Auto Insurance in New Jersey


When it comes to purchasing your auto insurance policy, New Jersey is known for having one of the lowest limit requirements in the United States for bodily injury and property damage coverage. But what’s really unique about auto insurance laws in the Garden State is that the state offers two options for auto owners to comply with minimum auto insurance requirements— standard and basic. Passed as a result of the Automobile Insurance Cost Reduction Act, the options are aimed at providing drivers with fewer obligations and/or assets a way to obtain car insurance more affordably.

New Jersey’s mandatory auto insurance requirements

Automobile insurance is required of every New Jersey driver. These are the three types of mandatory insurance:

  1. Liability insurance.

In the event that you cause an accident, liability insurance pays for damages to the party that is not at fault. Note that it does not cover medical expenses.

  1. Personal injury protection (PIP).

PIP, also known as no-fault insurance, pays your medical costs if you sustain injuries as a result of a car crash. In this instance, it does not matter if you or the other driver caused the accident.

  1. Uninsured motorist coverage.

Uninsured motor coverage protects you if you are in a crash with an uninsured driver.

Two options for coverage – Standard and Basic

Whether you are purchasing an insurance policy for the first time or renewing your current New Jersey auto insurance policy, you will need to make decisions about what coverage you need and how much you are able to afford.

Most New Jersey drivers choose to be covered under a Standard Policy. Standard policy holders can also choose to buy uninsured and underinsured motorist coverage, in order to have higher protections, as well as collision and comprehensive. Discuss with your auto insurance what the best levels of coverage are for you, as many times, the minimum coverage will not fully protect you in the event of an accident.

The Standard Policy requires the following minimum liability coverages:

  • $15,000 – per person, $30,000 per accident
  • $5,000 – property damage
  • $15,000 – personal injury protection (PIP)

Basic Policy Option

  • This does not include bodily injury liability. However, the Basic Policy Option makes available the choice of buying $10,000 worth of optional coverage.
  • $5,000 – property damage liability coverage
  • $15,000 – personal injury protection coverage

Basic – a good option for young drivers

While being insured under a basic policy is often considerably less expensive than purchasing a standard policy, the benefits it provides is very limited. It is not for everyone, but it does provide enough coverage to meet the mandatory minimum auto insurance requirements under New Jersey law.

The basic policy has low coverage amounts, and is designed for the driver with few assets or family responsibilities. For example, it can assist younger drivers who are just beginning to work with basic, minimum protection until the point they are able to afford more comprehensive coverage.

Because of the “two options” choice that New Jersey offers its automobile owners, choosing the proper coverage requires some research and careful planning. For example, if you choose the Standard Policy, a minimum amount of Uninsured/Underinsured Motorist Coverage is required. However, you may need to purchase higher limits if you feel you need more coverage.

Important Note:

If you do not have any bodily injury liability coverage, you are responsible for paying for damages you cause. This can include medical expenses, pain and suffering and loss of wages to the other driver as well as any passengers, in an accident that you cause. Insurance will not pay for an attorney to represent you if you are sued. Your assets will be at risk, including the risk of having money taken out of your wages in the event that a judgment is entered against you.

If you are driving while uninsured and someone else causes an accident that you are involved in, you cannot sue.

Is New Jersey a no-fault or a tort state?

New Jersey is a “no-fault” state. This means that no matter who is the cause of an accident, your medical expenses will be paid for you and your passengers, up to the limits stated in your New Jersey auto insurance policy. Since the Garden State is a “no-fault” state, you are required to carry personal injury protection coverage, otherwise known as PIP.

PIP covers you two ways. It covers your medical costs and it reimburses for other expenses you incur, such as the loss of wages from a job.

Young driver coverage

All licensed drivers in your household need to be listed on your auto policy. Any children of driving age with a license will also need to be listed.

If you have a young driver in your household, find out if your auto insurance company offers any discounts for young drivers, such as the good student discount. In most cases, the young driver needs to maintain good grades throughout the school year in order to continue to receive the good student discount. If they qualify, this can mean significant savings to your auto insurance premiums.

Turning in your license plates

If your vehicle is in storage or is not operable, your license plates must be turned into he New Jersey’s Department of Motor Vehicles.

New Jersey’s average annual premium cost

According to, the 2011 average annual premium for New Jersey auto insurance is $1,663, which is slightly more than the national average of $1561. Note that this is an average; your premiums could differ, depending on how many drivers you have listed on the policy, the number and type of vehicles you are insuring and if you have any previous claims or moving violations.



Insurance Information Institute

New Jersey Department of Banking and Insurance
Tel 609-292-7272
Consumer hotline 800-446-7467

New Jersey Auto Insurance Buyer’s Guide