Is New Jersey a No-Fault State?

From Ocean City to Atlantic City, Hoboken to Princeton, and everywhere else your adventures in the Garden State may take you, all New Jerseyans must always ensure they have an active and adequate car insurance policy. Let’s see how drivers can ensure their policies meet the state’s minimum requirements, how the no-fault law affects drivers, and how no-fault insurance appears on a New Jersey car insurance policy. 

Yes, car insurance in New Jersey is treated on a no-fault basis because the Garden State is a no-fault state. This means that all drivers must carry a no-fault coverage in the form of a first-party medical benefit (FPMB) called personal injury protection (PIP). While other states may allow drivers to select an optional FPMB to appear on their policies, New Jerseyans must carry a minimum limit of PIP.

New Jerseyans must have at least $15,000 in PIP on their policies but have the option to have over $250,000 in coverage. Drivers may invoke PIP to cover the medical bills or debt they incur following an accident, regardless of who caused it. In tort or at-fault states, at least one driver must be deemed at fault for the accident so the victim may invoke the at-fault driver’s liability coverage to cover their medical expenses. 

Drivers in New Jersey must carry at least the minimum amount of coverage their policy type requires. New Jerseyans can select one of two policy types: a basic policy or a standard policy. A basic policy containing the most minimal coverage one may legally carry must have 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 with standard policies must maintain more coverage. Insurance laws in the Garden State require drivers with a standard policy to have at least $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 for uninsured and underinsured motorist coverage (UM/UIM), and $15,000 in PIP. Those who finance or lease their vehicles may be required to carry comprehensive and collision coverages as part of their legally binding contracts.

Driving without insurance in the Garden State is illegal, and those who fail to comply with the mandatory insurance minimums may face severe penalties. The legal consequences for driving without insurance may be fines, license and registration suspension, vehicle impoundment, or even jail time. The severity and frequency of the crime will dictate the consequence. 

The legal penalties for driving without sufficient coverage aren’t the only consequences. Drivers lacking coverage won’t risk filing for an SR-22 in the Garden State. Still, they will likely be considered high-risk drivers by insurers and, therefore, face a significant increase in premiums for several years. 

No, in New Jersey, no-fault insurance is required from all drivers, meaning it’s a no-fault state, not an at-fault state. The main difference between an at-fault state and a no-fault one is how insurers handle claims following an accident. 

Say there’s an accident between two drivers, and they’re both injured. In an at-fault state, the drivers would have to wait to receive insurance benefits until a driver is assigned fault in the accident. Then, the accident victim relies on the at-fault party’s liability coverage to help them pay for their medical expenses and vehicle repairs.

In a no-fault state, when two drivers get into an accident, they can invoke their PIP coverage (or coverage provided by their FPMB) to receive coverage for their medical expenses immediately, regardless of who caused the accident. Then, should a driver require more coverage than their PIP limit offers, the fault shall be assigned, and the victim can receive coverage from the at-fault party’s liability coverage. 

While no-fault insurance is supremely helpful, it can come with some sticker shock. In fact, New Jersey, like most other no-fault states, is one of the country’s most expensive states for auto insurance, partly due to the mandatory PIP coverage. The average full coverage policy in the Garden State costs about $1,900 annually, or about 15% higher than the national average of about $1,670 annually. 

While the cheapest policy in the state may be more expensive than those in other states, binding with one of the state’s top insurers can help you keep your rates below average. Some insurers even offer base rates as low as 45% below the state average.

Yes, since drivers must carry no-fault insurance in New Jersey, the state is considered a no-fault state for car accidents. While the Garden State is a no-fault state, and drivers must carry PIP to cover their medical expenses should they be involved in an accident, vehicle repairs are treated on an at-fault basis instead of a no-fault one. 

All residents in the Garden State must carry a minimum limit of property damage liability coverage so the victim in an accident may invoke the at-fault party’s liability coverage to cover the cost of vehicle repairs following an accident. Drivers with a full coverage policy may opt for collision, comprehensive, or gap coverage to pay for their vehicle repairs, regardless of who’s at fault in an accident. 

In New Jersey, the no-fault law requires all drivers with vehicles registered in the state to maintain a minimum limit of PIP coverage. PIP helps all policyholders cover their medical expenses following an accident, regardless of who’s at fault. All New Jerseyans must have at least $15,000 in PIP on their policies, regardless of what type of policy they have. 

Uniquely, PIP coverage generally follows the driver instead of the car. This means it likely won’t cover the medical expenses for an uninsured driver authorized by the policyholder to drive the vehicle. However, PIP covers the policyholder’s uninsured passengers in the event of an accident. PIP may also cover the policyholder should they be a pedestrian or a bicyclist in an accident with a vehicle. 

Let’s break down some of the defining features of the Garden State’s no-fault law:

PIP is the most expansive coverage a driver may carry for medical expenses. It may cover costs incurred from hospital stays, doctor’s visits, prescription medications, ambulance rides, therapeutic services, diagnostic tests, and other standard medical expenses. PIP may also cover one’s loss of wages (work loss benefits), essential services like child care or home care, or even funeral expenses. 

New Jersey has a no-fault statute for a combination of reasons. Generally, states adopt no-fault laws to mitigate the burden placed on the legal and insurance systems when there are many accidents and claims to process. States with higher-than-average accidents or claims typically have a high population, high population density, or high population of uninsured drivers.

Despite being one of the smallest states in terms of square mileage, New Jersey is one of the most densely populated states in the country. Although the Garden State also has the lowest average number of uninsured drivers in the country, its population density is so impactful that the state required no-fault laws to keep the legal and insurance systems efficient.

Drivers in the Garden State have many adventures to look forward to as long as they maintain an active and adequate auto insurance policy with the necessary no-fault coverage required by law. Whether you’re new to the state, getting a policy for the first time, or curious about increasing your PIP limit, the best way to see all the rates you’re eligible for is to get and compare quotes online. By getting and comparing quotes, you can ensure you’re getting the right policy for your needs and budget.

Luckily, you’re in the right place for quotes. Here at Clovered, we’re quoting experts. We even have a free quoting tool you can use to access your unique quotes in minutes. If you’d like to get in touch with an agent, we have those, too. You can reach one of our licensed agents at 833-255-4117 or [email protected].