New Jersey Auto Insurance Laws and Requirements

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  • New Jersey Auto Insurance Laws and Requirements

Whether you’re heading out for a relaxing vacation on Cape May, planning a night out in Jersey City, or going about the regular old hustle and bustle in the Garden State’s suburbs like Ridgewood or Elizabeth, all drivers with cars registered in the state must ensure they always have an active and adequate New Jersey auto insurance policy.

Let’s take a look at the minimum coverage requirements in the Garden State, why certain laws are in place, and all the other nuances of auto insurance laws in the state.

New Jersey Auto Insurance Requirements Explained

In New Jersey, car insurance is required for all drivers, with the minimum coverage amount depending on their policy type. New Jerseyans can select one of two policies, each with its own minimum coverage limits. Drivers are expected to always have at least the minimum coverage required on their policy.

Drivers in the Garden State may select either a basic or standard policy. A basic policy contains the lowest limits a driver can maintain while remaining legally insured in the state. The minimum amount of coverage required on a basic policy is $10,000 in bodily injury liability per accident, $5,000 in property damage liability per accident, and $15,000 in personal injury protection or PIP.

The minimum limits on a standard policy are $25,000 in bodily injury liability per person, $50,000 in bodily injury liability per accident, $25,000 in property damage liability per accident (25/50/25 liability coverage), the same 25/50/25 limit of uninsured and underinsured motorist coverage (UM/UIM), and $15,000 in PIP. Those who lease or finance their vehicles may be expected to maintain minimum limits of collision and comprehensive coverage. 

Driving without insurance in the Garden State is illegal and punishable by law. Those who fail to maintain the mandatory minimum limits on their policies may face legal penalties like fines, license and registration suspension, or even jail time. Those who lack sufficient coverage also face significant financial and insurance-related consequences in the aftermath of the crime. 

Why Are There New Jersey Auto Insurance Regulations?

Drivers must have minimum car insurance in New Jersey to protect themselves and other drivers on the road in the event of an accident. Those with basic policies must have at least $10,000 in bodily injury liability, $5,000 in property damage liability, and $15,000 in PIP. Those with standard policies must have a bit more coverage, as the minimum coverage requirements for such policies are 25/50/25 liability coverage, 25/50/25 UM/UIM coverage, and $15,000 in PIP. 

While most states have auto insurance laws, New Jersey is one of 13 states with a no-fault law. States without no-fault laws are called tort states, which generally require drivers to carry liability coverage. Tort states require drivers to carry liability coverage to cover an accident victim’s medical expenses, should the policyholder be considered at fault in the accident. New Jersey requires drivers to have PIP as part of the no-fault law because no-fault states require drivers to default to their own coverage for their medical expenses instead of relying on other drivers on the road.

Are There New Jersey Liability Insurance Requirements?

Yes, there are auto insurance requirements in New Jersey. Drivers with basic policies must maintain at least $10,000 in bodily injury liability per accident, $5,000 in property damage liability per accident, and $15,000 in PIP per accident. 

Those who fail to maintain an adequate policy may face legal and financial consequences. The legal penalties for driving without insurance in the Garden State may be hefty fines, license or registration suspension, vehicle impoundment, or even jail time.

While the legal consequences should be enough to deter most drivers from forgoing coverage on their policies, the financial consequences may sway those who aren’t yet convinced. Those who break the mandatory insurance laws are considered uninsured and, therefore, on the hook for all the expenses if they cause a car accident. This may mean medical expenses for all parties, vehicle repairs for all parties, and possibly even legal defense fees should the victim or victims decide to sue.

On top of the legal and financial risks, those caught driving uninsured also face a significant hike in insurance premiums for years to come. While SR-22 insurance isn’t a concern in the Garden State, high-risk New Jersyans may pay double or triple the average amount for their policies. 

The average full coverage policy in the Garden State costs about $1,900 annually, about 15% above the national average of $1,670 annually. However, those with factors that deem them high-risk may see above-average premiums. 

Insurers assess a driver’s risk of filing a claim as they calculate premiums, so, typically, drivers at high risk of filing claims see above-average premiums. Insurers will use factors like a driver’s insurance history, driving record, gender, age, or ZIP code, among other factors, to assess their risk of filing a claim. 

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What Does Auto Insurance Cover in New Jersey?

The expenses auto insurance may cover in the Garden State depend on the driver’s policy. If a driver has a basic policy with minimum coverage, they’ll maintain coverage for a victim’s medical expenses and vehicle repairs in an at-fault accident and coverage for their own medical expenses regardless of who caused the accident.

Drivers with minimum coverage on a standard policy will also have coverage for a victim’s accident expenses and vehicle repairs (liability coverage) and their own medical expenses (PIP), but they’ll also have coverage for their own medical expenses should they be injured in an accident caused by an uninsured or underinsured driver.

Those with full coverage policies may maintain coverage for other, more specific scenarios. Full coverage policies may have comprehensive coverage, collision coverage, medical payments coverage (MedPay), or gap coverage, among other optional coverages. Maintaining a full coverage policy allows drivers to tailor their coverage to their needs so they’re covered in various accident scenarios.

While a full coverage policy may not be the cheapest policy in the state, drivers may find ways to lower their premiums without sacrificing coverage. Many of the state’s top insurers offer full coverage policies with premiums far below the average rate in the state.

Understanding the New Jersey Car Insurance Laws

In New Jersey, auto insurance laws require drivers to maintain the minimum coverage required on their chosen policy. New Jerseyans can choose to maintain either a basic or standard policy, each with different coverage requirements.

Those with a basic policy must always have at least $10,000 in bodily injury liability, $5,000 in property damage liability, and $15,000 in PIP. Those with a standard policy must always have at least 25/50/25 liability coverage, 25/50/25 UM/UIM coverage, and $15,000 in PIP. It’s important to note, too, that drivers must select a tort option when they bind a policy.

While the Garden State is a no-fault state, all drivers must also maintain some liability coverage. If an accident is severe enough for a party to max out their PIP coverage, the fault must be assigned in the accident so the victim can retrieve the at-fault party’s liability coverage. Since there’s still a tort component to accidents in the state, drivers must select either a full or limited tort option on their policies.

Those with a full tort option reserve more control when suing for noneconomic losses following an accident, like damages or pain and suffering. Those with a limited tort option have limited control when it comes to legal action following an accident. Drivers with a full tort option on their policies will likely pay higher premiums, and those with a limited tort option on their policies will likely pay less. 

Those who maintain the minimum coverage required on their policy are legally insured in the eyes of the law and don’t have to worry about the legal penalties that come with driving without insurance. 

What Is the Minimum Auto Insurance Coverage in New Jersey?

The minimum amount of coverage for a basic policy in New Jersey differs from that required on a standard policy, as drivers in the state have two options when it comes to policies. Basic policies in the Garden State must have at least $10,000 in bodily injury liability coverage per accident, $5,000 in property damage liability coverage per accident, and $15,000 in PIP per accident. 

Those with standard policies must have at least $15,000 in PIP, 25/50/25 UM/UIM coverage, and 25/50/25 liability coverage. All drivers in the Garden State, regardless of the type of policy they hold, must carry PIP as the state has a no-fault law. This coverage covers a driver’s medical expenses should they be injured in an accident, regardless of who caused it.

What Are the New Jersey Car Accident Laws?

Since New Jersey insurance laws require drivers to carry no-fault coverage, they will default to such coverage in the event of an accident. If a driver is injured in an accident, they may invoke their PIP for speedy coverage of their medical expenses. However, should their expenses exceed their PIP limits, that’s when things get a bit more complicated.

Drivers with minimum coverage basic policies carry some PIP coverage for their own medical expenses and some liability coverage for the victim’s medical expenses and vehicle repairs, should the policyholder be deemed at fault in an accident. However, should the victim’s expenses exceed the policyholder’s coverage limits, the policyholder may be on the hook for some of the victim’s expenses.

Those with standard policies carry PIP coverage for their medical expenses and liability coverage for the victim’s accident expenses, should the policyholder cause an accident. However, those with standard policies also maintain a minimum limit of UM and UIM should the at-fault driver in an accident fail to comply with auto insurance minimums or lack sufficient liability coverage for the policyholder’s expenses. While UM coverage will cover the policyholder’s medical expenses and vehicle repairs if they’re in an accident caused by an uninsured driver, UIM will cover the policyholder’s expenses when an insured driver reaches their liability limit. 

In addition to maintaining coverage on one’s policy, drivers also maintain a tort option. Depending on which tort option they maintain, drivers may reserve full or limited capability of suing other drivers following an accident.

Is Car Insurance Required in New Jersey?

According to New Jersey auto insurance rules, coverage is required in the state. Drivers must maintain the necessary minimum coverage on the type of policy they select. New Jerseyans can maintain either a basic or a standard policy, each of which has its own minimum coverage requirements.

Those who fail to maintain the minimum amount of coverage required by their policy or fail to carry a policy at all may face significant legal and financial consequences. 

Do You Need Car Insurance in New Jersey?

All drivers need minimum limits of at least PIP, bodily injury liability, and property damage liability in New Jersey. Those with standard policies also need to maintain minimum limits of UM and UIM coverages. 

Not only is auto insurance legally required in the Garden State, but it’s also necessary for one’s safety on the road. Those without a policy risk financial ruin each time they get behind the wheel. While it may be tempting to forgo coverage in the name of short-term savings, it isn’t worth putting one’s savings at risk. Generally, the cost of one’s insurance premiums is far less than the expenses that add up following an accident without sufficient coverage.

How To Find New Jersey Car Insurance Quotes

In New Jersey, the minimum auto insurance requirements mandate drivers to select one of two policy options. Those who aren’t sure where to start when it comes to selecting a policy may want to get and compare quotes online to kickstart their search. By getting and comparing quotes online, drivers can analyze policies with differing levels of coverage so they can select the best policy and rate for their needs.

Luckily, you’ve come to the right place for quotes. Here at Clovered, we have a free quoting tool you can use to access your unique quotes in minutes. If you’d rather chat with a professional, you can contact one of our licensed agents at 833-255-4117 or agent@clovered.com.

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The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.

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