In New Jersey, the cost of car insurance tends to be on the higher side, with the average annual expense for full coverage hovering around $2,547 and minimum coverage at about $1,028, according to data from Quadrant Information Services. However, there’s an alternative for budget-conscious drivers in the state: the dollar-a-day insurance program. While offering a more economical route, it’s important to note that this option comes with limitations. As an expert in the field, Bankrate provides insightful analysis and comprehensive details on NJ car insurance options to help drivers here better navigate their choices.

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The Special Automobile Insurance Policy (SAIP)

New Jersey’s dollar-a-day insurance, or the Special Automobile Insurance Policy (SAIP), is a state-run program that offers low-cost car insurance to New Jersey drivers who have Medicaid with hospitalization benefits. SAIP policies are commonly referred to as “dollar-a-day insurance” because the policies cost about $1 per day.

Dollar-a-day insurance is cheaper than traditional car insurance through a private insurer, but SAIP policies offer limited coverage and don’t meet New Jersey’s minimum car insurance requirements. Here is what’s included in a SAIP policy:

  • Emergency medical treatment: Covers medical expenses if you get into an accident and need emergency treatment.
  • Brain and spinal cord treatment: Offers coverage up to $250,000 if you get into an accident and need treatment for a brain or spinal cord injury.
  • Death benefit: Includes a death benefit of $10,000 paid to your loved ones if you pass away in an accident.

This type of insurance does not include collision or comprehensive insurance, which covers damage to your vehicle. More importantly, it does not include liability coverage, which means if you cause an accident and damage someone else’s vehicle or property, you are responsible for paying for the repairs out of pocket.

Cost of dollar-a-day car insurance in New Jersey

SAIP insurance costs $365 per year, payable in biannual or annual installments. If paid annually, it lowers the cost to $360. There is no monthly payment option like traditional car insurance.

Keep in mind that only one car is eligible for coverage on a SAIP policy, although multiple people can be covered on a single policy. For example, if you and your partner both qualify for SAIP insurance and you each have a car, you would need to purchase two separate policies, which would double the cost. However, you could both be covered on the same policy if you share a single car.

Unlike traditional car insurance, there are no discounts for dollar-a-day insurance. Despite the Medicaid requirements, there are also no subsidization options for dollar-a-day car insurance. However, your rate won’t increase or decrease due to your ZIP code, age or the type of car you drive.

How dollar-a-day car insurance compares to standard auto insurance

The SAIP program is significantly less than the average cost of standard minimum insurance policies in New Jersey or full coverage policies, which are $1,028 per year and $2,547 per year, respectively. Although the cost difference is large, these standard policies offer greater financial protection than the SAIP, which could cost a driver more in the long run.

SAIP insurance leaves drivers financially vulnerable by not covering many incidents a standard policy would provide coverage for, as it does not include liability coverage, collision coverage or comprehensive coverage.

Other types of auto insurance in New Jersey

New Jersey requires drivers who do not qualify for the SAIP program to purchase insurance that meets the state’s minimum insurance requirements. Drivers must carry at least basic insurance to drive legally; however, most car owners choose to purchase standard insurance, which provides more financial protection in the event of an accident.

A basic policy provides property damage liability and personal injury protection. A standard policy includes both of these, plus bodily injury liability.

  • Bodily injury liability: Bodily injury liability covers medical expenses if there are injuries to another driver due to an accident you have caused. Not included in basic policies, but $10,000 of coverage for all persons per accident is available as an option. Included in standard policies.
  • Property damage liability: Property damage liability covers expenses related to property damage to another driver’s vehicle if you are named the at-fault driver in an accident. $5,000 per accident is covered under basic policies. Standard policies include from $25,000 to $100,000 of coverage per accident.
  • Personal injury protection: Personal injury protection, or PIP, provides coverage for expenses related to medical treatment and lost wages for both you and your passengers following a covered accident. This coverage pays out no matter which driver is ruled at fault. Basic policies include $15,000 of coverage per person per accident and up to $250,000 of coverage for certain injuries. Standard policies include from $15,000 to $250,000 of coverage per accident and up to $250,000 for certain injuries, regardless of the selected limit.
  • Uninsured/underinsured motorist coverage: Uninsured motorist coverage pays for expenses related to an accident when another at-fault driver does not have insurance. Underinsured coverage covers you when an at-fault driver does not have high enough insurance limits to pay for damage and injuries you sustain. Not included in basic policies, but coverage is available under standard policies up to amounts selected for liability coverage.
  • Collision: Pays above your deductible for damage to your vehicle when it hits another vehicle or object. Available as an option from some insurers under basic policies and available as an option under standard policies.
  • Comprehensive: Pays above your deductible for damage to your vehicle from things like theft, vandalism, fire or collision with an animal. Available as an option from some insurers under basic policies and available as an option under standard policies.

No matter which policy you choose, the best way to find the cheapest premium is to shop around and compare multiple carriers. When gathering quotes, be sure to specify the same types of coverage and policy limits for the most accurate comparison. Experts recommend looking into each carrier’s discount opportunities as well to maximize your savings.

Who should get dollar-a-day insurance

Dollar-a-day insurance is particularly suitable for individuals who find standard car insurance policies financially out of reach. It’s crucial to understand what dollar-a-day insurance covers and does not cover, though. While it provides a legal solution to maintain car insurance, the financial protection it offers is quite limited compared to standard policies. Therefore, it’s often recommended as a last resort to prevent low-income drivers from the risks and legal issues associated with driving uninsured.

Before choosing dollar-a-day insurance in NJ, exploring other cost-effective car insurance alternatives is advisable. Though standard policies generally cost more than SAIP insurance, they offer broader coverage. Another potential avenue for those facing difficulties in obtaining traditional car insurance is the New Jersey Personal Automobile Insurance Plan (NJ PAIP). NJ PAIP caters to high-risk drivers and, despite being more expensive, meets the state’s minimum coverage requirements and provides a viable insurance solution.

How to get dollar-a-day insurance in New Jersey

To qualify for dollar-a-day insurance in New Jersey, you must meet certain eligibility requirements, including:

  • Be actively enrolled in Federal Medicaid with hospitalization.
  • Have a valid New Jersey driver’s license and registered vehicle.
  • Not have an existing auto insurance policy.

If you lose your Medicaid benefits, your SAIP car insurance will remain active with limited benefits until the renewal period, at which point you’ll need to find another policy. Additionally, drivers with suspended or revoked licenses or who have a car registration in bad standing are not eligible.

Drivers who meet eligibility criteria can apply for coverage at most insurance agencies in New Jersey. The SAIP website provides assistance for finding a provider, which is available online or at 1-800-652-2471.

Applicants will be asked to provide their driver’s license, car registration and Medicaid identification card, as well as the licenses of anyone in their household who also qualifies for Medicaid and drives the insured vehicle.

Frequently asked questions

    • Not all New Jersey drivers qualify for dollar-a-day insurance. Applicants must be enrolled in Federal Medicaid with hospitalization benefits. Those who qualify for Medicaid, but aren’t enrolled, won’t be eligible for SAIP insurance. Additionally, drivers must have a valid New Jersey driver’s license and registration in good standing.
    • Yes. The state doesn’t look at the credit scores of SAIP applicants like a normal insurance company does. Assuming other eligibility requirements are met, drivers can get approved for coverage even with a low credit score. Conversely, a good credit score won’t ensure a lower rate.
    • Dollar-a-day car insurance covers emergency medical treatment and brain and spinal cord injury treatment immediately after an accident. It also includes a death benefit of $10,000 for family members when the insured dies in a car crash. Dollar-a-day insurance does not include collision, comprehensive or liability coverage.
    • The NJ SAIP insurance does cost about one dollar per day for coverage — $365 for the whole year. It’s designed to offer an affordable option for drivers who cannot afford a full coverage policy. A driver must be enrolled in Medicaid to be eligible for this insurance option.