What Is Custom Parts and Equipment Coverage?

Custom parts and equipment coverage is a specialized type of insurance designed to protect the financial investment vehicle owners make in modifying their cars. This coverage addresses enhancements or additions that were not part of the vehicle’s original manufacturer design or factory specifications.

Understanding Custom Parts and Equipment Coverage

Custom parts and equipment (CPE) coverage specifically applies to modifications, enhancements, or additions permanently installed in a vehicle that were not original factory components. These items alter the performance or appearance of the vehicle beyond its standard build. Common examples of items typically covered include aftermarket stereo systems, custom wheels and tires, performance-enhancing parts like turbochargers or suspension upgrades, and specialized paint jobs or decals.

The coverage extends to custom interiors, spoilers, lift kits, and even permanent modifications for accessibility, such as wheelchair lifts. These items require separate coverage because their value often exceeds what a standard auto insurance policy would cover, as they are not considered original equipment. Coverage is specifically for items that are permanently attached, distinguishing them from portable electronics or personal belongings that might be covered under a homeowner’s or renter’s policy.

Insuring these modifications ensures that if they are damaged, destroyed, or stolen, the owner can receive financial compensation for their repair or replacement. Many insurers offer an initial, limited amount of CPE coverage, often around $1,000, if comprehensive and collision coverage is already in place. Additional coverage limits are typically available to protect higher-value modifications.

Differentiating from Standard Auto Insurance

A standard auto insurance policy, including collision and comprehensive coverage, primarily focuses on reimbursing the vehicle’s “actual cash value” (ACV) based on its factory specifications. Actual cash value accounts for depreciation, meaning the payout reflects the car’s worth at the time of loss, not its original purchase price or replacement cost. This valuation method typically provides little to no allowance for aftermarket modifications.

For instance, if a vehicle with a custom sound system is stolen or damaged, a standard policy might only cover the cost of replacing a basic, factory-equivalent stereo, or nothing at all for the custom components. Many standard policies have very low limits, sometimes as little as $1,000 or $2,000, for custom parts, making specialized coverage necessary. Without specific custom parts and equipment coverage, owners risk significant out-of-pocket expenses for their customized vehicle components.

Obtaining Custom Parts and Equipment Coverage

Acquiring custom parts and equipment coverage typically involves adding it as an endorsement or rider to an existing auto insurance policy. This means it is not usually a standalone policy but rather an enhancement to comprehensive and collision coverage. Insurers generally require an itemized list of all custom parts, along with receipts for their purchase and installation.

For high-value modifications, an appraisal might also be necessary to establish their worth accurately. The cost of this coverage varies depending on the total value of the custom parts, the specific vehicle, and the chosen insurer. It is important to regularly review and update the coverage as new modifications are made to the vehicle, ensuring that the policy accurately reflects the current investment. Disclosing all modifications to the insurer is crucial, as failure to do so could result in a denied claim or even void the policy.