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Each state’s department of insurance sets its own rules for how much auto insurance you need to buy. Usually, the rules set minimum levels of bodily injury and property damage liability coverage, as well as other coverage types you need to buy before you can legally drive. New Jersey recently implemented changes to the state’s minimum requirements, with more on the horizon. Insurance rates are represented as bodily injury liability per person/bodily injury liability per accident/property damage liability. As of Jan. 1, 2023, drivers must carry 25/50/25 coverage, up from 15/30/5. As of Jan. 1, 2026, drivers will need to have a minimum of 35/70/25.
Car insurance laws in New Jersey
New Jersey insurance regulations are designed to keep drivers safe and help ensure that all drivers have at least a minimum amount of coverage. Here’s what you need to know:
- Drivers must meet minimum coverage requirements: Every driver in New Jersey must carry a minimum amount of property damage liability personal injury protection.
- Drivers must carry no-fault insurance: As a no-fault state, drivers are required to carry New Jersey 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
New Jersey’s update to its car insurance law is two-fold: not only did the minimum limits increase in 2023, but they will do so again on Jan. 1, 2026. While you can get by on minimum insurance requirements for injury liability and property damage, it may be worth it to buy extra coverage. Minimal insurance may leave you with out-of-pocket expenses in the event of a major accident.
There is no guarantee that minimum liability coverage will pay for the damages associated with an at-fault accident in New Jersey.
For example, if you run a red light and hit another driver in the middle of the intersection, you would be at fault. If you cause $30,000 of damage to the other driver’s car, liability coverage won’t pay the entire bill. Minimum coverage insurance would only cover $25,000 in property damage, which means you would have to pay the other $5,000 out of pocket.
It’s important to remember that the best car insurance policy is not necessarily the cheapest one. Although carrying more insurance than is required will likely cause an increase in your rate, you are often able to add significant coverage without spending a fortune. Increased coverage not only offers peace of mind but could be the wiser financial decision in the long run.
Changes to car insurance minimum requirements in New Jersey
Drivers should be aware of the changing laws regarding New Jersey insurance, because they may face penalties if they’re caught driving with inadequate insurance coverage.
The new mandatory insurance minimums are as follows as of Jan. 1, 2023:
- $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/underinsured motorist bodily injury per person
- $50,000 uninsured/underinsured motorist bodily injury per accident
As of Jan. 1, 2026, minimum auto insurance coverage in New Jersey will be:
- $35,000 bodily injury liability per person
- $70,000 bodily injury liability per accident
- $35,000 uninsured/underinsured motorist bodily injury per person
- $70,000 uninsured/underinsured motorist bodily injury per accident
Note here that only the bodily injury liability and uninsured motorist minimum limits will be affected in 2026. Additionally, no changes to New Jersey personal injury protection (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 the state choose to purchase coverage beyond the minimum New Jersey car insurance 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 help pay for your vehicle’s damage after an at-fault accident or if you are hit by an uninsured driver. A deductible may apply and 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. As with collision coverage, comprehensive may not be an option for those with a basic policy, and a deductible may apply.
- Accident forgiveness: Accident forgiveness will keep your insurance rate from increasing after an at-fault accident. This endorsement usually only applies to your first accident.
- Rental car reimbursement: If your vehicle is out of commission for repairs after a covered claim, rental car reimbursement coverage will help pay for the cost of a rental.
Frequently asked questions
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.
Car insurance companies look at many rating factors when calculating premiums. Your driving record, ZIP code, vehicle and credit score can all impact your rate in New Jersey. Since every driver comes from a unique background, there is not one car insurance company that will be the least expensive for all drivers. However, our extensive research shows that some of the cheapest car insurance companies in New Jersey are NJM, Amica and Selective.
The annual average cost of car insurance in New Jersey is $2,555 for a full coverage policy and $1,029 for a minimum coverage policy, compared to the national average of $2,543 for full coverage and $740 for minimum. Additionally, how much you pay for car insurance depends on your rating factors. One of the best ways to ensure you get the cheapest rate possible is to shop around at your renewal.
New Jersey law requires that insurers provide a paper or electronic New Jersey Insurance Identification Card. The card must contain the insurance company’s name, your name and address, the policy number, its effective and expiration dates, a vehicle description (make model, and VIN), a heading of “State of New Jersey Insurance Identification Card,” the insurance company code and the name and address of the company or office issuing the card.
In August 2022, Governor Phil Murphy signed Bill S481 into law, which gradually increases the minimum liability coverage drivers in New Jersey must carry on a standard policy. Going forward, drivers in New Jersey must carry bodily injury and uninsured/underinsured motorist coverage with minimum limits of 25/50. In addition to these changes, the property damage liability limit increased from $5,000 to $25,000. For policies renewing on or after January 1, 2026, the minimum limit for these coverages will be 35/70. So far, no additional changes to the increased $25,000 property damage limit have been announced.