GVM Upgrades and Insurance: What to Tell Your Insurer

You should tell your insurer if the upgrade takes the vehicle outside OEM spec, the original equipment manufacturer's specs, which are the production specs the vehicle was built to.

The reason is risk. A modification changes the risk, and as your broker, I want to see the certificate for the GVM upgrade.

If you did not tell them, it depends. Say the upgrade was done properly and certified, but you did not let the insurer know. If you then made a claim, it would be a grey area, and you would have to clarify it with the insurer.

Say you rolled off the road. The first question would be whether the upgrade caused it. If it did, you would probably be declined, because you did not let the insurer know and it did not get to do its due diligence, the checks an insurer makes before it agrees to cover something.

If someone ran you off the road, there is no cause and effect: the accident had nothing to do with the GVM upgrade. Even then, it is not a black and white answer.

A GVM upgrade usually increases the vehicle's market value, what it would sell for, and its agreed value, the amount you and the insurer agree it is worth. If you do not let the insurer know, you will not be paid out on that higher value.

I usually recommend agreed value. Say I bought a Toyota Land Cruiser for $100,000, then had a GVM upgrade done. That might cost an extra $25,000, plus a bull bar and the other gear that adds weight. The vehicle is now probably worth $140,000.

So you would increase its value on the policy. To go from $100,000 to $140,000, you need to justify it with invoices. The insurer will want to know why the vehicle is worth that, and a new radio and a couple of headlights will not explain it.

A modification is more than a new set of car mats or a stereo. On a light vehicle, it might be an upgraded chassis to carry extra weight, or upgraded suspension.

On a bigger truck, a prime mover might be upgraded all round, including the brakes and chassis, to lift its towing rating from 90 tonnes to a higher one or to increase its performance.

Either way, it is a change outside the OEM specs, and it usually comes with a certificate or a document saying what has been done. The work also has to stay inside safe specs and the modifications allowed for that vehicle.

The main thing is to get your accessories and modifications noted, so they are covered at claim time. Say you pay $80,000 for a light vehicle, or $150,000 for a truck, and then fit a fridge, exhaust pipes, a bull bar, lights and a radio.

If you paid $150,000, spent another $50,000 fitting it out and did not tell anyone, you will be paid $150,000 at claim time. The $50,000 fit-out is not covered, and you are going to be upset.

Leaving them off does not save you much. You might save a little on the premium, but you lose everything you spent on the modifications.

It is the same for trucks. Say your prime mover is rated to tow 90 tonnes, or 110, and an upgrade takes it to 140.

Again, the insurer will ask what you were towing at the time, what caused the accident, what the outcome was, and whether the upgrade had anything to do with it.

If you are rated to 90 tonnes and towing 140, there is an issue. The insurer will point out that you had an upgrade and never told it. You will probably be paid out on the 90 tonne rating, because that is what you paid premium on.

You most likely do not need a different policy. It depends on the other vehicles in your fleet, but you do need to let the insurer know.

Licensing is run by each state and territory under its own regulations, but the classes line up: a car (C) licence covers vehicles up to 4.5 tonnes GVM, and over that the driver needs at least a light rigid (LR) licence.

In WA, Victoria and the ACT, for example, you need to have held a car licence for at least 12 months before you can get an LR. Check your own state's transport department before an upgrade takes a ute or van over the line.

Does a business with a few upgraded utes on a fleet policy have to declare each one? Yes. If they have been upgraded individually, each one has to be noted.

If a vehicle is outside OEM specs, the original equipment manufacturer's production specs, I want to know about it.

If you run several upgraded vehicles, get each one noted on your motor fleet insurance schedule, the list of vehicles on the policy, and give your broker its certificate and the invoices for its new agreed value.

One of the most important things you can do as the insured, the policyholder, is build a rapport with your broker. It is a two-way street and a partnership.

The more open you are with your broker, the clearer and easier the outcome when something happens. You are likely to get a better renewal, a better outcome on premiums and a better understanding of your cover. If you do not keep your insurer informed, that is a red flag, because it suggests a business that does not communicate well.

When you have an incident, you want your wheels back on the road and earning revenue as quickly as possible, as close as you can to where you were before. Having all the information up front is how you get there, whether that means a payout, a repair or a replacement vehicle.

Most people getting a modification done are not worried about the premium. They want to know whether the vehicle will still be insurable and inside safe specs once the work is done.

Will the premium go up? It can, mainly because the vehicle is worth more. But someone getting a modification done usually has a bigger reason for it. If the upgrade lets your prime mover tow more, that will outweigh whatever the premium is.