The motability website states
The car itself is covered in the sense that you have insurance and in the event of a fault claim DL may not pay out for the damages to these items. e.g. you have the advanced back and hit a lamppost damaging the Crystal grill they could say they will not pay out, or that they will only cover the cost of a standard grill. I guess this will come down to their discretion.
In the event event of a non fault claim, the third party insurance pays and DL should recover the cost to cover the modification from them.
As long as you have informed DL of the modification you are covered to drive with it but they may not pay out on it from their own pocket.