The main purpose of insurance in New Jersey is to safeguard you and your valuables against financial losses resulting from the perils specified in your insurance policy documents. There are many things that we do not plan for, like the death of a loved one, accidents, sicknesses, natural disasters, and damages to our structures. However, getting the appropriate insurance policy helps us to stay prepared in the event of unforeseen incidents. There are various insurance policies available in New Jersey, some of which are:
Business (commercial) insurance
Private property insurance
Speak to a New Jersey-licensed insurance agent if you need help selecting the right policy. They will help you compare quotes from several insurance companies in the state so you can end up with an affordable and suitable policy. An agent can also answer your insurance questions and make sure you make the right insurance decisions.
We have insurance in New Jersey to provide financial support and safeguard against the uncertainties of life. In 2022, there were over 9 million residents in New Jersey, who needed insurance policies like health, life, disaster, auto, home insurance, and business policies to meet their specific needs. In response to the demand, over 1,300 insurance carriers are licensed to sell policies in New Jersey
In 2019, the leading cause of death in New Jersey was heart disease, cancer, unintentional injury, stroke, Chronic lower respiratory disease (CLRD), Alzheimer's disease, septicemia, and diabetes. That same year, about 75,072 people died in the state, while approximately 692,000 residents were without proper health insurance. These uninsured individuals had less access to recommended care, received poorer quality of care, and experienced worse health outcomes than insured persons. We have health insurance in New Jersey to protect residents from unforeseen high medical costs that might be very difficult to pay out of pocket.
|Leading Causes of Death in New Jersey
New Jersey law requires the over 6 million vehicles registered in the state to carry the minimum auto insurance coverage of $15,000 per person for injury or death, $30,000 per accident for all injuries, and $5,000 for property damage. Approximately 600,000 uninsured motorists in New Jersey could face severe penalties for not carrying the required auto insurance policies. Also, they would have to pay out of their pockets for accident-related injuries or damages. However, having auto insurance can save motorists a lot of financial troubles in the event of accidents or auto theft. New Jersey residents spend over $7 billion annually on private and commercial auto insurance coverages combined.
In 2021, there were nearly 3.8 million property owners in New Jersey. About 64% of these property owners live in their houses, while 36% lease their homes. Both owners and renters of these residential properties need insurance policies to cover damages or destruction to their structures, personal belongings, and detached structures. For instance, more New Jersey homeowners should get homeowners policies to protect against financial losses caused by covered perils like fire and hail. Interested persons can purchase different types of residential insurance policies (homeowners, condos, renters, and landlord insurance policies) depending on their type of structures and home ownership status. Homeowners insurance premiums alone account for around $3 billion annually.
The nearly 1 million registered businesses in New Jersey are susceptible to various risks: property damages, employee and non-employee crimes, data breaches, job-related injuries, and liabilities which can be financially draining. As a result, these businesses need commercial insurance policies that would protect against the costs of unforeseen risks. New Jersey businesses spend an average of $12 billion a year on insurance.
Nearly 1.6 million residents in New Jersey are seniors (65 years and older), meanwhile the average life expectancy in the state is between 68.2 and 88.5. Those who die without savings and life insurance policies might put a financial strain on their loved ones. Having a life insurance policy will help you provide financial protection to your loved ones at your demise. When you purchase a life insurance policy, you can enjoy the living benefits, which can finance your retirement or pay medical costs, as well as the death benefits that will be effective after your demise.
Many disasters like storms, floods, hurricanes, wildfires, extreme heat, drought, and landslides are prevalent in New Jersey. For instance, about 906 wildfires were recorded in New Jersey in 2021 alone, burning over 6,000 acres. Purchasing disaster insurance will help protect against financial losses caused by natural disasters, which are typically excluded from most standard property insurance policies.
Speak to a New Jersey-licensed insurance agent for more information on why you need insurance policies. They can recommend insurance policies that will meet your current and future needs. An insurance agent can also help you compare policies from different insurance companies, so you settle for an affordable, yet comprehensive policy.
In New Jersey, the type of policy an insured purchases determines what is insured. For instance, you can get homeowners insurance cover if you want to insure your home. Speak with a New Jersey-licensed insurance agent who can determine your needs and recommend the best policy to purchase.
|Types of insurance policies in New Jersey vs what is insured
|Life Insurance policy
|It insures your life
|Health Insurance policy
|It insures your health
|Homeowners Insurance policy
|It insures your home and personal property
|Auto Insurance policy
|It insures your car
|Commercial Insurance policy
|It insures your business, employees, and business properties.
An insurer refers to the company that provides you with financial coverage in the event of perils listed in your insurance policy. There are over 1,500 insurers currently doing business in New Jersey.
In New Jersey, the insured is the person or business covered by an insurance policy in the event of a loss or claim. An insurance policy is only active when premiums are paid; refusal to pay premiums can make the policy lapse. The insured must file a claim with their insurance company whenever they experience losses and damages caused by covered perils.
An insurance policy is a legal contract between an insurance provider and the insured. Therefore, a policyholder is advised to read their insurance policy document to prevent disagreements with their insurer if a covered peril occurs. For instance, reading your insurance policy helps you ascertain what the policy excludes and includes. It also helps you know your and the insurer’s responsibilities if a covered loss occurs.
An insurance policy in New Jersey consists of the following:
Declaration page: This is usually the first page of an insurance policy. It includes the insured's relevant personal details (e.g., name), what is covered by the policy, the policy period, and the policy limits. For instance, the declarations page of an auto insurance policy will include the name of the person covered, a description of the vehicle covered (such as the make/model, VIN), the premium amount, and the deductible.
The Insuring Agreement: This page outlines what the insurer will do in the event of a covered peril, like paying for losses or damages or defending the insured in the event of a liability lawsuit. Insuring Agreement is divided into two basic forms:
Named–perils coverage: It covers only the perils specifically listed in the policy and excludes those not listed.
All–risk coverage: It covers all perils and excludes those specifically listed in the policy. Such that if a loss is not excluded, then it is covered. For instance, life insurance policies are mostly all-risk policies.
The Exclusions: This page specifically highlights what the policy does not cover. Exclusions typically come in three major types:
Excluded perils or causes of loss: For instance, earthquakes, floods, and nuclear radiations are excluded perils in typical homeowners insurance policies.
Excluded losses: For instance, wear and tear is a major excluded loss in auto insurance policies.
Excluded property: For instance, personal possessions like automobiles, pets, and airplanes are examples of excluded properties under a homeowners policy.
The Conditions: This page provides information on certain requirements that the insured must meet before the insurer pays out claims or performs their duties. Most insurance policies require the insured to file a claim with the insurance company after a covered loss and cooperate during the insurance company’s investigation or defense of a liability lawsuit.
Definitions: This page defines specific terms used in the policy. The definitions section may be a stand-alone section or part of another section.
Endorsements: Some things change during policy renewal, like policy language and coverage, and it is on the endorsement page that the insurer talks about these changes. The endorsement page highlights what has been added, deleted, or modified in the original insurance contract.
Contact your New Jersey-licensed insurance agent if you have difficulties understanding certain terms in your insurance policy. They will explain the terms in simple terms.
Insurance coverage refers to the extent to which your insurance policy will protect you when an insurable unforeseen event happens. Insurance coverage helps you recover from financial losses due to covered risks like damaged properties, car accidents, or health issues. An insured would have to pay premiums to be eligible for insurance coverage. Examples of insurance coverage available in New Jersey are:
Life insurance coverage
Homeowners insurance coverage
Health insurance coverage
Auto insurance coverage
Commercial insurance coverage
An insurance rate is the amount of money an insurer collects from the insured for insurance coverage. Many people use the terms “insurance rate” and “premium” interchangeably, but there is a difference between the two. An insurance rate is the cost per unit of insurance for each exposure unit (risks faced by the insured due to their normal operations). For instance, life insurance policies usually have $1,000 exposure units, while property and casualty insurance policies have $100 property value and $1,000 liability exposure units. In contrast, an insurance premium is the rate multiplied by the number of units the insured buys. The calculation looks like this:
Insurance Premium = Rate × Number of Exposure Units Purchased
An insurance quote estimates what an insurance company will charge for providing a new policy to the insured. The first step in purchasing a new insurance policy is to compare quotes from at least three insurance providers with the help of a New Jersey-licensed agent. Typically insurance quotes include the cost of the policy and what the insurance will cover. Note that insurance quote processes differ by insurer. Each insurance provider uses different factors to determine premiums; therefore, they may ask slightly different questions during the quoting process. They will collect information regarding you and the property you want to insure to design a quote that suits your needs. For instance, if you want a homeowner's insurance quote, the insurer will ask questions about your home, like home type, age, and condition, what the roof is made of, is the home using gas or it fully electric, what kind of plumbing system it has, and the location. After providing the necessary information and selecting the coverage, you will be issued a quote. After you have decided to buy a policy, the next thing to do is to pay your first premiums - this in turn starts your coverage. Your insurer may ask for additional information to determine the final cost of the policy, but the quoted price should be very close to the final cost of the policy. Always speak to a licensed insurance agent in New Jersey who can help you get multiple insurance quotes so you can compare policies.
A discount in insurance refers to the reduction in the normal price of an insurance policy. Below are some common insurance discounts in New Jersey:
Safety discount: Some insurance companies may offer discounts if you take certain safety measures. For example, you can enjoy up to 5% discounts on your homeowners insurance policy if you install security systems like smoke detectors, burglar alarms, or deadbolt locks in your home. Also, you may get a discount on your life insurance policy if you are a non-smoker, drink in moderation, and exercise regularly.
Multi-policy discounts: Purchasing multiple types of insurance from a single insurance company attracts discounts.
Group discounts: Employer-sponsored insurance policies usually come at discounted rates because it is group coverage.
Premium discount refers to the amount your insurer can reduce from your insurance premium if you pay your premiums upfront in full.
Generally, a discount rate refers to the interest rate that an insurer uses to predict the present value of future cash flows and investments. However, a discount rate in health insurance refers to the negotiated discounted rate an insurer agrees upon with the service providers. Note that a discounted rate is usually lower than the normal rate that the insured would have paid for a particular coverage. (Speak with a health insurance-licensed agent for more details)
You need insurance in New Jersey as a financial safety net to help you and your family and/or business recover after a covered event, such as a fire, theft, lawsuit, or car accident. One major reason to buy insurance policies in New Jersey is that some are required by law. For instance, New Jersey law requires all motorists in the state to carry a minimum of $15,000 liability coverage per person and $30,000 per accident with at least $5,000 property damage coverage. Per NJSA 39:6B-2, driving without auto insurance can result in the following penalties:
Fines that range from $300 to $1,000 for the first offense
Subsequent offenses can attract a maximum fine of $5,000
Jail term for 14 days
Community service time for about 30 days
Note: If you were caught operating a vehicle without insurance, speak with a licensed New Jersey attorney who can help.
Additionally, New Jersey law requires all businesses with 50 employees or more to provide health insurance, and businesses of any size (even from out of state) to have workers’ compensation insurance. Another major reason to get insurance policies is that your lender may require them. For instance, a lender may require a homeowner to provide proof of homeowners insurance coverage before funding their mortgages or refinancing them. This is because lenders want to ensure that their financial investments in people’s homes are protected if it is destroyed or damaged by certain perils. The table below shows why you need to purchase the different insurance policies available in New Jersey:
|Different Insurance Policies in New Jersey and Why They are Needed
|With an average of 47% of adult Americans without life insurance, around 3.2 million New Jersey residents leave their families exposed, unless they have savings that are meant to be used to cover the final expenses.
|Over 11% of New Jersey residents under the age of 65 lack proper health insurance. As a result, these 800,000+ individuals are at risk of paying medical bills out of pocket. However, having health insurance can help them minimize out-of-pocket medical payments for sicknesses.
|Residential property insurance
|There are over 3.7 million housing units in need of residential property insurance policies in New Jersey to provide coverage in the event of damages or losses caused by covered perils like theft, fire, windstorm, hail, and vandalism. For instance, with a homeowners insurance policy, you will be sure that your house is covered when you experience any theft-related damages. In addition, residential property insurance typically provides dwelling coverage and personal property coverage. It may even cover the contents of your car, if it is broken into.
|New Jersey has over 6 million vehicles, and each one needs auto insurance policies to protect against financial losses in the event of accidents, vandalism, theft, and other covered risks. Over 14 thousand vehicles were reported stolen in New Jersey in 2021, with 2,500 between January and March alone. You should get a comprehensive auto insurance policy if you live in an area prone to theft or natural disasters so you can be covered if an unforeseen event occurs. Also, your auto insurance policy will pay for your car’s repairs if it gets damaged in an accident.
|New Jersey had close to 1 million businesses. About 99.6% of all businesses in the state are considered small businesses, with about 1.9 million employees. All these businesses need commercial insurance policies to protect against financial losses in the event of unforeseen risks like client lawsuits, customer or employee injuries, property thefts, and damage. In addition to property and liability, New Jersey businesses commonly offer health and life insurance to their staff.
|Residents of New Jersey need disaster insurance because the state is prone to many natural disasters like storms, floods, hurricanes, wildfires, extreme heat, drought, and landslides. For instance, about 906 wildfires were recorded in New Jersey in 2021, burning over 6,000 acres. Meanwhile nearly half a million properties across the state have more than a 25% chance of being flooded in the decades to come.
Yes, it is. Insurance is a necessary investment that is worth your money. This is because insurance policies seek to provide financial assistance when paying out of pocket may seem unbearable. There are different types of insurance policies in New Jersey, and they include:
If the health issues are not taken care of and treated, they have the tendency to get worse with time. Health insurance helps with just that - to assist you with taking care of your health, which can extend the length and quality of life. The leading causes of death in New Jersey are heart disease, cancer, unintentional injury, stroke, chronic lower respiratory disease (CLRD), Alzheimer's disease, septicemia, diabetes, kidney disease, influenza, and pneumonia. In 2020, 3,725 New Jersey residents died of a stroke. Despite the obvious need for health insurance coverage, over 11% of the state’s population does not have it. If you are among those who do not have health insurance, you should consider getting health insurance policies to help pay for medical expenses and other unforeseen expenses resulting from illnesses or injuries. Speak with a state-licensed health insurance expert agent who can get you coverage based on your needs.
The table below shows the common types of health insurance coverage available in New Jersey:
|Common Types of Health Insurance Coverage in New Jersey
|In 2022, over 1 million (or around 63% of all eligible New Jersey resident users were enrolled in Original Medicare. Medicare is a federal government program that provides healthcare insurance for individuals aged 65 and older and younger people with diseases like End-Stage Renal Disease (ESRD) and disabilities.
|Medicaid and Children's Health Insurance Program (CHIP).
|Medicaid is a health program that provides health coverage to low-income adults, children, pregnant women, elderly adults, and people with disabilities. CHIP is a health program that provides low-cost health coverage to children in families that do not qualify for Medicaid. As of 2022, over 1.8 million lower-income New Jerseyans were enrolled in Medicaid, while nearly 260,000 children enrolled in CHIP.
|Major Health Insurance
|Medicare Advantage is a type of health insurance offered by private companies that provides an alternative to Original Medicare. In 2022, 37% of all eligible Medicare users in NJ chose Medicare Advantage over Original Medicare.
|Group Health (ACA-compliant) coverage
|Many companies in New Jersey offer group health insurance plans to their employees to increase retention rates. As a result, nearly 3.9 million employees in New Jersey have the opportunity of benefiting from group health plans.
|311,692 New Jersey residents enrolled in private individual market plans through the GetCovered (New Jersey health insurance marketplace) during open enrollment for 2022 coverage. Enrolling in health plans is important because it leads to better health outcomes, access to medical services or prescription drugs, and reduces the financial burden of unanticipated accidents or illnesses. In addition, eligible individuals can get financial help for GetCovered through the unemployment insurance benefit claims to enjoy affordable health insurance coverage in New Jersey.
|Medicare Advantage Prescription Drug Plan
|This is a type of health plan offered by Medicare-approved private insurance companies that covers prescription drugs for people with Medicare. There is 69% usage among MA users in NJ.
|Medigap (Medicare Supplement)
|Medigap is a health insurance policy that pays for some healthcare costs excluded from Original Medicare, like co-payments, coinsurance, and deductibles. Around 83% of Original Medicare subscribers in New Jersey use Medigap to help with the costs.
|Supplemental Health Insurance
|Critical Illness Insurance
|Some of us will suffer from critical illnesses in our lives, like kidney failure, cancer, stroke, and diabetes. Such conditions can last for a long time and are typically expensive to treat. For example, the average costs of medical care and drugs for cancellation is around $42,000 per year. With critical illness insurance, you get paid the policy benefits as soon as you are diagnosed with a qualifying illness, and you can spend the money any way you see fit.
|Hospital Indemnity Insurance
|Hospital indemnity insurance is a supplemental insurance policy that helps cover the cost of hospitalization. It can be used in conjunction with a major medical plan or as a stand-alone plan. On average, the 113 New Jersey hospitals in New Jersey see around 3.8 million hospitalizations and emergency cases annually.
|Dental insurance covers dental care, and most New Jersey employers offer dental coverage as part of employees' health packages. Dental coverage can be also purchased as a stand-alone plan, to help pay for services of the more than 7,400 dentists in the state. The average cost of a dental exam in NJ is $75, $150 for a filling, and $1,000 or more for a crown.
|At 64% of the adult population needing prescription eyewear, and more than 170,000 New Jersey residents reporting significant visual impairments, vision insurance helps cover costs like eye exams, contact lenses, eyeglass lenses, and frames.
|Hearing (and hearing-aid) Insurance
|About 850,000 New Jersey residents battled hearing impairments in 2018. If you are among those who are suffering hearing loss, hearing insurance helps cover costs associated with hearing tests and hearing aids.
|Long-Term Care (LTC) Insurance
|Long-term care (LTC) insurance provides financial protection for people who can no longer perform the most basic functions of daily activity and require living assistance at home or a medical facility. Without insurance coverage, long term care costs in New Jersey can be as high as $65,000 annually, with the average stay of 2.5 years.
|Disability Income Insurance
|If you suffer a physical or mental disability and cannot work because of it, disability income insurance helps to partially cover the lost income. Temporary disability insurance in New Jersey can be also used for pregnancy and during the childbirth recovery.
New Jersey is home to over 9.2 million people, all of whom will eventually, sooner or later - die. The average life expectancy in New Jersey is 79.5 years and over 30,000 seniors die in the state every year. Life insurance in its true sense is meant to pay for the final expenses that are left unpaid by the insured after they die. Such costs typically include the burial expenses, repayment of the debts (loans, mortgages, etc.), and providing for the family’s day-to-day expenses after your income is no longer coming in. While the insured is alive, a life insurance policy can be also used as an alternative retirement savings account (similar to an IRA or a 401K, but with typically more favorable tax benefits during the retirement years), or as a source of personal financing, as if you had your own bank. Once you die, the beneficiaries get the death benefit, minus the benefits used up as living benefits. This makes life insurance a must-have for both the young and the old. Besides private use, thousands of businesses in New Jersey use life insurance to protect their employees and to structure ownership transfer when a major shareholder or executive passes away.
A knowledgeable state-licensed New Jersey life insurance agent can help you find the most appropriate coverage based on your needs.
|Common Types of Life Insurance Policies in New Jersey
|Term Life Insurance
|Permanent Life Insurance
Term life insurance covers you for a specified period like 10, 15, 20, or 30 years. Policy beneficiaries can only get death benefits if the insured dies within the specified policy term. The insurer will not pay out death benefits if the insured outlives the policy. Generally, the only valuable thing about term life policies is the death benefit that gets paid out to the beneficiaries after the insured's death. Due to the lack of extra features which can be found in cash value life insurance, term life offers the lowest premium for the most amount of death benefit. There are two main types of term life insurance in New Jersey:
Renewable term life insurance: It permits you to continue coverage when your term expires, regardless of your health status, but it will cost more at the policy renewal because of your age at that time.
Nonrenewable term life insurance: It does not allow policy renewal and can only be issued for a specific period, but you can apply for a new policy when your term expires. (usually a more affordable version)
Permanent life insurance is a lifelong policy with a cash value savings component from which you can withdraw or borrow. This cash value account usually yields a tax-deferred interest. The most common permanent life insurance policies in New Jersey are:
Whole life insurance: It provides permanent coverage that lasts throughout your lifetime. Your whole life insurance policy will remain active as long as you continue to pay premiums, and your policy beneficiary will be paid a death benefit at your demise. Aside from the death benefit, your whole life policy also has a cash value component in which interest accumulates on a tax-deferred basis.
Universal life insurance: Similar to whole life insurance, it provides long-life coverage as long as premiums are paid. Typically, universal life policies have both death and living benefits. Your policy beneficiary will receive a death benefit after your demise, but you can withdraw or borrow from your cash value while still alive (living benefits). One of the major benefits of universal life insurance is that it is flexible, unlike whole life insurance with fixed premiums. You can change your death benefits and premiums amounts at will, and you can use the money in your cash value to pay your premiums if you have sufficient money in your cash value.
Final expense insurance: This permanent life insurance policy is designed for older adults. Final expense insurance has a low death benefit tailored toward covering final expenses like funeral service costs, burial expenses, and doctor or hospital bills. This policy is best for people who have pre-existing conditions because no medical exam is required. However, final expense premiums are usually significantly higher than other life insurance policies.
Private property insurance policies pay to repair people's personal properties when damaged by covered perils like fire, hail, storm, and tornadoes. It helps to protect your home, attached and unattached structures, and personal possessions like automobiles, furniture, and appliances against financial losses. New Jersey residents need to have private property insurance because:
It provides liability coverage: It protects residents against financial losses resulting from third-party bodily injuries, property damage, lawsuits, and liability claims.
It provides additional living expenses: Private property insurance provides coverage if insureds need temporary residences when their insured homes are damaged due to covered losses.
It provides personal belongings coverage: Private property insurance covers personal belongings like electronics, furniture, and arts if stolen or damaged due to covered perils.
It provides natural disaster coverage: Private property insurance covers damages to your structures caused by natural disasters like lightning, windstorm or hail, and volcanic eruptions. However, it does not cover damages resulting from floods or earthquakes.
Note: If you live in a modular home, regular homeowners insurance provides coverage. Meanwhile, if you are the owner of one of the approximately 33 thousand manufactured homes in New Jersey, you must use Manufactured home insurance (also known as Mobile home insurance).
Condo insurance: It covers repairs to your condo unit and your personal property if stolen or damaged by covered perils like fire, lightning, explosion, aircraft, vehicles, windstorm or hail, vandalism, smoke, riot, and accidental or sudden water damage. A typical condo insurance policy in New Jersey does not cover flooding, earthquake, termites, freezing pipes, war, continuous and repeated seepage, and intentional acts caused by you or your family members.
Renters insurance: Tenants of the over 1.3 million dwellings available for rent in New Jersey need renters insurance to cover their personal belongings from unforeseen incidents. Renters insurance also covers additional living expenses when you have to get temporary accommodation due to damages to your rented home. It does not cover losses caused by war or nuclear hazards, floods, mold (unless it is due to a covered peril), termites, wear and tear, earthquakes, and intentional acts caused by tenants. Renters require separate policies to cover these excluded perils. For instance, a renter can purchase a separate policy (flood insurance) to protect against flood damages.
Landlord insurance: Owners of the >1.3 million houses available for rent in New Jersey need landlord insurance policies to protect against financial losses resulting from damages to their rental properties. Regular homeowners insurance stops coverage as soon as you rent your home out. Typical landlord insurance also covers items used to service the rental home, like toolboxes, backup generators, lawnmowers, and snow blowers, and excludes damages resulting from sinkholes and nuclear hazards.
Most property owners and renters usually have challenges with how much home insurance to purchase. Generally, buying home insurance coverage is advisable to cover the rebuilding and replacement costs of your home and personal property (within the home) in the event of damage or a total loss. Contact a New Jersey-licensed insurance agent to know the best home insurance policies that suit your structure and determine how much coverage you need. They will assess your home insurance needs, run a home insurance quote, and recommend coverage options that will provide the right coverage for you. In addition, an insurance agent will help you compare home insurance quotes from multiple insurers and ensure you settle for an affordable but comprehensive policy.
Over 6 million vehicles registered in New Jersey need auto insurance to protect against costs associated with vehicle-related accidents and incidents. In 2020, New Jersey recorded over 190 thousand total crashes, which included 549 fatal collisions that resulted in 587 deaths, and 10,279 vehicle thefts. In 2021, New Jersey saw a spike in car thefts, with over 14 thousand vehicles reported stolen. New Jersey law mandates every motorist to carry the following auto insurance liability coverage:
|Minimum Limits of Liability Insurance in NEW JERSEY
|Bodily Injury Liability
|$15,000 per person
|$30,000 per incident
|Property Damage Liability
|$5,000 per incident
Watercraft insurance is an umbrella term used in New Jersey for several insurance policies like yacht, boat insurance, and personal watercraft insurance policies. Watercraft insurance covers boats, yachts, jet skis, and other vessels from physical losses or damages. According to the New Jersey Department of Transportation (NJDOT), there are over 175 thousand marine vessels registered in New New Jersey.
Aircraft insurance covers physical damage to aircraft like airplanes and helicopters and any legal fees arising from its operation and ownership. Aircraft insurance can be private or commercial. In 2022, there were around 4,700 aircraft operating out of the 41 public use New Jersey airports.
Nearly a million businesses registered in New Jersey employ close to 4.2 million residents. These businesses need commercial insurance policies to cover losses resulting from risks like theft, property damage, liability lawsuits, employee injuries, illnesses, and death. Commercial insurance is really necessary in New Jersey because:
It keeps businesses running: Commercial insurance covers businesses in the event of covered perils like theft, property damage, lawsuits, employee injuries, illnesses, and death.
It protects your employees: Purchasing commercial insurance policies like commercial life insurance and commercial health insurance helps to attract and retain employees. It also serves as a motivation for employees to give their best to the company.
It boosts business credibility: Having commercial insurance helps you gain the trust of prospective clients and customers. It builds assurance in their minds that the business has a way of compensation when something goes wrong with existing agreements.
It is mandatory by law: New Jersey law requires commercial drivers to carry automobile liability insurance coverage. Similarly, all employers in the state must purchase workers’ compensation insurance for their employees. Failure to carry the required insurance coverage results in severe penalties.
Contracts may require it: Lenders may want businesses who collect loans from them to have some commercial insurance policies like commercial property or commercial liability insurance policies. Likewise, landlords in New Jersey who rent or lease their facilities out to businesses may require them to have certain commercial insurance requirements.
|Examples of Commercial Insurance Policies in New Jersey
|Business Interruption Insurance replaces lost income when a business becomes temporarily inactive due to damage or loss of property.
|Commercial Crime Insurance protects businesses against crime-related losses like theft, fraud, and burglary perpetrated by both employees and third parties.
|Commercial Auto Insurance protects commercial vehicles like cars, trucks, and vans against financial losses arising from vehicle-related accidents or theft.
|Workers Compensation Insurance provides medical treatment, wage replacement, and permanent disability compensation to employees who suffer work-related injuries or illnesses.
|Group Health Plans are health coverages employers offer to their employees, which can sometimes extend to their family members.
|Disability Income Coverage provides an income if an insured person cannot work or earn an income due to a disability.
|Health insurance for self employed is frequently purchased from the individual health marketplace.
|Group Life Insurance policies are bought by employers or organizations to provide coverage for employees or group members. Since group life policies typically have low death benefits, they are considered supplemental life insurance, as it supplements the main “individual” policy an employee may have.
|Buy-Sell Agreements Coverage is a legally binding contract between business partners. It details how a business partner's share of business may be reallocated if that partner dies or resigns from the company.
|Key Employee Life Insurance is a type of life insurance policy that a company purchases for the lives of crucial members (like the owner, founders, or top executives) in the organization.
Liability insurance covers you from third-party liability claims resulting from bodily injuries and property damages. It also covers any legal fees associated with the claims. The most common types of liability insurance policies in New Jersey are:
Homeowners insurance - personal liability: Typical homeowners insurance covers bodily injuries to others or damages to their properties. It also covers damages caused by the insured’s pet, but does not cover injuries sustained by the pet (pet insurance covers this).
Renters insurance - liability: It protects renters from liability claims when they unintentionally cause harm to others on the premises.
Landlord insurance - liability: It protects landlords from third-party injury or damage claims related to their rental properties.
Cyber liability insurance: It protects you against financial losses caused by data breaches and other cyber security issues.
Employer’s liability insurance: It covers employees' claims resulting from job-related injuries or illnesses excluded from workers' compensation insurance.
Product liability insurance: It provides coverage when your business products cause bodily injury to a third party or property damage to their belongings.
Director and officer (D&O) liability insurance: It covers business directors and officers from liability claims caused by their actions and decisions. D&O covers personal losses, legal fees, and other costs arising from lawsuits.
General liability (GL): It covers bodily injury and personal injury that occurs on your business premises. Additionally, general liability insurance covers property damage caused by your business operations or products.
Umbrella liability insurance: It is an extra coverage that provides additional protection beyond what is included in your standard business insurance policy. Umbrella liability insurance covers personal property damage, injuries, lawsuits, and personal liability situations.
Speak to a licensed insurance agent in New Jersey for more information regarding liability coverages and policy provisions. They will be able to answer your insurance questions and ensure you end up with the right insurance products.
Natural disasters like storms, hurricanes, floods, wildfires, extreme heat, drought, and landslides are prevalent in New Jersey. For instance, the table below shows the number of structures at risk of storms in New Jersey and the estimated reconstruction costs if they get damaged:
|Storm Surge (Category Level)
|Number of single-family homes at risk of storm in New jersey
|Reconstruction cost value of single-family homes at risk in New Jersey
|Category 1 Hurricane
|> 27. 5 billion
|Category 2 Hurricane
|> 84.9 billion
|Category 3 Hurricane
|> 119.7 billion
|Category 4 Hurricane
|> 150.5 billion
|Category 5 Hurricane
|> 150.5 billion
|Source: Insurance Information Institute (III)
It is important that you get disaster insurance, especially if you live in a disaster-prone area, to protect your residential and business structures against financial losses caused by natural disasters. Note that a standard residential or business property insurance policy does not cover natural disasters like floods and earthquakes. Hence, you would have to purchase disaster insurance policies as add-ons to your existing standard property insurance policy.
Flood insurance: There are over 1,800 miles of coastline in New Jersey that covers 3,218 square miles of the state and is home to over 200 diverse communities. About 53% of New Jersey residents live along the shore and rivers of these coastal zones, putting their homes and businesses at risk of flooding. Individuals living around the New Jersey coastal zone should consider getting flood insurance to cover damages caused by floods. You can purchase flood insurance from the National Flood Insurance Program (NFIP) through licensed P&C insurers and “Write Your Own” (WYO) insurance companies.
Earthquake insurance: It covers damages caused by earthquakes. Typically, earthquake insurance policies pay to repair damages to dwelling units, personal belongings, other structures (like fences, gates, and garages), additional living expenses, and the cost of removing debris. You can always check the New Jersey Office of Emergency Management website for updates regarding earthquake incidents in the state.
Discuss with a New Jersey-licensed insurance agent before purchasing any disaster insurance policy. They will provide more information on the prevalent disasters in your locality and help you assess your needs and purchase the correct amount of disaster insurance coverage.
A deductible is an amount an insured must pay towards a liability or a loss before their insurance kicks in. On the other hand, a premium is the amount of money an insured must pay in exchange for insurance coverage. All insurance policies require premiums, but not all insurance policies require deductibles. For instance, you do not need to pay deductibles for your life insurance policy.
A deductible is the amount of money the insured pays out of pocket toward an insured loss or damage. Most homeowners and auto insurance policies have deductibles on property claims. Typically, insureds with higher deductibles tend to pay lesser insurance premiums. A deductible can either be:
A specific dollar amount,
A percentage of the total amount, or
A period of time you must wait before the insurance coverage begins
A specific dollar amount deductible allows your insurer to subtract an agreed amount from your claim payment. For instance, if your policy has a $500 deductible and you have an insured loss worth $10,000, your insurer will send you a $9,500 claims check. In contrast, a percentage deductible is common with most homeowners insurance policies and is calculated based on a percentage of the home's value. Hence, if you insure your house for $100,000 and your insurance policy has a 2% deductible, your insurer will deduct $2,000 from your claim payment. For instance, if you have a $12,000 insurance loss, your insurer will send you a $10,000 claim check.
A waiting period deductible, which is commonly used in business interruption policies, stipulates the amount of days (in hours) that a business must cover its own costs, while waiting for insurance coverage to begin, after a covered event that causes the business to close its regular operations. For example, if a fire breaks out in a restaurant and it is forced to close its door for repairs, the restauranter may have to cover the costs of the utilities and the staff for this agreed upon time (usually 3 days - 72 hours), after the passing of which the insurer starts covering those costs.
Deductible is less common in liability insurance.
In New Jersey, deductible means the amount the insured is expected to pay towards a covered loss before their insurance company pays out claims.
Some advantages of deductibles in New Jersey are:
Opting for a higher deductible helps to lower your insurance premiums.
It allows you to choose an amount of deductible you can easily pay out of pocket.
It prevents higher premiums due to claims history because you will no longer be tempted to turn in small claims.
Some disadvantages of deductibles are:
Opting for a lower deductible will increase your insurance premiums.
Higher deductibles may be difficult to pay out of pocket, especially in the event of large losses. The chosen deductible amount should be affordable for the insured.
A premium in New Jersey insurance refers to the amount of money an insurance provider charges for insurance coverage. Many insurers offer different types of premium payment options. For instance, some insurance companies allow insureds to pay their premiums with a debit or credit card. In contrast, others allow electronic funds transfer (EFT), where the insurance premium is automatically withdrawn from the insured's bank account every month.
An insurance premium is an amount a person or business pays for an insurance policy. There are several payment options you can choose from to pay your premiums. For instance, you can pay premiums in installments (like monthly, quarterly, semi-annually, or annually), or you can make a lump-sum payment upfront before your coverage begins. The premium can be paid directly to the insurer or through a premium financing company (typically only in commercial insurance).
Insurers use several factors to determine insurance premiums. These factors vary by the type of insurance policy you are purchasing. For instance, the factors that an insurance company will use to calculate life insurance premiums will differ from what the same company will use to calculate homeowners insurance premiums. Generally, insurance companies in New Jersey use the following factors to calculate insurance premiums:
Age: This is a major factor in calculating premiums in most insurance policies. For instance, in life insurance policies, premium increases as you get older because the more you advance in age, the shorter your life span. In auto insurance policies, teen drivers tend to pay higher auto insurance premiums than experienced mature drivers because they do not have driving experience and are more likely to get into accidents. In a typical homeowners policy, the age of the home is a major consideration when calculating premiums. As a result, homeowners who live in old homes that need many improvements if rebuilt will pay higher home insurance premiums than those who live in newly-built homes. Older cars are less expensive to insure because their value is lower than the newer vehicles.
Gender: Women tend to have a longer life expectancy than men. Because of this women typically pay lower life insurance premiums than men of the same age and health status. In contrast, women pay higher premiums for health insurance policies than men because they tend to need medical attention more often.
Occupation: Individuals with high-risk or dangerous jobs tend to pay higher life and health insurance premiums than those with lower-risk jobs. For instance, insurers charge construction workers higher premiums for insurance than receptionists.
Individual vs. family enrollment: Most health insurance companies will charge you more for a health plan that covers your spouse and/or dependents.
Health status: Individuals with pre-existing conditions should expect to pay higher life and health insurance premiums than those with no health issues.
Tobacco users: Smokers tend to pay higher life and health insurance premiums than nonsmokers because they are at a higher risk of developing health issues like respiratory diseases, cancer, and heart diseases. Health insurance premiums for smokers can go as high as 50% compared to that of nonsmokers, while for life insurance smokers could pay up to 4 times more.
Annual mileage: Expect to pay higher auto insurance premiums if you drive more than 50 miles daily because you will be more prone to accidents if you are always on the road.
Location: Where your home or business is situated in New Jersey affects your residential, auto, and commercial insurance policies. For instance, insurance companies will charge you higher premiums if your business or home is located in areas prone to natural disasters than when your home or business is located in places where weather-related incidents rarely occur. Additionally, you will pay higher auto insurance premiums if you live in a populated city like Newark because there are more vehicles on the road, and the likelihood of accidents and thefts is higher compared to less populated areas like Tavistock.
The number of employees: Large businesses have greater chances of experiencing theft, fraud, embezzlement, and other business-related crimes or liabilities than small businesses. As a result, large companies pay higher commercial insurance premiums than businesses with fewer staff. However, employees of large businesses have greater chances of enjoying affordable group health and life insurance rates because they are likely to be eligible for more discounts.
The type of car you drive: Some expensive or newly purchased vehicles cost more to insure than less expensive ones. However, if your car has high safety equipment, you might qualify for discounts.
Driving history: If you have a history of accidents or serious traffic violations, your auto insurance premiums can increase by 10% or 15% compared to when you have a clean record.
Security measures: Insurers might charge lower commercial insurance premiums from businesses with safety precautions like security alarm systems and CCTV cameras. Some insurance companies even offer up to 5% in home insurance discounts if you install security systems like smoke detectors, burglar alarms, or deadbolt locks in your house. Also, some insurers cut 15% or 20% off home insurance premiums when you install sophisticated sprinkler systems and fire alarms wired to the police or fire stations.
To save on your insurance premiums, you should shop around and compare insurance policies from several insurance companies. You can seek the services of an experienced New Jersey-licensed insurance agent who is familiar with the insurance market. They will help you get insurance quotes from multiple insurers and ensure you settle for an affordable policy. Other ways to save on insurance premiums are to bundle your insurance policies, raise your deductible, take advantage of discounts (like a multi-policy discount) and embrace group coverage.
Generally, the higher your deductibles, the lower your premiums. For instance, increasing your auto insurance deductibles from $200 to $500 can reduce your premiums by 15%-30%, while increasing your deductible to about $1,000 might save you 40% or more on premiums. Conversely, the lower your deductibles, the higher your premiums.
How you pay insurance premiums in New Jersey depends on the agreement between you and your insurance company. You can negotiate to pay your premiums in any of the following ways:
Monthly: This is the most common mode of premium payment. You will have to pay a specific amount to your insurer monthly to keep your policy active. Monthly payments make it more convenient for you if you have issues making lump-sum payments for your insurance policy.
Quarterly: This requires you to pay premiums every three months to keep an insurance policy active. Quarterly premium payments are good for you if you do not want to make monthly payments but also do not want to pay a huge lump sum all at once.
Semi-annually: This mode of premium payment is less common than monthly or annual premium payments. Semi-annual premium payments require you to pay premiums every six months to keep your policy active. Most insurers offer discounts to insureds who pay their premiums semi-annually.
Annually: This is a lump sum payment you make once a year to keep your insurance policy active. Many insurance companies in New Jersey offer discounts to insureds who pay their premiums all at once (in full).
If you cannot pay your premiums semi-annually or annually, you can get premium finance loans to pay your premiums. Then, you can make payments towards the loan to the premium finance company every month with the required interest.
Health insurance companies allow insureds to pay their premiums monthly. However, premiums for group health plans are usually split between the employer and the employees. The employer can choose to pay about 50% or more of the premiums while the employees’ portions are deducted from their payroll. Some supplemental health plans may offer discounts for paying the policy in full (speak with a health insurance agent for more information).
The mode of auto insurance premium payment varies, depending on the type of auto insurance policy you purchase. For example, the mode of premium payment for a private auto insurance policy is usually flexible. You can pay your premiums monthly, quarterly, semi-annually, or annually. In contrast, a commercial auto insurance company will require that businesses pay lump-sum payments for commercial auto insurance policies. However, if a business does not have the financial capacity to pay premiums annually, it can get a loan from a premium finance company. The premium finance company will pay for the premiums in full and bill the business in monthly installments. Like any loan, the business will have to pay interest as they repay their loan.
You can pay for your residential insurance through an escrow account or directly to your homeowners insurance company. Generally, your mortgage lender can allow you to pay your home insurance premiums through your monthly mortgage payment. Alternatively, you can pay your home insurance premiums directly to your home insurance company on a monthly, quarterly, semi-annually, or annually basis.
Generally, most commercial insurance companies expect businesses to pay their premiums annually. This way, businesses can get discounts on their policies by paying upfront, but if they choose another payment option, they might have to pay higher premiums. Alternatively, a business can get a premium finance loan to pay their annual premiums and then refund the loans monthly. The business might be required to make a two-month deposit payment and pay the remaining loans plus the accrued interest every month for the next 10 months.
You can choose to pay your life insurance premiums monthly, quarterly, semi-annually, annually, or as a single premium. However, your insurer might want you to make an annual payment if you want to pay your permanent life insurance premiums with the money in your cash value account. In addition, you can get premium finance loans to pay your life insurance premiums if you are a high-net-worth individual, but you would have to use your assets as collateral.
Disaster insurance premiums are mostly paid annually. However, your insurance company can allow you to pay your premiums monthly if you are paying through your mortgage escrow.
Talk to a New Jersey-licensed insurance agent for more information on premiums payment. They will recommend the right insurance policy that suits your needs and the best mode of payment that can work for you.