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It’s essential to have car insurance in New Jersey, not only because it’s legally required by the state, but also as a form of financial protection. Failure to maintain at least minimum liability coverage can come at a price, including fines, license suspensions and even jail time. Bankrate breaks down New Jersey car insurance laws to help keep you on the road and out of trouble.
Car insurance laws in New Jersey
New Jersey insurance law is straightforward and easy to understand. These laws are designed to keep drivers safe and ensure that all drivers have adequate car insurance. Here are the New Jersey car insurance laws that all drivers should be familiar with:
- Drivers must meet minimum coverage requirements: Every driver in New Jersey must carry a minimum amount of liability and uninsured motorist coverage.
- Drivers must carry no-fault insurance: New Jersey is a no-fault state, which means drivers are required to carry no-fault car insurance.
- Drivers must carry proof of insurance at all times: Drivers must carry proof of insurance in their vehicle at all times and provide proof of coverage when requested by law enforcement. New Jersey recognizes electronic ID cards and physical documentation as acceptable forms of proof of insurance.
- Every driver has the right to auto insurance: Every driver in New Jersey has the right to a car insurance policy. Drivers who are denied coverage or cannot afford standard coverage can purchase a Basic Policy under The Automobile Insurance Cost Reduction Act. Additionally, New Jersey drivers who are on federal Medicaid with hospitalization benefits qualify for The Special Automobile Insurance Policy (SAIP), which costs $365 per year.
Liability insurance in New Jersey
Currently, the New Jersey minimum car insurance requirements are 15/30/5 for the standard insurance policy. Minimum coverage insurance includes liability coverage and uninsured and underinsured motorist coverage. The current required coverage in New Jersey is:
- $15,000 bodily injury liability per person
- $30,000 bodily injury liability per accident
- $5,000 property damage liability per accident
- $15,000 uninsured motorist bodily injury per person
- $30,000 uninsured motorist bodily injury per accident
- $15,000 underinsured motorist bodily injury per person
- $30,000 underinsured motorist bodily injury per accident
- $15,000 personal injury protection (PIP)
Most drivers in New Jersey choose to purchase more coverage than what is required. Car accidents can be expensive, and there is no guarantee that liability-only coverage will pay for the damages associated with an at-fault accident.
For example, imagine you run a red light and hit another driver in the middle of the intersection, causing $30,000 of damage to the other driver’s car. Minimum coverage insurance would only cover $5,000 in property damage, which means you would have to pay the other $25,000 out of pocket.
Changes to car insurance minimum requirements in New Jersey
It is important to note that effective January 1, 2023, the state minimum liability limits in New Jersey are increasing to:
- $25,000 bodily injury liability per person
- $50,000 bodily injury liability per accident
- $25,000 property damage liability per accident
- $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
Additional changes to New Jersey state minimum liability limits are slated for policies renewing on or after January 1, 2026. These changes include:
- $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
Only the 2022 limit change will increase property damage, so it will remain $25,000 per accident for the 2026 update; no changes to New Jersey PIP requirements have been announced.
Is New Jersey a no-fault state?
Yes, New Jersey is a no-fault state. In a no-fault state, a driver’s insurance company will automatically pay for their medical expenses and lost wages after an accident, regardless of which driver caused the accident. In a fault state, the at-fault driver’s insurance company is responsible for paying for the other driver’s medical bills.
Because New Jersey is a no-fault state, drivers are required to carry personal injury protection (PIP) insurance. The minimum amount of required PIP insurance in New Jersey is $15,000 per person or per accident, but drivers can choose to increase their coverage limits to $250,000 or more.
Penalties for driving without insurance in New Jersey
Driving without car insurance in New Jersey is illegal. Getting caught without insurance comes with heavy consequences, including fines and potential license suspension. After two or more offenses, drivers can also face jail time for driving without insurance.
New Jersey also has strict laws around car insurance fraud. Giving false information to an insurance company when filing a claim or applying for a policy can result in jail time, a $15,000 fine for each fraud accusation and license suspension.
Additional auto insurance coverage options in New Jersey
Many drivers in New Jersey choose to purchase car insurance coverage beyond the state minimum requirements. Adding endorsement coverage to your policy will increase your monthly premium, but you get a higher level of financial protection. Here are some of the most common add-on coverage types in New Jersey:
- Collision coverage: Collision coverage will pay for your vehicle’s damage after an accident. The average cost of collision coverage in New Jersey is around $422 per year. If you have a basic policy, collision coverage may not be an option.
- Comprehensive coverage: Comprehensive coverage pays for vehicle damages related to non-collision events, like fire, flooding, theft and vandalism. The average premium for comprehensive coverage in New Jersey costs $130 per year. If you have a basic policy, comprehensive coverage may not be an option.
- Accident forgiveness: Accident forgiveness will keep your insurance rate from increasing after an at-fault accident. This coverage usually only applies to your first accident.
- Rental car reimbursement: If your vehicle is getting repaired after a covered claim, rental car reimbursement coverage will pay for the cost of a rental. Some insurance companies include this coverage for free with a full coverage policy.