- New Jersey follows a choice no-fault system, where drivers can choose whether they want a no-fault or traditional tort car insurance policy.
- The average coverage policy in New Jersey is $1,663, with the lowest being $1,070 per year.
- Common factors that determine your car insurance rate include driving history, vehicle type, geographic location, and other personal information.
- The most affordable car insurance companies include GEICO, Allstate, Plymouth Rock, and NJM.
Affiliate disclosure: Automoblog and its partners may be compensated when you purchase the products below.
Do a quick search for driving in New Jersey, and you’ll come across several new driving legislations. Just last year, the state created two categories of driver’s licenses (a REAL ID federal license and a standard license) and began permitting undocumented immigrants to get driver’s licenses. It’s also allowing first-time drunk driving offenders to keep their license (although they are required to install an ignition interlock device, which analyzes alcohol levels before letting drivers start the car).
Aside from all these changes, the Garden State has a number of minimum coverage requirements. If you’re unfamiliar with the differences of New Jersey car insurance, we’ll go over all the information you need to stay safely covered.
Our team has done extensive research on the best car insurance companies, no matter where you live. Enter your zip code to see recommended providers in your area and compare quotes.
What Is The Required Auto Insurance in New Jersey?
Like most states, New Jersey requires a minimum car insurance coverage. Unlike most states, however, it requires most drivers to carry three types of auto insurance coverage: liability, personal injury protection, and uninsured/underinsured motorist coverage.
Liability Coverage
This covers any injuries or damages incurred by other parties in accidents where you are at fault. There are two types:
- Bodily injury liability (BI), which pays for any injuries to other drivers and their passengers.
- Property damage liability (PD), which pays for any damage done to another party’s property.
New Jersey requires a minimum liability coverage of $15,000 per individual, $30,000 per accident, and $5,000 for property damage
Personal Injury Protection (PIP) Coverage
This covers any injuries incurred by you, your passengers, or any other person covered under your policy, regardless of who is at fault.
New Jersey is a no-fault state, which makes PIP coverage a requirement. If a New Jersey driver gets in an accident, their own car insurance company is responsible for picking up the tab for medical expenses – no matter who caused the accident.
In addition to healthcare, PIP may also reimburse for lost wages or caretaking services (personal or household) needed during recovery. The standard amount of PIP coverage is $15,000, per person per accident.
Uninsured/Underinsured Motorist (UM/UIM) Coverage
This covers any bodily injury or property damage you incur in accidents caused by a driver who has no insurance or not enough insurance to pay for your expenses.
The minimum UM/UIM coverage is $5,000, but it’s best to buy higher coverage whenever possible. Payments can only be reimbursed if your UIM coverage is higher than the liability coverage of the underinsured driver.
Optional Coverage
Two other important types of coverage are collision and comprehensive.
- Collision covers property damage resulting from a collision with another car or object, regardless of who is at fault.
- Comprehensive covers any property damage not resulting from an accident, including environmental hazards, theft, and vandalism.
While collision and comprehensive coverage are optional, they may be required if you’re financing or leasing your car. It can also provide peace of mind knowing your car is covered in almost all cases.
New Jersey Car Insurance Laws
New Jersey became a no-fault state in 1973, and later transitioned into a choice no-fault state in 1998. In a choice no-fault state, drivers are given the option of a no-fault auto insurance policy or a traditional tort liability policy.
Whereas a true no-fault state requires all drivers to be covered by their own insurance provider, no matter who’s at fault, a tort liability state requires the at-fault driver to pay for the other party’s expenses. With tort, injured parties also have the right to sue the driver at fault.
Two Types of Policies
As a choice no-fault state, New Jersey offers two types of car insurance policies – basic and standard.
Basic Policy
A basic policy is typical to no-fault systems, as it includes BI and PD liability and PIP coverage. However, it also prevents anyone from suing the at-fault driver, except in certain extreme cases. With a basic policy, the injured party has a limited right to sue, and can only pursue legal action for the following:
- Death
- Loss of a fetus
- Permanent injury
- Loss of a body part
- A displaced fracture
- Significant disfigurement or scarring
If any of these can be medically proven as a result of an accident, a lawsuit may be filed. In all other cases, however, a basic policyholder can’t file a lawsuit.
Standard Policy
A standard policy is more common in tort liability states and gives drivers an option of whether they want a limited or unlimited right to sue. Note, this option only covers legal actions for “pain and suffering” or non-economic losses after an accident. Any medical expenses or economic losses will still be paid by your PIP coverage.
A limited right to sue saves you money, but prevents you from seeking compensation after an accident. The unlimited right to sue is more expensive. However, you can legally hold the at-fault driver financially responsible for pain and suffering caused by any injury.
New Jersey’s Two Point Systems
When a driver in New Jersey is caught in violation of a traffic law, they are given different kinds of points.
The New Jersey Motor Vehicle Commission (NJMVC) adds anywhere from two to eight points to a driver’s license.
Common violations include:
- Racing on a highway (five points).
- Failure to obey the direction of an officer (two points).
- Failure to yield to a pedestrian in a crosswalk (two points).
- Leaving the scene of an accident where someone was injured (eight points).
If a driver gets six or more points within three years, they may be fined a $150 surcharge plus $25 for each point over six. If a driver gets 12 or more points, their license will be suspended.
In addition to driver’s license points, the driver is also assigned auto insurance eligibility points. These insurance eligibility points don’t affect official driving records, but they’ll likely affect your car insurance rates. Each provider keeps its own internal records and point systems. Some may even assign additional points to drivers with low credit scores, a history of at-fault accidents, or other factors.
Two Separate Insurance Markets
New Jersey has two insurance markets – the “regular” or voluntary market, and the “residual” or assigned risk market.
Drivers are only eligible to purchase from the voluntary market if they received fewer than seven insurance eligibility points within the last three years.
On the other hand, drivers with seven or more insurance eligibility points are considered high risk and may not be eligible to purchase from the voluntary market. In these cases, drivers can opt for coverage under the Personal Automobile Insurance Plan (PAIP).
If you’re having trouble finding reasonable coverage and have been denied at least twice in the past 60 days, you may be eligible for PAIP coverage. PAIP is not a company, rather, it’s a clearinghouse that assigns each driver to an insurance company. Then, the insurance company will provide the driver with “assigned risk” coverage at a standardized rate.
New Jersey Car Insurance Rates Compared to Other States
According to data from U.S. News & World Report, New Jersey’s average car insurance rate is $1,663, with the lowest being $1,087.93 (GEICO) and one of the more expensive being $2,752.97 (Farmers Insurance). These are middle-of-the-road rates, with the most expensive rate being in Michigan at $2,450, and the most affordable being in Maine at $875.78.
Despite having 6.3 million licensed drivers and operating primarily as a no-fault state, New Jersey’s car insurance rates are fairly reasonable.
The following factors can influence what a driver is required to pay:
Driving Record
If you or a member of your household have any at-fault accidents, violations, or suspensions on your driving record, you may have higher car insurance rates. While the exact rate depends on the car insurance company, drivers considered high risk will typically pay more than those with a clean record.
Vehicle Type
The make, model, and value of your vehicle can affect your New Jersey car insurance rate. In general, older vehicles will cost less (unless it’s a collectible), while luxury cars or the latest models will cost more to insure. The reasoning behind this is the latter costs more to repair or replace, given the price of the parts. However, some vehicle features, such as added safety or environmentally friendly features, may even allow for a discount.
Driving Location & Habits
Where you park and drive play a role in how much you will pay for insurance. Usually based on the number of claims filed in the particular zip code, areas shown to be higher risk will require more coverage. Locations that are densely populated or have a significant crime rate will likewise have high insurance rates.
Personal Factors
A few personal factors will also influence your received rates, with the most common being gender, age, and marital status. Young male adults have been known to experience more accidents and claims, and typically pay more for insurance coverage. On the other hand, young married couples have lower incidences of accidents and claims and therefore pay much lower premium rates.
How Do You Get The Cheapest Car Insurance Rates in New Jersey?
Before even contacting car insurance companies, think about what car insurance coverage you want. Do you want just the minimum requirement? Are you planning to insure two vehicles? Would you rather pay up front or each month? Knowing these will streamline your search and help find the best quotes for your needs.
Once you have a few providers in mind, there are things you can consider to get the cheapest car insurance rates:
Lower Coverage & Higher Deductibles
Your choice of coverage naturally determines the amount you will pay. Beyond the minimum requirement, adding more coverage types or increasing limits will result in higher insurance rates. For example, collision and comprehensive coverage are not required in New Jersey.
By opting to pay for your own repairs out-of-pocket, you can effectively cut down on your regular premiums (the amount you pay, no matter what occurs). Just be sure you can comfortably pay the deductible in case of any accidents.
Opt for No-Fault Coverage
Since New Jersey already requires drivers to be covered by their own insurance providers, you are able to choose the Limited Right to Sue. While you won’t receive payment for any pain and suffering from the at-fault driver, this may be a preferred plan if affordability is a greater concern.
Check for Discounts
Don’t be shy to ask for any discounts. It’s common practice in such a competitive industry, and car insurance companies provide a wide range of options. A few popular ones include discounts for:
- Students with high grades.
- Opting in for paperless billing.
- Defensive driving or driver’s ed course completion.
- Vehicles with added safety features such as airbags.
- Multiple policies within the same company (two or more cars or homeowner’s insurance).
Shop Around
Even after you have auto insurance coverage, you can always continue to look for more affordable options. If you do find one, you can cancel your current policy and have any unused premium payments refunded to you. Keep in mind you should never cancel an existing policy until the new one takes effect.
Who Are The Best Car Insurance Companies in New Jersey?
According to World Population Review, New Jersey is ranked as one of the most densely populated states in the U.S. in 2020. This naturally translates to a lot of drivers on the road, which makes it even more important to find the right New Jersey car insurance.
Thankfully, the state has a sizable share of car insurance companies. To help you find the best one, our team has determined four providers according to coverage and cost:
GEICO
GEICO is known for offering some of the cheapest car insurance rates – and it’s no different in New Jersey. U.S. News & World Report found GEICO car insurance to have an average of $1,087.93 per year. Rates can even go as low as $976.53 for 60-year-olds and above but may rise over $2,000 for those with bad credit scores.
As one of the top providers in the country, GEICO boasts an A++ from AM Best and an AA+ from Standard & Poor’s. It is the best overall provider based on our industry research and a good choice if you’re looking for the cheapest car insurance rate.
Allstate
Allstate offers cheap car insurance coverage and has many ways to lower the premiums. For example, drivers with clean records can expect an average of $1,851.63 per year. This can be further lowered for drivers with new cars or multiple policies.
Allstate also offers discounts for students who get high grades or have completed the teenSMART® driver education program. Its Milewise® program allows policyholders to pay-per-mile, while its Drivewise® app tracks driving habits to determine if you’re eligible for a discount.
Plymouth Rock
Plymouth Rock Assurance is a popular car insurance provider in the northeast, with particularly extensive coverage in New Jersey. Plymouth not only helps drivers in the state find the best possible plans for their needs, it also claims to save policyholders an average of over $581 per year.
Plymouth Rock has also garnered a number of recognitions, including an A- (Excellent) rating on AM Best, and an Overall Excellence award by Professional Insurance Agents of New Hampshire (PIANH).
NJM
NJM is another northeastern insurance provider, specifically founded in New Jersey. It has since expanded to New York, Pennsylvania, Connecticut, Delaware, and Maryland, and was the first to be recognized by J.D. Power.
NJM offers a range of car insurance coverage, including for classic and collector cars, motorcycles and ATVs. Its discount packages – for auto and home bundle, multi-car policies, and defensive driving courses – have been proven to lower rates as much as 20 percent.
These four providers can start you off with some of the cheapest New Jersey car insurance policies. If you’re looking for more options, enter your zip code above and see other providers available in your area.
Original article: How To Find Affordable New Jersey Car Insurance
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