I'm sure if the only mods were interior stuff then they wouldn't be doing this. The insurance company would have a hard time proving that the interior stuff contributed to the accident. The suspension and wheels is pretty valid though.
When I was 17, I crashed my first car and it had alloys on it that were not declared. Direct line were the insurers and did refuse to pay out on the claim until I first paid them the extra £50 on the premium the alloys would have caused. This was very reasonable and very decent of them. I paid the extra, then they wrote off the car and gave me the full value as a claim.
This is one of the reasons I refuse to go anywhere else for insurance. The cheapest quote is not always the best, good service and peace of mind is well worth a few extra quid