any changes when first buying the vehicle; deliberate; innocent; and reckless, where the insurer often does not pay the claim and returns the premium.

"A television programme I saw recently featured a driver who had spent £1000 on a nitrous-oxide kit, which increased the car's power output by several multiples. Needless to say, the need to inform his insurer was not mentioned!"

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