Car insurance is mandatory in New Jersey, but each insurance company sets its own underwriting guidelines regarding eligibility. In other words, a car insurance company could refuse to offer a policy to those with less-than-stellar driving records or credit scores. So, what happens when a high-risk driver in New Jersey can’t find coverage? Bankrate explores the New Jersey Assigned Risk Plan, which is designed to help you obtain a policy if you’re having trouble doing so with traditional carriers.

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What is the New Jersey Personal Automobile Insurance Plan (NJ PAIP)

Finding cheap car insurance for high-risk drivers may be more nuanced in some states. And if your credit score is poor or if your driving history has a few negative marks, it is possible to be rejected by some insurance companies. This is why the New Jersey Assigned Risk Plan came into existence in 1992. Also known as the New Jersey Personal Automobile Insurance Plan (NJ PAIP), this government initiative is meant to provide motorists in the state with car insurance when they have been turned down by private insurers because of their credit score or driving history.

Bear in mind that the NJ PAIP is not an auto insurance agency. Rather, it is a program that matches drivers with insurance companies for adequate coverage, also called an “assigned risk plan.”

Who is eligible for the NJ PAIP?

As with most state-sponsored insurance programs, to qualify for the NJ Assigned Risk Plan, you first have to offer proof that you have failed to get regular insurance — at least twice in the span of 60 days. Only those who have been declined all other insurance options can apply for the NJ PAIP.

Other eligibility requirements include:

  • New Jersey resident and licensed driver
  • Vehicle registered in New Jersey
  • Suspended license for being uninsured
  • Necessity of insurance to have license reinstated

Your credit score does not have any significance in applying for PAIP (although it can be a contributing factor to your premiums in some cases), but certain factors can still make you ineligible, such as:

  • Invalid driver’s license
  • History of car insurance policy lapses or non-payment of premiums
  • Withholding information in the application

If you are turned down once by the PAIP, you are free to apply again if the ineligibility factors no longer exist.

What kind of coverage is available with the NJ PAIP?

New Jersey car insurance law mandates that all drivers maintain a minimum limit of liability coverage. Under the New Jersey Assigned Risk Plan, drivers may choose between a basic and a standard policy, with the former offering fewer coverage options than the latter. The basic policy does not include bodily injury in the minimum coverage but offers it as an add-on, up to $10,000 per accident. Property damage coverage of $5,000 per accident and personal injury protection of $15,000 per person per accident are also included in the basic plan. The base features of the standard policy include bodily injury coverage, property damage, personal injury protection, uninsured motorist coverage and collision and comprehensive coverages.

High-risk auto insurers associated with the New Jersey Assigned Risk Plan are obligated to provide coverage to drivers who qualify for three years. After that duration, if you are still a high-risk driver and fail to get regular insurance, you will likely be able to apply for PAIP again. Coverage options may differ from one insurance provider to another, however, so comparing available options will give you the best idea of what will suit your needs and budget.

How much does car insurance cost with the New Jersey Assigned Risk Plan?

High-risk car insurance is typically more expensive than the options in the general market and the NJ Assigned Risk Plan may be consistent with that trend. Your premium will also depend on the factors that individual insurance providers evaluate to set a price for you, which can include your ZIP code, age, type of vehicle and marital status, among other variables.

The NJ PAIP has two payment options: you can either pay the total annual premium in full at the start of your policy, or you can choose to pay a 30 percent deposit initially and the rest in installments over the next few months. If you are insured through this program, you are not bound to stay with it if you are eligible for a cheaper policy elsewhere. You are free to cancel the policy and your remaining premiums will be refunded. However, be sure your replacement policy is in force before terminating your NJ PAIP plan to avoid any lapse in coverage.

How to buy insurance from the NJ PAIP

For the most accurate quote, you will first need to find a NJ PAIP insurance producer.. Then, you can select an agent and contact them for a quote. The information you provide will be used to determine the amount you can expect to pay for insurance and also be matched with a high-risk insurer, so it is important that you provide as many details as possible.

The company that the NJ PAIP assigns to you must commit to providing you with insurance for the next three years, regardless of your driving history. Unlike purchasing regular car insurance, your options are likely to be fairly limited when it comes to high-risk insurance providers, so the three year obligation can potentially be a huge benefit.

Alternatives to the NJ PAIP

New Jersey is a no-fault state and seeks to ensure low-cost insurance is available to help drivers from all walks of life remain insured. There are ways to get high-risk insurance without state-sponsored programs if you look in the right places. If you have an imperfect driving history or little to no credit, you have the following options in New Jersey besides the Assigned Risk Plan:

  • Special Automobile Insurance Policy (NJ SAIP): Another government program but meant for only those who are on Medicaid with hospitalization. Also called New Jersey Dollar a Day car insurance, it provides only medical coverage for emergency treatment after an accident.
  • High-risk insurance companies: It is possible to find insurers that accept high-risk drivers, although you may have to do your own research to find those with which you will be eligible for coverage, and the three year guaranteed coverage period would not necessarily apply. Most national insurers also have different coverage options for motorists with DUIs, accidents and other violations on their record.

The laws in New Jersey seek to give every motorist access to car insurance. By gradually improving your driving record, you may become eligible for various discounts offered by most insurers that can reduce annual premiums either up front or over time. Otherwise, you may be able to obtain insurance through state-supported initiatives like the NJ PAIP.

Frequently asked questions

    • Because each driver comes with unique coverage needs and rating factors, the best car insurance company is subjective. For instance, some companies may be better for high-risk drivers, while others cater to those with clean driving records. Additionally, some carriers are regional and only offer policies in select states. However, one of the most effective ways to find the best company for you may be to request quotes from multiple companies and narrow your search based on your individual circumstances.
    • Due to the passing of Bill S481, the minimum liability requirements for New Jersey car insurance are increasing. Standard policies renewed on or after January 1, 2023, are required to meet the following coverage limits:
      • $25,000 bodily injury liability per person
      • $50,000 bodily injury liability per accident
      • $25,000 property damage liability per accident
      • $15,000 personal injury protection (PIP)
      • $25,000 uninsured motorist bodily injury per person
      • $50,000 uninsured motorist bodily injury per accident
      • $25,000 underinsured motorist bodily injury per person
      • $50,000 underinsured motorist bodily injury per accident

      Additionally, the New Jersey state minimums are slated to increase once more in 2026; the minimum limits for bodily injury and uninsured motorist for policies renewed on or after January 1, 2026, will be:

      • $35,000 bodily injury liability per person
      • $70,000 bodily injury liability per accident
      • $35,000 uninsured motorist bodily injury per person
      • $70,000 uninsured motorist bodily injury per accident
      • $35,000 underinsured motorist bodily injury per accident
      • $70,000 underinsured bodily injury per accident

      Please note that required coverage levels for PIP and property damage coverage are not affected by this second increase.

    • Although you might be tempted to decrease your liability limits or raise your deductibles to lower your rate, you may want to review your discount opportunities first. By doing so, you may be able to save on your car insurance while also maintaining important financial protection. Each company offers its own suite of car insurance discounts, and some may have additional eligibility requirements if you are on an assigned risk plan. Still, some common discounts to ask about may include bundling, telematics, good student and defensive driver, among others. Furthermore, remaining ticket-and-accident-free could earn you a good driver discount along with an overall lower base rate.