Hi. I deal with motor insurance claims so I thought I'd reply. You should always tell your insurance company if you have an accident and if there is no claim your insurance premium shouldn't increase. Not telling them simply makes it harder to investigate and therefore harder to repudiate a third party claim, however it's not a major problem.
Regarding the police, they are dealing with a criminal matter, your insurance company is dealing with a civil claim. Although the police may not be charging anybody with a criminal offence somebody will still be liable for the accident and that could be you.
I'm not entirely sure what an induction kit is and some insurance companies are more lenient that others but the reason modifications increase your premium is if they are likely to increase the powere/performance, increase the cost of parts or increase the chances of theft. You should always advise your insurance company of any modification as they can quite legally void your policy for non-disclosure. If that happens you will have to pay the third party claim yourself and in this day and age it could be thousands.
Speak to your insurance company and see if they will indemnify you (deal with the claim). They need to start their investigations asap. If they do void your policy, find a solicitor who may be able to sucessfully hold the third party at fault.
Hope this helps. If you need to know anything else by all means
e-mail me. It's good to be able to help, given that I know nothing useful about cars yet!