I'm with Shannons and have every modification covered, they even have the brands and model numbers of all modications including my rims, computer, coilovers, pod etc....
Shannon's are great with modifications. I asked them about if the modification is illegal will i be covered in the case of an accident and the answer i got was...
'You will definately be covered provided it wasn't that specific modification that caused the accident.'
And when they say caused they mean 100% at fault for the accident, there is no way they would try to prove or can prove that one modification could be blammed for an accident, as there is usually a certain amount of driver error involved as well.