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New Jersey Car Insurance Laws

Courthouse in Trenton, New Jersey.
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There were 278,413 accidents reported by the New Jersey Department of Transportation in 2019. So far in 2020, there have been 531 fatal accidents, which is an increase of nearly 5% from the year before.

Car insurance in New Jersey is legally required. Drivers must meet certain coverage requirements to protect themselves and other drivers on the road. Keep reading to learn about the New Jersey car insurance laws.

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 coverage. 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

The New Jersey minimum car insurance requirements are 15/30/5 for the standard insurance policy. Minimum coverage insurance includes liability coverage and uninsured/underinsured motorist coverage. The required coverage in New Jersey is:

  • $15,000 in bodily injury liability coverage per person
  • $30,000 in bodily injury liability coverage per accident
  • $5,000 in property damage liability coverage per accident

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.

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 protection. Here are some of the most popular add-on coverages in New Jersey:

  • Collision insurance: Collision insurance will pay for your vehicle’s damage after an accident. The average cost of collision insurance in New Jersey is around $403 per year.
  • Comprehensive insurance: Comprehensive insurance pays for vehicle damages related to non-collision events, like fire, flooding, theft and vandalism. The average comprehensive insurance policy in New Jersey costs $129 per year.
  • 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.

Frequently Asked Questions

What is the best car insurance company in New Jersey?

The best car insurance company in New Jersey is different for every driver. Some drivers want a company with great customer service, some are looking for the best discounts and others are simply looking for the cheapest rate. To find the best car insurance company for your needs, shop around and compare providers based on the factors that are important to you.

What is the cheapest car insurance in New Jersey?

The cheapest car insurance companies in New Jersey are NJM, Amica, Selective Insurance, Plymouth Rock and Geico. Selective Insurance has the most affordable full coverage policy, which costs $1,019 on average. NJM has the cheapest minimum coverage policy, which costs $363 on average. You can get a personalized quote from each company to see which one can offer you the lowest rate.

How much does car insurance cost in New Jersey?

The average cost of car insurance in New Jersey is $1,706 for a full coverage policy and $727 for a minimum coverage policy. However, every driver in the state pays a slightly different rate based on their ZIP code, age, driving record, credit score, claims history and vehicle make, model and year.

Written by
Elizabeth Rivelli
Insurance Contributor
Elizabeth Rivelli is a contributing insurance writer for Bankrate and has years of experience writing for insurance domains such as The Simple Dollar, and NextAdvisor, among others