Best auto insurance in New Jersey with bad credit

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According to the Insurance Information Institute, drivers with low credit scores pay more for car insurance because, statistically, they file more claims. Therefore, unless you live in California, Hawaii or Massachusetts (where insurance providers are not allowed to use your credit score as a factor while calculating a premium), your credit score is affecting the cost of your car insurance.

But finding car insurance for poor credit in New Jersey is not as simple as a Google search. The reason? Car insurance is impacted by a lot of factors in addition to your credit score.

Average cost of full coverage car insurance in New Jersey by credit

Provider Poor credit Average credit Good credit Excellent credit
State average $3,307 $1,979 $1,757 $1,384
National average $3,873 $1,865 $1,674 $1,487

Best car insurance in New Jersey with bad credit

While a low credit driver in New Jersey pays an average of $3,307 a year for full coverage car insurance, the national average for a good credit driver for the same amount of coverage is $1,674 — which is a difference of $1,633.

Contrary to what you may think, insurance companies do not simply look at your credit score, but they do look at something that is quite similar: your credit-based insurance report. Your credit-based insurance score is still based on information from your credit reports (compiled by the Big Three — Experian, Equifax and TransUnion).

Depending on your history with money (meaning on-time versus late payments, amount of debt, types of credit used, etc.), you are either labeled as:

  • Poor
  • Average
  • Good
  • Excellent

The difference between a credit score and a credit-based insurance score is simple: a credit score can deny you access to lines of credit or loans, while a low credit-based insurance score will not deny you access to coverage, but it will likely increase the cost of your premium.

Why does my credit affect my car insurance rates in New Jersey?

The reason why someone with a low insurance score is more likely to get into an accident is not fully known. Regardless, numerous studies have shown there to be a correlation.

In 2004 and 2005, the Texas Department of Insurance released an extensive study, as well as a supplemental to that study proving drivers with low credit scores file more claims. In 2007, the FTC did the same. In the FTC report, a study by MetLife is referenced where it was found that low credit drivers were a 50% greater risk to the company (but the risk was even higher with other types of insurance).

The best thing drivers with low credit scores can do to improve their premiums is to increase their credit scores. However, once they do so, they may want to switch providers. Most policies come with 6-month terms, which means you may have to wait that long before your provider reviews your information again. By switching, your new provider will be working with your most up-to-date data.

What other factors impact auto insurance rates in New Jersey?

The true cost of insurance boils down to a lot of factors unrelated to your credit-based insurance score. The most likely culprits include:

  • Where you live: Much of your premium is determined by your zip code because some areas have a higher amount of claims than others. It is quite possible to save on your premium by simply moving to a safer zip code. For example, in Florida, if you were to move from Tampa to Orlanda, you would save an average of $450 a year.
  • Your car: A high end expensive car costs more to insure than a mid-range vehicle. Drive an older car with a high safety rating and you will see a big change in your premium. A prime example would be a driver switching from a BMW 330i to a Honda Odyssey. The BMW 330i costs about $2,225 a year to insure, while a Honda Odyssey only costs around $1,454. A potential savings of $771 for simply changing cars.
  • Your driving history: High risk factors, such as speeding tickets, at-fault accidents or DUIs all greatly affect how much you pay for car insurance. If you have numerous traffic violations on your record, this is likely the reason behind your expensive premium. For example, a single DUI in New Jersey can increase your premium by as much as 120%.

How to get cheap car insurance in New Jersey with poor credit

If a low credit score is affecting how much you are paying for car insurance, the most important things you can do to lower your premium are to improve your credit score and continue to obey all traffic laws. However, there are things you can do today to save on your car insurance. Sometimes, to get the best car insurance for bad credit in New Jersey, you have to do a little bit of legwork.

  • Shop around: Rate shopping is the first thing you should do to lower your premium. Even though you have a low credit score does not mean every provider is going to charge you the same amount for a policy. Each company weighs the importance of a low credit score differently. Though it is not a guarantee, it is very possible to save a significant amount of money by simply changing providers.
  • Compare discounts: Cheap car insurance for bad credit in New Jersey often revolves around discounts. Even though two companies may offer the same discounts, you will probably save more with one over another. However, while shopping around, also be sure to look for discounts that you can both immediately take advantage of, and ones you will be able to use in the future.
  • Increase your deductible: You can raise or lower your deductible. The higher you raise it, the less you will pay in premiums every month. However, just keep in mind that the higher you go the less you will receive after an accident. Speak with an agent to choose a deductible that suits your needs best.

Frequently asked questions

Will I get a credit check when I obtain an insurance quote?

Yes, you will, but it will not hurt your credit score (contrary to public opinion). This is because a credit check only hurts your credit score if you are looking for money— be it in the form of a loan or line of credit. This is why companies advertise performing soft credit checks as opposed to hard credit checks. You want a soft credit check if you want your credit score to remain unaffected.

Which company offers the best bad credit car insurance in New Jersey?

The best car insurance company for one person may not be for another, this is because your credit score is only one factor among many affecting your premium. To find the best car insurance for you, shop around and compare rates and discounts.

Methodology

Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, varied credit tiers and the following full coverage limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverages that meet each state’s requirements. Our base profile drivers own a 2019 Toyota Camry, commute five days a week and drive 12,000 miles annually.

These are sample rates and should only be used for comparative purposes.

Credit: Rates were calculated based on the following insurance credit tiers assigned to our drivers: “poor, average, good (base), and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. The following states do not allow credit to be a factor in determining auto insurance rates: CA, HI, MA

Written by
Lauren Ward
Insurance Contributor
Lauren Ward has nearly 10 years of experience in writing for insurance domains such as Bankrate, The Simple Dollar, and Reviews.com. She covers auto, homeowners, and life insurance, as well other topics in the personal finance industry.