Auto insurance is crucial for New Jersey drivers. It provides financial protection against accidents, theft, and other vehicle-related incidents. New Jersey mandates auto insurance to promote responsible driving and mitigate financial risks.
The New Jersey Department of Banking and Insurance (NJ DOBI) regulates and enforces auto insurance policies in the state. Meanwhile, the New Jersey Motor Vehicle Commission (NJ MVC) enforces these regulations, requiring all registered vehicles to maintain proper insurance coverage.
Under the New Jersey Automobile Insurance Cost Reduction Act (AICRA), all drivers must carry liability insurance, covering bodily injury and property damage caused to others in an accident.
New Jersey's "no-fault" insurance system means each driver's insurance covers their medical expenses regardless of fault in an accident.
What are the Auto Insurance Requirements in New Jersey?
In New Jersey, a minimum level of coverage is mandatory for all drivers. The following are the minimum required insurance coverages as of January 1, 2023:
- $25,000 for each person's bodily injury responsibility
- $50,000 per accident in bodily injury liability
- $25,000 for each accident's property damage liability
- $15,000 for Personal Injury Protection (PIP)
- $25,000 for each person's Uninsured/Underinsured Motorist (UM/UIM) bodily harm
- $50,000 for each accident's UM/UIM physical harm
New Jersey has a no-fault insurance system, meaning drivers must have PIP to pay for medical costs in the event of an accident, regardless of who is at fault.
If law enforcement requests proof of insurance, it must be kept in the car. Valid proof of coverage might be physical paperwork or electronic ID cards.
Every driver in New Jersey has the legal right to auto insurance coverage. If they are not eligible for standard coverage or cannot afford it, drivers may choose the AICRA Basic Policy. The $365 annual Special Automobile Insurance Policy (SAIP) is also available to federal Medicaid recipients with hospitalization benefits.
2026 Changes to Minimum Car Insurance Requirements in New Jersey
New Jersey opted to raise the minimum coverage requirements for auto insurance in two phases because, up until 2023, they were among the lowest in the country.
New Jersey will further modify its auto insurance laws effective January 1, 2026. These modifications represent the second stage of a proposal to raise minimum liability limits to give drivers greater financial security.
The following are the new required minimums for regular auto insurance coverage in New Jersey, effective 2026:
- $35,000 for each individual in cases of bodily harm
- $70,000 for each incident involving bodily harm
- $25,000 for property damage liability per incident
- $15,000 for PIP
- $35,000 for UM/UIM physical harm per individual
- $70,000 for UM/UIM physical harm per incident
Types of Coverage in New Jersey
New Jersey offers various types of auto insurance coverage to guarantee that drivers have adequate protection. These coverages are available under the Basic Policy and the Standard Policy.
The Basic Policy offers minimal coverage at a lower cost, meets only legal requirements, and excludes UM/UIM, comprehensive, and collision coverage. The Standard Policy provides broader coverage with higher liability limits and the option to add UM/UIM and comprehensive and collision coverages, suitable for those seeking more extensive protection and flexibility.
Bodily Injury Liability (BIL)
This coverage pays for medical expenses, lost wages, and other costs associated with injuries the policyholder causes to others in an accident.
Under the Standard Policy, BIL is required with minimum limits of $25,000 per person and $50,000 per accident. Meanwhile, the Basic Policy makes BIL optional, with limits of $10,000 per accident. This limited coverage may be insufficient for severe accidents, potentially exposing drivers financially.
Property Damage Liability (PDL)
This coverage pays for damage the policyholder causes to another person's property in an accident.
In the Standard Policy, PDL is required with a minimum limit of $25,000 per accident, offering adequate protection against property damage claims. On the other hand, the Basic Policy includes PDL with a limit of $5,000 per accident, which might not cover extensive damage.
Personal Injury Protection (PIP)
Regardless of who is at fault in an accident, PIP pays for lost wages, medical bills, and rehabilitation costs for the policyholder and passengers.
The Standard Policy offers PIP coverage ranging from $15,000 to $250,000 per person per accident. In contrast, the Basic Policy provides a fixed PIP coverage of $15,000 per person per accident.
Uninsured/Underinsured Motorist Coverage (UM/UIM)
UM/UIM protects the policyholder in an accident with a driver with insufficient or no insurance.
The Standard Policy requires UM/UIM coverage that matches the bodily injury liability limits and prioritizes adequate protection in such scenarios. This coverage is not available under the Basic Policy, increasing the financial risk for drivers involved in accidents with uninsured or underinsured motorists.
Comprehensive Coverage
Comprehensive coverage pays for damage to the policyholder's vehicle caused by events other than collisions, such as theft, fire, vandalism, or natural disasters.
The Standard Policy offers this optional coverage, providing extensive protection against various non-collision-related incidents. The Basic Policy does not include comprehensive coverage, leaving drivers responsible for such damages.
Collision Coverage
Collision coverage pays for damage to the policyholder's vehicle resulting from a collision with another vehicle or object, regardless of who is at fault.
This coverage is available as an optional addition under the Standard Policy, which emphasizes that repair costs are covered in the event of a collision. The Basic Policy does not offer collision coverage, requiring drivers to bear the cost of repairs themselves.
Penalties for Driving Without Insurance in New Jersey
Driving without insurance in New Jersey can lead to severe penalties. The state imposes strict consequences to guarantee that all drivers maintain proper insurance coverage, and the severity of these penalties increases with repeated offenses.
First Offense
Drivers caught without insurance for the first time face the following consequences:
- Fines: Between $300 and $1,000
- License Suspension: Up to one year
- NJ MVC Surcharge: $100 for license reinstatement
- Community Service: To be determined by the court
Subsequent Offenses
Repeat offenders face even harsher penalties, which include:
- Fines: Up to $5,000
- License Suspension: Two years
- NJ MVC Surcharge: $100 for license reinstatement
- Jail Time: 14 days
- Community Service: 30 days
The severity of the penalties depends on the number of offenses. Additionally, suppose an uninsured driver causes an accident. In that case, they face these penalties in addition to paying out-of-pocket for damages caused.
New Jersey's "No Pay, No Play" Law
New Jersey's "No Pay, No Play" law restricts uninsured drivers from claiming non-economic damages, like pain and suffering, if they are hit by an insured driver. They cannot sue for personal injury and have limited ability to collect for property damage.
Uninsured drivers with serious injuries may need health insurance to cover medical expenses. Car insurance helps avoid these penalties, protects against at-fault losses, and allows for more significant compensation if not at fault in an accident.
How To Choose the Right Auto Insurance in New Jersey?
Choosing the right auto insurance in New Jersey involves evaluating available coverage options and personal requirements. Here are some considerations in choosing the right auto insurance in New Jersey:
Understand New Jersey's Insurance Laws
Start by understanding the state's unique insurance laws, which mandate minimum coverage but allow for additional protection through higher liability limits and optional coverages like comprehensive and collision insurance.
These additional coverages are essential for those with more assets or financed or leased vehicles, as lenders often require full coverage and may recommend gap insurance to cover the difference between the loan balance and the vehicle's value if it is totaled.
Select an Insurance Provider
Selecting an insurance provider involves several critical considerations. It is essential to verify the company's financial stability and assess customer satisfaction through reviews and ratings.
It is also essential to confirm that the insurance provider offers the specific coverages required, including any optional coverages that might be needed.
How To Find a Licensed Insurance Company in New Jersey?
Finding a licensed insurance company in New Jersey is straightforward with the resources provided by the NJ DOBI.
The NJ DOBI offers a comprehensive list of Licensed Insurance Carriers operating in New Jersey. This list helps drivers choose from reputable and legally recognized insurers. The Contact Information of several Insurance Carriers is also provided by the NJ DOBI.
Additionally, the National Association of Insurance Commissioners (NAIC) provides an Online Lookup Search Tool that allows users to verify an insurance company's licensing status. This tool is particularly useful for confirming whether an insurance provider is authorized to operate within the state.
Compare Insurance Quotes
Comparing insurance quotes from multiple providers is essential to identifying the best coverage at the most competitive price. Each quote should be reviewed in detail, focusing on deductibles, coverage limits, and exclusions.
Customize Coverage
Customizing the insurance coverage based on individual needs and budget is crucial. Assessing personal risk factors, such as driving habits, the type of vehicle, and geographical location, helps determine the appropriate coverage types.
For example, drivers in urban areas with higher accident rates might benefit from higher liability limits. At the same time, those with older vehicles might opt for less comprehensive coverage.
For more detailed information on choosing the right auto insurance in New Jersey, the NJ DOBI provides a comprehensive Auto Insurance Buyer's Guide available in PDF format on their website.
What Factors Affect Auto Insurance Rates in New Jersey?
Auto insurance rates in New Jersey are influenced by various factors that insurance companies use to assess risk and determine premiums. Understanding these factors can help drivers find ways to lower their rates.
Location
Where a driver lives significantly impacts their auto insurance rates in New Jersey. City residents typically pay higher premiums than rural residents, as urban environments have higher accident rates and claim frequencies.
For instance, drivers in Newark pay an average annual premium of $2,300. In contrast, those in less populated areas like Princeton pay about $1,400.
Age, Gender, and Marital Status
Demographic factors significantly influence auto insurance rates. Young, single male drivers face the highest premiums due to higher accident rates.
An 18-year-old male driver in New Jersey might pay around $5,461 annually, while an 18-year-old female might pay slightly less. Rates decrease after age 26, and married drivers typically receive lower rates than single drivers.
Driving Record
A driver's history of accidents, tickets, and claims heavily influences their insurance costs. Those with clean driving records in New Jersey typically enjoy the lowest annual premiums, around $1,757. However, accidents, moving violations, and frequent claims can lead to substantial rate increases.
For instance, a DUI conviction can increase rates to approximately $5,041 per year. Different companies have different rules regarding incident consideration. Many do not consider incidents older than three years, while some insurers may look back as far as five years.
Vehicle Usage
How much a car is driven affects rates in New Jersey. Typically, drivers who use their vehicles for long commutes or business purposes pay more than those who drive primarily for pleasure. The annual mileage driven is also considered. Drivers with high annual mileage might spend more than $1,800 annually, compared to under $1,600 for those with low mileage.
Type of Vehicle
Another factor that impacts auto insurance in New Jersey is the make, model, and year of a car. More expensive vehicles generally cost more to insure, especially for physical damage coverages.
For instance, insuring a luxury car like a BMW can cost over $2,800 annually, while insuring a standard sedan like a Toyota Camry might cost about $1,500. Insurers also consider a vehicle's safety features, repair costs, and theft rates.
Credit Score
Many insurers in New Jersey use credit-based insurance scores as a rating factor. Drivers with higher credit scores often receive lower premiums. In this state, a driver with an excellent credit score might pay around $1,400 annually. In contrast, a driver with poor credit could face premiums exceeding $3,500 annually.
How To Save Money on Auto Insurance in New Jersey?
Auto insurance can be a significant expense, but there are several strategies that drivers in New Jersey can use to lower their premiums, which are as follows:
Safe Driving Habits
One of the most effective ways to lower auto insurance premiums is to maintain a clean driving record. Many insurance companies offer safe driver discounts to those who avoid accidents and traffic violations.
In New Jersey, a driver with a clean record might save up to 10-20% on their premiums. Defensive Driving Courses can also help, and completing an approved course can lead to additional discounts.
Impact of Deductibles
Choosing higher deductibles can lower the monthly premium. However, the selected deductible must be affordable in the event of a claim. For example, increasing the deductible from $500 to $1,000 can reduce premiums by 10-20%, but drivers need to be prepared to pay the higher out-of-pocket cost if they need to file a claim.
Bundling Policies
Bundling multiple insurance policies with the same provider can lead to significant savings. For instance, combining auto and home insurance policies can result in a discount of around 15%. This reduces overall costs and simplifies the management of multiple insurance policies.
Low Mileage Discounts
Insurance companies in New Jersey may offer discounts for drivers who log fewer miles annually. This is particularly beneficial for those who work from home or have a short commute. Low mileage can signal a reduced risk of accidents, resulting in lower premiums.
Credit Score
As mentioned earlier, maintaining a good credit score can help lower auto insurance premiums. Insurance companies often use credit scores to assess risk. Drivers with higher credit scores are seen as less risky and may qualify for lower rates. It is important to regularly check credit reports and address any issues to maintain a good credit score.
Usage-Based Insurance Programs
Some insurance providers in New Jersey offer usage-based insurance programs. These programs use telematics devices to monitor driving behavior, such as speed, braking, and mileage. This option is ideal for those who drive infrequently or have excellent driving habits.
What To Do After an Auto Accident in New Jersey?
In the event of an auto accident in New Jersey, taking immediate and appropriate actions is crucial.
If the accident involves significant damage, injury, or death, reporting it to the authorities is necessary. New Jersey requires citizens to report accidents with injuries, fatalities, or property damage exceeding $500 within ten days. If a police officer responds and submits a report, filing a personal report may not be needed.
While not all insurance claims require a police report, obtaining one for injuries or property damage claims is required to help establish fault and prevent claim denial. Failure to report an accident when required can result in penalties, including fines and the suspension of a driver's license and vehicle registration.
Filing an Insurance Claim
If another driver caused the damage, the vehicle owner has two options for filing a claim. They can file a first-party claim with their insurance, provided they have collision or comprehensive coverage. In this scenario, their insurer will cover the repairs or the vehicle's value minus the deductible.
Alternatively, the owner can file a third-party claim with the at-fault driver's insurance. The at-fault driver's insurer will pay for the damages according to their insured's liability, though this may not cover the entire loss.
When filing an insurance claim, it is important to notify the insurance company as soon as possible. Provide detailed information about the accident, including the date, time, location, and description of what happened. Required documents, such as the police report, photos, and medical reports, should be submitted promptly.
It is essential to cooperate with the claims adjuster assigned to the case and provide any additional information needed. Repair estimates for vehicle damage should be obtained, and while insurers may have preferred repair shops, policyholders generally have the option to choose where to have the vehicle repaired.
The insurance company will offer a settlement based on policy coverage and the extent of damages.
Denied Insurance Claims
If an insurance claim is denied, the first step is to appeal the decision through the insurance company's internal appeals process. This involves reviewing the denial letter, gathering additional evidence, and submitting a formal appeal to the insurer.
If the appeal does not resolve the issue, a complaint can be filed with the Insurance Claims Ombudsman by calling 1-800-446-7467, emailing ombudsman@dobi.nj.gov, or completing and submitting the Insurance Complaint Form via mail or fax. For added convenience, policyholders in New Jersey can also file complaints online.