Insuring modifications

[Duckydos]

Insurance is like that, if they can find a way to screw you, they will. This is my understanding (which goes back to that kid who lost his 'teggy).
When you pay your $200/month or whatever, you are insuring your stock '92 Integra (we will use him as an example, sorry dude). So, all the after-market performance parts, clear corners, CAI, exhaust, wheels... he will receive the value of STOCK parts, minus wear and tear and depreciation.
When it comes to getting specialty insurance, you declare the value of your car (lets say.. $20,000) but you will probably pay $5k/year because the company knows that you're insuring it that high for a reason. It is usually more practical to have regular insurance and take your chances.
When it comes to racing. Insurance for racing is insanely high and most solo and amatuer drivers can't afford it. SCCA offers a program, but even then it's hard to qualify for it and it's still pretty expensive. If you go out to the track (wether it be road, rally, 1/4 mile, whatever) and it is a competitive or timed event, insurnace (non-specialty) normally won't cover it. Driving school accidents will usually be covered.

That is just my understanding of the whole process.
-Ducky