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Custom equipment coverage is an optional add-on to an auto insurance policy. It pays to repair or replace parts and equipment you add to a vehicle after it leaves the factory. Many drivers spend thousands on upgrades like custom wheels, lift kits, or premium sound systems. However, a standard policy usually covers only a small part of those upgrades.
Some insurers cap aftermarket parts at about $1,000. Others don’t cover them at all. As a result, a single theft or crash can leave you paying most of the cost yourself. Custom equipment coverage closes that gap. This guide explains how custom equipment coverage works, what it costs, and when you need it.
How Custom Equipment Coverage Works With Your Policy
Most insurers call this endorsement “custom parts and equipment” coverage, or CPE. It is not a standalone policy. In most cases, you must carry both comprehensive and collision coverage to add it. Those two coverages together are often called “full coverage.” Liability-only policies typically do not cover damage to your own car. Therefore, they won’t pay for your aftermarket parts either.
Here is how the layers work. Your base comprehensive and collision coverage pays to fix the factory vehicle. Many policies also include a small built-in allowance for added parts. For example, Progressive includes up to $1,000 for aftermarket parts and modifications under its comprehensive and collision coverage. A sample endorsement filed in Nevada shows the same $1,000 cap per loss. However, rules vary by state and insurer. In some states, custom items are excluded entirely unless you buy the endorsement.
Custom equipment coverage raises that limit. Typical endorsement limits run from $2,000 to $10,000 per loss. Many insurers offer about $5,000 as a standard option. Some go higher. For example, Elephant Insurance has offered limits up to $20,000. Your normal comprehensive or collision deductible usually applies to the claim.
What Custom Equipment Coverage Typically Protects
The key question is whether an item was added after factory production. If the dealer or manufacturer installed it as a standard feature, it is usually covered under your base policy. If you or a shop added it later, it typically falls under custom equipment coverage. Permanent installation also matters. Loose items you can carry away are often treated differently.
Common examples of covered items include:
- Custom wheels and rims
- Upgraded stereo, speakers, and amplifiers
- Custom paint, wraps, and decals
- Lift kits and leveling kits
- Running boards, bed liners, and tonneau covers
- Roof racks and custom grilles
- Performance exhaust and engine upgrades
- Custom seats and interior upholstery
- Built-in navigation or video screens
The table below shows how a claim might play out. These figures are illustrative. Your actual limits and deductible will vary.
| Scenario | Value of Custom Parts | Base Policy Pays (Up to $1,000) | With $5,000 CPE Limit |
|---|---|---|---|
| Stolen custom wheels | $3,200 | $1,000 | $3,200 |
| Stereo system theft | $1,800 | $1,000 | $1,800 |
| Crash damages lift kit and bumper | $4,500 | $1,000 | $4,500 |
| Fire destroys full truck build | $9,000 | $1,000 | $5,000 |
In each case, your deductible would come out first. The last row shows a key point. Even custom equipment coverage has a ceiling. If your upgrades exceed the limit, you pay the difference.
What Custom Equipment Coverage Usually Excludes
No endorsement covers everything. Custom equipment coverage typically excludes illegal modifications. For example, window tint darker than your state allows may not qualify. Homemade or poorly installed parts are often excluded as well. Some insurers also exclude certain suspension changes and snowplow equipment.
Wear and tear is not covered either. If your custom paint fades over time, that is a maintenance issue. Mechanical breakdown of an upgraded engine part is also excluded. Coverage generally applies only to sudden losses like theft, fire, vandalism, or collisions. Portable electronics are another common gap. A phone mount may be covered, but the phone itself is not.
Heavily modified vehicles may need a different product entirely. Show cars and full builds can exceed any CPE limit. In that case, agreed value or specialty collector car insurance may fit better. These policies set the car’s insured value up front, including its modifications.
How Much It Costs and How to Get It
The price of custom equipment coverage depends on the limit you choose. It also depends on your insurer, your state, and your vehicle. Lower limits are often inexpensive compared to your full premium. However, higher limits cost more. Because CPE requires full coverage, your total premium will also reflect comprehensive and collision costs. The only way to know your exact price is to request quotes.
Follow these steps to get the right protection:
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- List every modification. Write down each part, its brand, and its installed cost.
- Save your receipts. Keep invoices for parts and labor. Insurers often ask for proof of value.
- Take photos. Photograph each upgrade from several angles. Store copies in the cloud.
- Read your current policy. Look for an aftermarket parts allowance. Note the dollar cap.
- Call your insurer. Ask if they offer a CPE endorsement. Ask about available limits.
- Match the limit to your total. Choose a limit at or above your total upgrade value.
- Compare quotes. Not every company offers this add-on. Shop around if yours does not.
Timing matters too. Disclose each new upgrade when you install it. For example, if you add $2,500 wheels in March, tell your insurer in March. Waiting until after a loss can cause problems. In some cases, an insurer may deny a claim for undisclosed changes. Review your limit every year as your build grows.
It also helps to understand claim valuation. Many policies pay actual cash value, which subtracts depreciation. As a result, a three-year-old stereo may pay less than its original price. Ask your agent whether your endorsement pays actual cash value or replacement cost. That one detail can change your payout by hundreds of dollars.
Frequently Asked Questions
Does regular car insurance cover aftermarket parts?
Typically, only up to a small limit. Many insurers include about $1,000 for aftermarket parts under comprehensive and collision. However, some cover none at all. Custom equipment coverage raises that limit when you need more.
Do I need full coverage to buy custom equipment coverage?
In most cases, yes. Insurers usually require both comprehensive and collision coverage first. As a result, liability-only drivers generally cannot add custom equipment coverage.
Will modifications raise my car insurance rates?
They can. Performance upgrades may increase risk, which can raise premiums. However, cosmetic items often have a smaller effect. Either way, you should report them so they’re covered.
Is factory-installed equipment considered custom?
Usually not. Features the manufacturer installed are typically covered under your standard physical damage coverage. For example, a factory premium sound package is part of the car’s base value.
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Official Sources & Resources
For verified information on auto insurance regulations and consumer protection:
- NAIC (National Association of Insurance Commissioners): naic.org
- Insurance Information Institute: iii.org
- Federal Trade Commission — Auto Insurance: consumer.ftc.gov
- USA.gov — Car Insurance: usa.gov/car-insurance
Content last reviewed November 2026. If you notice any outdated information, please contact us.