Auto insurance in New Jersey is a type of insurance that protects against financial loss if someone gets into an accident or in the event of car theft. It is a contract between the insured and an insurer that covers potential medical bills, repair costs, and liability (if there is an accident) in exchange for premiums. Car insurance premiums vary in New Jersey based on several factors, including usage (frequency and purpose), the vehicle owner's driving history, selected coverage, car brand or model, and vehicle age.
You are mandated by law to carry minimum car liability insurance in New Jersey. Per the Automobile Insurance Cost Reduction Act, all drivers in New Jersey must be able to access a basic car insurance policy. You violate the law if you drive in New Jersey without having car insurance. Besides risking economic loss if you drive uninsured, you stand a chance of paying fines, facing a jail sentence, and risking driver's license or registration suspension. Cash fines range from $300 to $5,000, and an annual surcharge of $250 for three years, while jail time for uninsured driving in the Garden state can be up to 14 days.
New Jersey auto insurance required minimum limits for all drivers are:
Property damage (PD) liability - $5,000 per accident
Bodily injury (BI) liability - $15,000 per person, $30,000 per accident
Personal injury protection (PIP) - $15,000
These state-mandated minimums are the amounts insurers will pay towards covered claims. If you want higher limits, which most insured drivers in New Jersey do, you could go up to $1 million in PD and BI coverage, and up to $250,000 in PIP.
The most commonly purchased car insurance limits in New Jersey are:
Property damage liability - $100,000 per accident
Bodily injury liability - $100,000 per accident, $300,000 per accident
Personal injury protection (PIP) - $250,000
New Jersey is a no-fault state, which means that each driver must file a claim with their own car insurance company if they are involved in a car accident, regardless of who is at fault. The Division of Insurance of the New Jersey Department of Banking and Insurance (DOBI) oversees insurance businesses and reviews insurance products, including auto insurance, for compliance with existing regulations.
New Jersey requires a certain minimum amount of auto insurance if you have a vehicle. A State Motor-Vehicle Registrations Report by the Federal Highway Administration (FHWA) revealed that New Jersey had over 6 million registered vehicles in 2020. The State Department of Transportation (NJDOT) estimated the number of road crashes between January and March 2020 at 190,783, while it recorded 276,861 for 2019. Essex County had the highest number of crashes in both years for the period recorded.
According to the Fatal Accident Investigation Unit of the New Jersey State Police (NJSP), there were at least 550 fatal crashes in 2020. The total fatalities from these crashes were estimated at 587, with 304 drivers and 86 passengers as victims. Only car insurance can adequately alleviate these crashes' medical expenses and repair costs. Rather than bearing vehicle repair or replacement costs out of pocket if you get involved in a car accident, or your car is stolen, your New Jersey car insurance will kick in and pay. It can also pay for personal liabilities. Generally, the following are some of the reasons you need car insurance in New Jersey:
Auto insurance can protect the passengers in your vehicle and pay for any injuries they sustain if you get into a car accident (third-party liability)
Car insurance can cover you and pay the repair costs for other people's vehicles if you are at fault or responsible for a car accident. Regardless of who is at fault, some auto insurance policies, like personal injury protection and collision insurance, will pay for such costs
Car insurance can supplement health insurance and pay for medical bills after an accident, especially for treatments your standard health insurance does not cover
Auto insurance, especially comprehensive coverage, can help pay for damages caused by non-collision incidents. For instance, it will pay for damage caused by weather events such as ice storms, hail, or wildfires
Auto insurance protects businesses that own or use vehicles in their daily operations. Such businesses include companies engaging in taxi services, ride-share services, and delivery services. However, such enterprises are encouraged to purchase commercial auto insurance for full protection and to avoid financial complications in the case that an accident happens
Carrying car insurance allows other people to drive your vehicle, especially if you have children or live with others. Typically, car insurance applies to the covered car, and most car insurance policies permit adding other drivers. Such people can borrow your car, and the insurance will still cover them if something bad happens
Car insurance can cover legal costs if the victim of an accident chooses to sue you for injuries or damages, thereby protecting you from out-of-pocket expenses
Purchasing car insurance coverage in New Jersey through a state-licensed auto insurance agent is as vital as the insurance itself. A professional agent will help determine your required coverage and leverage their relationship with insurers to find you a suitable and affordable car insurance policy.
You can only get suitable auto coverage in New Jersey by finding a credible car insurance company licensed by the state's Division of Insurance. To find a trustworthy auto insurer, research as many as possible and obtain their car insurance quotes while considering the benefits offered by each insurance company. Typically, auto insurance in New Jersey can help pay for damage or injuries sustained while using your vehicle in exchange for periodic payments known as premiums. It also covers other types of risks, such as theft and personal liabilities, provided the insured continues to pay for coverage to keep their car insurance policy active.
A typical New Jersey auto insurance policy's payment structure includes premium, deductible, and coverage limit. The amount you pay your car insurer in exchange for coverage is known as a premium and can be paid in any way agreed with the insurance company. Your auto policy deductible is the amount you need to pay after a covered event before your insurance kicks in and your insurer starts to cover the costs. If you choose a low deductible, you will most likely pay higher premiums, but you will have lower out-of-pocket costs. Auto insurance coverage limit is the maximum amount you can receive from your insurer for any loss covered by a specific coverage. The amount of the limit is based on the purchased limits listed in the policy. An insured will pay the rest of any cost that exceeds their coverage limit out of pocket for any covered incident.
New Jersey car insurance companies consider many factors in determining auto insurance coverage costs. These include your age, zip code, gender, vehicle mileage, driving habits, and driving history. Other factors are the vehicle type or model, selected coverage, credit history, and the number of individuals covered by the auto policy. Since New Jersey is a no-fault state, an insured is expected to quickly file a claim with their auto insurance company after a covered event and provide their insurer with as much information as possible. The insurer will assign a claims adjuster to assess the extent of damage and determine the appropriate compensation for such damage, subject to the coverage limits. An insured can make a case if they feel the compensation offered by their insurer is insufficient. It is best to check with your car insurance company to know the required steps to take before filing a claim to avoid unnecessary delays.
To compare car insurance quotes, speak with a New Jersey-licenced property insurance agent who has access to different competing insurance companies and types of vehicle insurance.
Yes, depending on the auto insurance company, you can get car insurance without a license in New Jersey. While a license is not necessarily required to buy car insurance, having it can make the process easier. In other words, getting car insurance without a valid license in New Jersey may be a bit challenging. If you do not have a license and intend to purchase car insurance, some auto insurance companies may require you to take a few additional steps based on your circumstances or needs. Such steps include:
Listing someone else as the primary driver, especially if the person will be driving the car the most. However, your insurer may require that you provide their driver's license number and other identifying information
Adding parked car coverage or purchasing optional comprehensive coverage if you intend to garage your car for an extended period. Comprehensive coverage can protect your parked vehicle from non-collision incidents
Naming yourself as an excluded driver if you are a senior who only need someone to drive you
Making your spouse the owner or co-owner of the vehicle if they have a license
Your best option for getting car insurance without a license in New Jersey is to engage a local and independent auto insurance agent. Such an agent will leverage the local knowledge to find a car insurance company offering auto policies to unlicensed persons.
If you are not at fault in a car accident, it is typical for the at-fault driver's liability coverage to pay for medical bill expenses and damage to your vehicle up to their policy limits. In that case, you must file a third-party claim for medical costs and car damage with the at-fault driver's insurance company. However, New Jersey is a no-fault state, implying that even if you are not at fault in a car accident, you still have to file a claim with your car insurance provider.
Depending on your insurance company, your car insurance costs in New Jersey may increase by about 12% after an accident where you are not at fault. This is because the incident will go into your driving record, and from an insurer's perspective, you may likely file another claim in the future.
First, driving a car in New Jersey without car insurance is illegal. The penalty for a first offense is completing community service and a fine between $300 and $1,000. Furthermore, if you are caught driving a vehicle in the state by law enforcement without insurance, you may face license suspension for up to one year. For second and subsequent offenses, you may serve a 14-day jail term, face license suspension for at least two years, or pay between $500 and $5,000 in fine. In addition, you may also be required to engage in community services for 30 days.
New Jersey is a no-fault state. Besides facing penalties, if you are uninsured and not at fault in an accident, you will have to pay for your losses, including fixing your damaged car and paying for medical bills. If you are without car insurance and an insured driver hits you, the No Pay, No Play Law, enacted in New Jersey in 1997, prohibits you from receiving compensation for your losses. However, you may be able to file a claim with your health insurance provider to reimburse your medical bills if you sustain severe injuries. If the at-fault driver does not have car insurance like you, both of you will have to bear your losses out of pocket, besides the fines the court may levy on you for driving uninsured if caught.
According to a report by the Insurance Information Institute (III), the estimated amount paid for auto coverage via the New Jersey auto insurance market between 2015 and 2019 is as follows:
|Average Expenditure For Auto Insurance in New Jersey Between 2015 and 2019|
|Year||Amount - Estimate ($)(Billion)|
In New Jersey, each choice a person makes when purchasing car insurance affects their premium and auto coverage. Therefore, it is vital to shop for car insurance quotes from several insurance companies and compare them, whether buying private or commercial auto coverage. Considering your car insurance needs and comparing the cost of the same coverage across different insurers will help you. While you can do this independently, employing the services of a professional and New-Jersey licensed auto insurance agent is advised.
All cars in New Jersey, whether used for private or business use, require, at the minimum, state-mandated auto liability insurance coverage. The key difference between private and commercial auto insurance is vehicle ownership. While private auto insurance applies to cars used for personal purposes, any vehicle owned by a business and used for commercial purposes requires commercial auto insurance. Commercial car insurance generally covers employees the company permits to drive a business vehicle and can pay expenses incurred due to an accident, even when such employees use the vehicle for personal errands.
Private auto insurance in New Jersey excludes business use and will not cover any business-related insurable event. Purchasing hired and non-owned auto insurance (HNOA) is essential if you or your employees use a private car for work errands. HNOA protects a business when it leases or rents a vehicle and provides liability coverage if you get into an accident while using your private car for work purposes. However, this policy does not cover physical damage resulting from a car accident.
New Jersey has two separate auto insurance markets: the voluntary (regular) market and the assigned risk (residual) market. The market from which to purchase car insurance in the state depends on the number of insurance eligibility points you earn. Eligibility points are assigned to drivers for car violations, at-fault car accidents, and suspensions to help insurers determine whether you qualify for car insurance in the voluntary market. These points are different from those maintained by the New Jersey Motor Vehicle Commission (NJMVC) on your driving record. Most car insurance companies assign three insurance eligibility points to every newly licensed driver for their inexperience, regardless of age or gender. Per New Jersey regulations, a driver may be considered unqualified to purchase car insurance in the state's voluntary market if:
They have earned seven or more insurance eligibility points in the three years preceding their application
They have accumulated seven or more points for the three-year period ending 90 days before their policy renewal
In most cases, some New Jersey auto insurance companies will direct drivers not qualified for the voluntary market to purchase car insurance through the Personal Automobile Insurance Plan (PAIP). For commercial auto insurance, ineligible businesses are directed to the Commercial Automobile Insurance Plan (CAIP). Since not all auto insurance companies in the voluntary market refuse to offer coverage to drivers with seven or more points, it is good to shop around and compare your options, including pricing and coverage. When directed to the PAIP or CAIP, which serve as administrative clearinghouses, they allocate you or your business to a car insurance company for coverage, which is why it is called the assigned risk market. New Jersey drivers can find PAIP producers in the state by calling 1 (800) 652-2471 or via the list of PAIP producers.
The monthly average cost of car insurance in New Jersey is between $68 to $95 ($816 - $1,140 per year) for minimum coverage and between $135 to $173/mo ($1,620 - $2,076 per year) for full coverage. Commercial auto insurance in New Jersey is typically more expensive due to usually higher purchased coverage limits for liability and property claims. While most private vehicle owners in the state purchase liability limits of $100,000 to $300,000, most businesses default to $1 million of liability coverage as a standard. A $1 million dollar commercial auto insurance policy in New Jersey can cost as low as $120 - $150 per month, or much more - depending on the type of business and the mode of use for the insured vehicle.
To get an accurate quote: speak with a New Jersey-licensed property insurance agent who can compare car insurance quotes based on your needs. You get to choose the best car insurance for you.
Several factors determine the cost of private and commercial auto insurance depending on the insurer. Car insurance companies consider such factors to group individual and business clients with similar risk characteristics and assign a rate. This process is known as tiering. While not all New Jersey auto insurance companies consider similar factors in determining the cost of private and commercial auto insurance, the following are common factors that affect premium:
Applicable to both Private and Commercial:
Vehicle Type - The type and model of an insured vehicle impact the cost of car insurance. Typically, it will cost an individual or a business more to insure a luxury or a specialized commercial vehicle than an older economy car.
Number of Vehicles - The more vehicles you add to the policy, the more possible risk gets introduced, which results in a more expensive premium. At the same time, every vehicle you add, opens you up for additional car insurance discounts.
Value of the Vehicles - Auto insurance is meant to bring the insured vehicle owner back to the state they were in prior to the covered loss event. This means that the value of the vehicle determines the maximum possible loss exposure for the insurance company. While most insured private vehicles in New Jersey are valued under $100,000, commercial vehicles, especially for transportation and construction use can cost hundreds of thousands of dollars, and are therefore inherently more expensive to insure.
Vehicle Use - Generally, the average daily distance covered by an insured vehicle determines its risk exposure; hence the insurance cost. For example, a company vehicle that is used on rare occasions to run errands will be less expensive to insure than a truck with a tractor trailer that frequently delivers chemicals across the country.
Geographical Location - The rate at which other car drivers in an area file auto insurance claims can influence private and commercial car insurance costs
Amount of Coverage - While the property coverage is limited by the value of the insured vehicle(s), liability coverage limits and optional policy add-ons (like Roadside Assistance or New Car Replacement Assistance) can be raised and added to fit the needs of the insured individual or business. Higher purchased limits and policy add-ons add to the cost of the coverage.
Number of Drivers - This is especially important for commercial auto policy like non-owned auto, which covers all employee drivers. The more drivers, the higher the cost. For private auto the amount of drivers is just a starting point to determine the cost.
Applicable to Private Auto Insurance - Only:
Gender and Age - Generally, young adults and male drivers have a higher chance of car accidents and will most likely pay higher auto insurance premiums
Marital Status - Generally, single people have a higher incidence of car accidents and are more likely to pay higher premiums than young married couples
Driving Record - Generally, car insurance companies consider drivers with driving records that include at-fault accidents, license suspensions, and motor-vehicle violations as high-risk drivers. Hence, the costs of insuring vehicles driven by such drivers are usually higher compared to those with clean driving records
Factors like age and gender used in determining auto insurance risks will always be beyond your control. However, there are certain things a person or business can do to save some costs while purchasing a New Jersey car insurance policy. These include:
Choosing health care insurers as primary for car accident-related injuries. However, checking with your health insurance company before choosing this option is essential
Asking auto insurers for eligibility for car insurance discounts. Commonly available New Jersey auto insurance discounts that can save money include:
vehicle safety features - anti lock brakes, daytime running lights, anti-theft devices, etc. Ask your agent for a full list of safety features which could save you money from each of the proposed insurance companies,
multi policy discount - can be expected if you bundle home insurance with auto insurance, or commercial property insurance with commercial auto coverage,
multiple cars discount (also known as bundling auto coverages) - saves you money when you place more than one vehicle under the same policy. For commercial auto this may be referred to as “commercial fleet insurance discount”,
defensive driving discount - is given if you can prove to the insurer that you have taken a recent defensive driving course. Defensive driving courses in New Jersey could save you 5% to 10% off your auto insurance. (the course must be retaken every 3 years to keep the discount active),
good driver discount (also known as Safe Driver discount) - is given by the insurer if the insured driver is in an accident and moving violation-free for 3-5 years. Some insurers may offer a safe pilot program that can save 10% - 30% for the insured. The insured typically downloads an app on their phone, which tracks the driving insights and trends, phone usage, and crash detection. With such apps, the better you drive, the bigger the discount,
good students - are those who have at least a B average in school or college. If you fall into this category, check with your insurer to see if you can save money using a good student discount,
Claims-free discount - the longer you keep the auto insurance in force with the same insurer without filing any claims, the more of a discount you may get.
Going for higher deductibles on comprehensive and collision coverage. However, it is vital to decide how much you can afford to pay out of pocket in the event of a car accident
Selecting the Limited Right to Sue option. This option limits lawsuits for suffering and pain if the events of permanent injury or death after a car accident
To find out how much is car insurance going to cost for you, speak with a New Jersey-licensed insurance agent who can assess your needs and offer multiple choices of coverage options from different insurers. A knowledgeable agent can help you compare car insurance quotes, to find the best car insurance for your needs and for the best price. Contact a trustworthy New Jersey-licensed agent for a free quote today.
While accident records and motor vehicle violations are commonly responsible for car insurance premiums going up in New Jersey, any of the following can be an important factor that can contribute to increased auto insurance costs:
Growing severe weather as a result of climate change - This tends to cause more damage to vehicles, hence higher insurance costs
Inflation - This can affect the costs of buying vehicle parts and repairing a car
The continued increase in car accidents by other car drivers in your area - Even if you are a safe driver, this factor will impact liability insurance cost
Increased rate of car theft - This can increase the cost of comprehensive auto insurance coverage as rampant theft implies an increased risk for insurers
Rising healthcare costs - This usually affects the cost of liability insurance cost, especially in relation to injuries and legal costs after a car accident
Like in other states, a driver's age is essential in determining car insurance costs in New Jersey, which usually go down at a certain age. Generally, individuals with reasonable years of driving experience tend to drive more carefully and get in fewer accidents than young drivers with no experience. Auto insurance costs for new drivers who got their first license at age 16 tend to drop as they turn 21 (after 5 years of accident free driving) and can even go further down between ages 25 through 50. Teen drivers in New Jersey can pay up to five times more for the same type and amount of coverage than an accident free driver in their 40s or 50s.
Due to aging and a few other factors, drivers over 65 years are more likely to pay higher car insurance premiums than persons aged between 25 and 64. Regardless of age, new drivers in New Jersey will still pay more for auto insurance than experienced drivers of the same age, but it matters only for a few years. Since most insurance companies check the driving record for the last 3-5 years, if you are a 40 year-old who started driving at 35, as long as you have stayed accident free during those 5 years, you will pay insurance rates like all other 40 year olds who might have been driving for over 20 years.
The two broad categories of auto insurance in New Jersey are basic auto insurance and standard auto insurance. Basic auto insurance offers limited benefits but provides enough coverage to meet the state's minimum auto insurance requirements. It is usually cheaper than a standard auto insurance policy, hence a good fit for persons with a few assets to protect and little family responsibilities. On the other hand, standard auto insurance offers more coverage options than basic auto insurance and provides additional protection. It is the most commonly purchased auto policy in New Jersey. These two New Jersey policies apply to private and commercial auto insurance, and each policy comes with specific coverage amounts.
Let's’ take a look at:
Property Damage Auto
Bodily Injury Auto
Liability Auto, and
Additional Auto Coverage in NJ
Property damage (PD) coverage in New Jersey auto insurance is a type of auto liability coverage that pays for claims and suits by persons whose property is damaged due to a car accident caused by an insured. For instance, if an insured driver crashes into another person's fence and causes damage, the insured's PD liability coverage will pay for the fence's repair costs.
In New Jersey, property damage liability coverage is $5,000 per accident for a basic policy. For a standard policy, PD liability coverage can be as low as $5,000 per accident and as high as $100,000 or even more for commercial vehicles. Property damage auto liability coverage may be purchased as a combined single limit with bodily injury coverage in private and commercial auto insurance policies.
Property damage liability auto insurance in New Jersey primarily covers the cost of repairs for damage caused by an insured to another person's car or property up to their policy limits. Such damaged property may include an office building or a storefront, a house, a lamp post or a public bench, and trees. PD liability auto insurance does not cover damage to an insured's car. If you want coverage that can repair your damaged car damage in the event of an accident, collision coverage is what you need.
Make sure to discuss your auto insurance needs with a New Jersey insurance professional, who can assess your needs and explain all the possible coverage options.
Bodily injury (BI) liability auto insurance in New Jersey pays for auto claims and suits by individuals who die or sustain injuries due to an accident caused by an insured. You may purchase it as a combined single limit to enjoy a maximum limit of protection per car accident for bodily injury and property damage liability combined. Typically, for private and commercial auto insurance, BI liability coverage in New Jersey comes in two separate dollar amounts, namely:
An amount paid per person in any accident caused by an insured
An amount paid for combined injuries to all individuals who sustain injuries in any accident caused by an insured
In New Jersey, bodily injury liability coverage is often not included in basic auto policies. However, $10,000 coverage per accident is available as an option for all individuals who need additional protection. In a standard auto policy, the bodily injury coverage limit can be as low as $15,000 per person and $30,000 per car accident. For personal auto insurance, BI coverage can be as high as $250,000 per person and $500,000 per accident, while for commercial policies, especially for trucks weighing over 10,000 lbs, the coverage is usually higher.
Generally, bodily injury (BI) liability auto insurance in New Jersey covers the following:
Lost income of an injured person
Funeral costs if a passenger in the other car dies due to a car accident caused by an insured
Medical expenses incurred from treating an injured person. Such costs may include medication and doctors' visits
Legal fees if an injured person chooses to sue an insured after a car accident
Compensation for pains and suffering inflicted on an injured person by an accident where an insured is at fault
Liability auto insurance pays for the bodily injury caused to others and the damage to someone else's property by an insured due to a car accident. It is vital insurance protection that can prevent you from paying for damages and bodily injuries caused to other people and properties in an accident where you are at fault. Generally, liability auto coverage pays for third-party property damage and bodily injury claims up to the limit selected for any private or commercial auto insurance policy in New Jersey. It can also provide legal defense for lawsuits brought against an insured in the event of a covered accident.
Liability auto insurance covers expenses such as lost wages, medical and hospital bills, prescriptions, and pain. Although New Jersey is a no-fault state, the state car insurance laws require drivers to carry a minimum liability coverage limit listed as 15/30/5. This limit applies to the state’s private and commercial auto policies and is the maximum amount an auto insurance provider will pay in the event of an auto claim. The following explains the 15/30/5 composition:
The minimum limit for bodily injury coverage per person ($15,000) - The amount an insurance provider will pay for a single individual injured by an insured driver in a car accident. However, in New Jersey, you may choose up to $250,000 per person in bodily injury coverage
he minimum limit for bodily injury coverage per accident ($30,000) - This is how much an insurer is willing to pay for third-party bodily injuries inflicted on more than one person by an insured in an at-fault accident. An insured in New Jersey can, however, opt for up to $500,000 per accident in bodily coverage
The minimum limit for property damage per accident ($5,000) - The maximum amount an insurer will pay for third-party property damage caused by an insured in a covered accident. In New Jersey, an insured can choose as high as $100,000 or more in property damage coverage
Commercial vehicles in New Jersey frequently use the combined single limit (CSL). CSL is one amount, which is meant to cover all liabilities of the accidents combined. For example, a $2 million CSL means that it will cover up to a total of $2 million in damages if the vehicle driver was at fault.
Besides liability auto insurance, there are other available auto insurance coverages for private and commercial auto policies in New Jersey. These include:
Sometimes referred to as no-fault coverage, PIP is medical coverage that pays for injuries you and others covered under your auto policy may sustain in a car accident. PIP coverage pays your medical expenses regardless of who is responsible for an accident. Depending on your needs, PIP coverage offers financial protection in two ways, namely:
Refund of certain expenses that came up due to your injury, including hiring someone to help you with some chores and lost wages
Payment of medical bills incurred for injuries treatment, including doctors' visits, special medical equipment use, and hospitalization
An individual may select both or only the medical payments coverage based on their insurance needs. The minimum state-mandated PIP coverage limit in New Jersey for a basic and standard auto policy is $15,000 per person and accident. However, you may select higher limits (up to $250,000 or more) if you want additional coverage. Both basic and standard auto policies' PIP coverage can pay up to $250,000 for some injuries following an accident until the patients become stable and no longer need critical care. Such injuries include:
Spinal cord injury
Significant or permanent brain injury
Any other medically necessary treatment of significant or permanent injury provided at an acute care hospital or a trauma center
This coverage compensates you for bodily injury or property damage if you get into a car accident caused by an insured driver whose coverage is less than your underinsured motorist (UIM) coverage. The coverage is typically purchased for the same limits as the Property Damage Liability. If different limits are selected, typical options are $25,000, $50,000, and $100,000.
In New Jersey, all auto insurance companies exclude the first $500 in damages from claims paid under underinsured motorist coverage. This is a state-mandated deductible, which cannot be lowered to $0.
Typically, your underinsured motorist coverage in New Jersey will cover the difference when damages caused by an at-fault driver are beyond their policy limits. Below illustrates how underinsured motorist coverage works:
You carry $50,000 in uninsured motorist coverage and $50,000 in liability coverage, and another driver only has $15,000 in liability coverage
The other driver crashes their car into yours, causing $35,000 in damages
The at-fault driver's insurance company will pay you $15,000 of the damages, while your insurer pays you the balance ($20,000), less the $500 deductible, from your underinsured motorist coverage
In New Jersey, uninsured motorist coverage covers property damage and bodily injury if you get involved in an accident caused by an uninsured driver. An insured driver is a motorist who lacks the state-mandated minimum auto coverage. Like underinsured motorist coverage, claims payout for damages under uninsured motorist coverage in New Jersey excludes the first $500 of such damages. Typically, your uninsured motorist coverage pays for the claims you would ordinarily make against an uninsured motorist who is at fault in a car incident.
NOTE - Uninsured/Underinsured motorist (UM/UIM) coverage is sold together in New Jersey. You can choose as many limits as selected on your liability coverage for a standard car insurance policy. For instance, if the selected limit on your liability coverage is $100,000, you can select up to $100,000 as your UM/UIM coverage limits. It is not available for a basic policy.
Comprehensive auto coverage in New Jersey pays for non-collision damage done to the insured vehicle. Examples of non-collision events include flooding, broken windshield, vandalism, vehicle theft, and fire. It also covers events involving car collisions with animals. Although not required by New Jersey law, your car leasing company may require that you have comprehensive coverage for a car financing contract. Comprehensive coverage is available as an option from some insurance companies for basic policies, while it is generally optional for standard policies.
Collision coverage pays an insured driver for damage to their car due to a collision with another vehicle or other object. Regardless of who is at fault in a car accident, this coverage will pay you to repair damage to your car. It is especially beneficial if you do not have the patience to make liability claims against an at-fault driver, which may take some time. In practice, your auto insurance company will then seek reimbursement from the at-fault driver's insurer. In New Jersey, collision coverage is available as an option under standard auto insurance policies. Although not common under basic policies, some insurers still offer collision coverage as an option.
New Car Replacement policy, also known as Car Replacement Assistance (CRA) gives the insured owner of the vehicle more money for their claim if their car is totaled. Instead of paying the standard actual cash value (ACV), New Jersey car insurance with a car replacement feature typically pays 10% - 20% extra. For example, if the ACV of an insured totaled vehicle is $60,000, a policy with a 10% CRA plan will pay $66,000, while a 20% CRA plan will pay $72,000. The extra money is meant to ease the transition of having to find and purchase a new replacement vehicle.
If you use your private insured vehicle to work as a driver for a rideshare service like Uber or Lyft, the time while you have passengers in the car is typically covered by your employer’s insurance. Meanwhile, the time while you are waiting for a client is a gray area, which is no longer covered by your private (non-commercial) policy, but is not yet covered by the employer. To bridge this gap in coverage, you can buy Rideshare insurance coverage, which typically adds $5 - $20 to your monthly premium in New Jersey.
Roadside assistance is needed for the times when you are stranded on the side of the road and need emergency assistance, most commonly, due to a damaged tire or from running out of fuel. Among others, roadside assistance coverage in New Jersey will pay for services like:
Towing the disabled insured vehicle or jump-starting
Flat tire changeout for a spare
Unlocking doors for locked out motorists
24-hour roadside assistance
TIP: If purchased through your New Jersey car insurer, roadside assistance protection is usually much cheaper than buying it through auto clubs or covering it using the credit card perks, especially if you bundle multiple policies together.
Accident forgiveness feature keeps the cost of your insurance unchanged after your first accident. Some insurers allow one accident per account, while others may allow one accident per every 2-5 years which does not affect the rates.
The available car insurance plans in New Jersey based on the purpose of vehicle use are private auto insurance and commercial auto insurance. Private auto insurance is specifically meant to cover vehicles used for personal purposes from damages or losses due to accidents, fire, theft, and other covered perils. It covers car damage, bodily injuries, and legal liabilities resulting from a car accident.
Commercial auto insurance is a form of commercial insurance and auto coverage designed to provide coverage for vehicles primarily used for business purposes. It provides financial protection for commercial vehicle owners in the event of damage or loss, and they will not have to pay out of their pockets to fix such situations. Commercial auto insurance in New Jersey also covers third-party legal liability claims, car damage, and bodily injuries stemming from a car accident.
The table explains some differences between New Jersey private and commercial car insurance.
|Commercial Auto Insurance||Private Car Insurance|
|Auto Insurance Premiums||Have higher insurance premiums because commercial vehicles are often put to greater use than private cars. Besides, commercial policies typically come with higher limits||Mostly lower than the obtainable premiums in commercial cars because private cars are usually not used as much as commercial vehicles, hence lower risks|
|Risk Exposure||Covers high-risk level events. Due to its purpose, commercial vehicles are mostly on the road and tend to be more vulnerable to covered perils||Covers lower or moderate risks since most private car owners do not drive them as much as commercial vehicles. Hence, they may have low chances of getting involved in car accidents|
|Coverage For Family Members||May provide coverage to family members only when occupying or driving the insured vehicle||Can extend broader coverage to family members in more situations|
|Coverage Limits||Offer higher coverage limits. Most commercial vehicles that transport passengers and goods must be insured for $1 - $1.5 million or more in liability||Available coverage limits are usually lower than commercial plans|
Besides providing coverage for other events or incidents, New Jersey car insurance can protect your vehicle and prevent you from paying out of pocket for damages due to a car accident. After a car accident, insurance companies have a responsibility to determine who is at fault and each driver's fault degree using the Comparative Negligence Act. The insurer will investigate and assign a percentage of fault to drivers involved in the car accident based on factors such as:
Failure to swerve or apply brakes
Failure to use the car horn
Failure to observe and avoid another car
If you have an auto insurance policy in New Jersey, the first thing to do after a car accident is to contact your car insurance company immediately, or at least within seven days, and report the incident. If necessary, request medical assistance and then call the police to report it. While contacting your insurer, their representatives may require certain information, including the following:
Information about the other driver's insurance
Your personal details and insurance information
Details of your vehicle
Information about the other vehicle in the accident
Details of the police officer investigating the car accident, like names and badge numbers
Typically, a car insurance company in New Jersey should contact you within 10 business days after reporting a car accident or seven working days if it plans to inspect the damaged vehicle. Your insurer will assign a claims adjuster to your case who will assess the situation, determine the extent of damage, and decide how far your car insurance can cover damage costs. If you are unsure about how the claims process works, you can speak with the assigned adjuster at this point for clarification. The adjuster will guide you through the claims process. In determining the extent of loss or damage your auto policy will cover, the claims adjuster will list out the coverage you will get based on your policy and the circumstances around the accident. Once this is done, your insurer will consider some other factors and take steps to pay you for damages or losses the car accident may have caused.
In New Jersey, the amount of auto insurance coverage you need is the level of coverage that can adequately protect you financially in the event of an insurable incident. How much car insurance coverage you need depends on various factors, including your vehicle's value, location, and the amount of insurance you can afford. The minimum auto coverage required by law in New Jersey is $5,000 for property damage liability per accident and $15,000/$30,000 for bodily injury liability per person/accident. However, the minimum required coverage amounts are often insufficient and can leave you financially vulnerable in the case of covered incidents.
New Jersey car insurance coverage requirements are much lower than the amount necessary for adequate protection in the case of a covered event. Therefore, it is advisable to maintain the highest amount of liability coverage you can afford for adequate financial protection. Per the New Jersey Auto Insurance Buyer's Guide, most drivers in the state choose the following coverage amounts for adequate financial protection while purchasing car insurance:
$300,0000 for bodily injury liability coverage
$300,000 for property damage liability coverage
$250,000 for personal injury protection (PIP)
$300,000 for uninsured/underinsured motorist (UM/UIM) coverage
If your car is financed or leased, the lending company may require you to carry some types and amounts of coverage that New Jersey law does not mandate. For instance, they may need you to maintain a specified amount of collision, comprehensive, and gap insurance coverage. Gap insurance covers the difference between the insured value of a totaled or stolen car and the amount owed on its lease or loan.
Generally, New Jersey car insurance policies consist of multiple auto insurance coverages. While some are mandatory, others are optional. How much of these coverages you need will largely depend on your circumstances and the worth of assets you intend to protect.
Note: If you are at fault in an accident and your liability insurance does not cover all the damages and injuries you have caused, the other party may still sue you for more. If the insured has assets that can be in danger from a lawsuit, the insured should purchase enough liability coverage to protect the exposures. For example, if you have a state-minimum required liability policy on a car, and $1 million in assets, if you cause $500,000 in damages, you will likely get sued for the difference that was not paid by your auto coverage. If auto insurance does not cover it, consider an Umbrella Liability Insurance.
IMPORTANT: The minimum state-mandated auto liability coverage in New Jersey is set to increase in 2023 and then again in 2026. The new rates are expected to be at:
|Minimum Amount of Liability Coverage for a Standard Automobile Insurance in New Jersey|
|Auto Liability Coverage Type||increase in 2023||increase in 2026|
|Bodily Injury or Death of 1 person in any 1 accident||$25,000||$35,000|
|Bodily Injury or Death for all persons in any 1 accident||$50,000||$70,000|
|Property Damage in any 1 accident||$25,000||-------------|
When considering the required car coverage amount to get, your best option is to employ the services of an auto insurance agent. A New-Jersey licensed car insurance professional is familiar with state laws and their services are free for the insured. A knowledgeable agent will help you determine your car coverage needs, provide you with multiple suitable policy options, and help you choose the right protection for your private or commercial vehicles.
Your New Jersey car insurance policy will usually cover you when renting a car, and you may not need to purchase extra protection from a car rental company. This is because any private or commercial auto insurance policy will most likely carry similar protection as rental car insurance. For instance, collision and comprehensive coverages in regular car insurance are equivalent to the loss damage waiver (LDW) and collision damage waiver (CDW) coverages in rental insurance, respectively. Similarly, PIP coverage in your car insurance policy is comparable to personal accident coverage in a rental car insurance policy. The same applies to bodily and property damage liability coverage in standard auto insurance and liability insurance supplement coverage in rental car insurance.
While your regular New Jersey car insurance can cover rental cars in New Jersey, there are instances when you may need to buy insurance from a car rental company. These include:
When you only carry the minimum liability insurance required by the state
When the comprehensive and collision coverage limits of your car insurance are low
When the deductibles chosen on your car insurance policy are high
If you want to save money and use your own existing auto coverage while renting a car, first confirm with your insurer if your standard auto policy covers rentals. Either the agent who sold you the policy or the insurer will be able to clarify this for you.
Yes. You can use your regular New Jersey car insurance when renting a car, provided your policy contains the minimum coverage limits required by the rental company. This applies to private and commercial car insurance policies. Typically, if you carry sufficient liability and comprehensive coverage on your auto insurance policy, they can extend to your rental car. However, to prevent avoidable financial losses, you should confirm the coverages with your insurer to determine if you can use your car insurance when renting a car.
A standard New Jersey car insurance policy, private or commercial, will only cover car repairs for damage caused by covered incidents such as accidents, vandalism, fires, or hailstorms. It does not provide coverage for electrical system breakdowns or mechanical issues unrelated to covered events. Also, regular auto insurance in New Jersey does not cover routine wear and tear areas/repairs like oil changes, tires, and brake pads that are not necessitated by covered incidents.
If you require coverage for your car's mechanical breakdown or electrical systems problem in New Jersey, your best option is car repairs insurance, also known as mechanical breakdown insurance (MBI). Car repairs insurance primarily covers the costs of fixing or replacing a vehicle's mechanical and electrical issues, such as engine, air conditioning, transmission, cooling systems, and exhaust. However, MBI coverage excludes repairs, including:
Repairs of regular wear and tears, such as worn tires and brake pads
Repairs of damages caused by poor car maintenance
Repair of pre-existing faults before purchasing insurance coverage
Repairs of rust and corrosion
Routine car maintenance, such as wheel balancing, oil changes, tire rotation, and suspension alignment
Repairs of car parts covered by a recall or your vehicle warranty
Yes, any New Jersey private or commercial car insurance with collision and comprehensive coverage covers windshield replacement. Regardless of size, the average cost of replacing a vehicle's windshield in New Jersey ranges between $160 and $950. You could save money when your policy replaces your vehicle's windshield if you have a low deductible on your car insurance comprehensive coverage. Some insurers offer full glass coverage as an add-on to comprehensive coverage. It is designed primarily for glass replacements or repairs and often comes with an option of 0$ deductible.
New Jersey car insurance will pay the replacement costs of your windshield in the following scenarios:
A vehicle accident - if your policy includes collision coverage, regardless of who is at fault (since New Jersey is a no-fault state)
Windshield damaged or destroyed by an "act of God”, and your auto policy includes comprehensive coverage
An animal accidentally crashed into your windshield
Your windshield was damaged due to an act of vandalism
A tree branch or pebble falling on your windshield while your car is parked or while driving
Standard private or commercial auto insurance in New Jersey does not cover engine failure unless it is accident-related. If you need additional protection for your vehicle's engine, your best option is to consider purchasing mechanical breakdown insurance (MBI). MBI can pay for the costs of repairing engine failure or any other mechanical breakdown.
Your New Jersey car insurance will only provide coverage for a stolen car if you have comprehensive coverage. Otherwise, your auto insurance company will not be liable for replacing your stolen vehicle. Any car insurance policy with comprehensive coverage will pay up to a vehicle's actual cash value (ACV) in the event of car theft. The only exception is if your auto insurance provider determines that you intentionally allowed your car theft in a bid to file an auto claim and receive a payout. Such action is considered fraud, and your insurer may file criminal charges against you.
Note: New Car Replacement Insurance (Car Replacement Assistance) does not apply to stolen cars.
In New Jersey, no form of car insurance, private or commercial, covers theft of personal items from a car, not even with comprehensive coverage. If someone breaks into your vehicle and steals your personal items in the car, comprehensive coverage will only pay for car damage. However, your residential insurance coverage may cover the theft of personal items from your car, regardless of the car's location during such theft.
Some auto insurance companies in New Jersey offer personal belongings coverage as an add-on to a car insurance policy. You may opt for this if you require extra protection. This add-on can reimburse your personal items' market value if they get damaged or lost due to theft, accident, or fire while inside your insured car. However, getting personal belonging coverage as an add-on to your car insurance policy will come at an additional cost.
Any New Jersey car insurance with comprehensive coverage covers water damage due to storms, rain, and floods. Even if the water damage totals your vehicle or the engine, a car insurance policy with comprehensive coverage can replace it. However, car insurance does not cover water damage caused by a vehicle owner's carelessness or poor maintenance. For instance, while car insurance (with comprehensive coverage) covers damage caused by sudden rain, it may not cover it if the damage resulted from slow leaks into the vehicle over time. Note that comprehensive coverage does not cover water damage to non-manufacturer-installed equipment in your car, like removable navigation and sound systems.
Yes, car insurance covers towing if you have coverage for towing and labor assistance. After an accident, towing of the damaged vehicle is covered by the at-fault party’s insurance policy. In case it was your fault, some collision and comprehensive policies may include it as a feature. If the vehicle is disabled due to a mechanical problem, like a flat tire, or a dead battery, or if you suffered a hit and run, then your roadside assistance coverage will need to step in.
In New Jersey, car insurance covers a vehicle, not the driver. Hence, if someone drives your insured car and gets into a car accident, there is a high chance that your auto insurance company will pay for damages and claims, depending on your coverage.
New Jersey is a no-fault state. As such, since car insurance covers a vehicle, you will have to file claims with your insurer for property damage, whether or not the person driving your vehicle is at fault. Your property damage liability pays for such damage. However, you will not be required to use your personal injury protection (PIP) coverage if the person driving your car is at fault in an accident. Generally, PIP coverage follows the driver and not the vehicle. If the damage caused by the person borrowing your insured car exceeds your policy limits, the borrower's liability policy can kick in to supplement yours.
Before taking the risk of lending your car to someone else, it is advisable that you read your policy contract carefully to understand what is and is not covered. If you need help understanding that, speak with a New-Jersey licensed auto insurance agent for assistance.
Although purchasing auto insurance online is becoming more mainstream, your best option while considering buying auto insurance in New Jersey is to use the services of a licensed auto insurance agent. A professional auto insurance agent understands the car insurance industry, can explain policy details and will help you determine the right coverage amount and type for your unique needs.