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Car insurance rates have been rising in New Jersey and will continue to rise over the next several years, said Gary La Spisa, senior vice president at the Insurance Council of New Jersey. Rising costs will continue to lead to even more uninsured drivers on New Jersey roads.
“The uninsured rate in New Jersey is now much higher because the cost of insurance is now substantially higher,” he said. In 2019, New Jersey had the lowest uninsured rate in the country at just 3.1%, but now the percentage is much higher at 14.1%, though still lower than the national average of 15.4%, La Spisa added.
Let's explore why car insurance rates are rising and how to get the best and cheapest car insurance in New Jersey.
In this article:
Why rates are rising so fast in the Garden State
There are three main drivers behind the increased car insurance costs in New Jersey: legislative changes to the minimum liability insurance requirements, higher replacement costs for parts and vehicles, and an increase in the frequency and severity of accidents.
Reason 1: Legislative increases for ‘standard’ policies
In 2022, the New Jersey Legislature raised the minimum liability insurance requirements on “standard” car insurance policies for New Jersey drivers. This minimum standard coverage pays for the costs of injuries and property damage of another party if you were involved in an accident.
The law raised the limits in two stages — the first effective Jan. 1, 2023, and the second effective Jan. 1, 2026.
Effective Jan. 1, 2023, for standard policies:
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The minimum limits per injury increased from $15,000 to $25,000.
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The minimum limits per accident increased from $30,000 to $50,000.
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The minimum limits for property damage increased from $5,000 to $25,000.
Effective Jan. 1, 2026, for standard policies:
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The minimum limits per injury will increase from $25,000 to $35,000.
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The minimum limits per accident will increase from $50,000 to $70,000.
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The minimum limits for property damage will remain at $25,000.
A significant price increase in the Garden State
When the second stage of increase takes effect in 2026, New Jersey will have the fifth-highest minimum liability insurance requirements in the nation, La Spisa said.
“I think it was all well intended to ensure that liability insurance adequately covered accidents, but it does represent a significant legislatively mandated cost increase,” La Spisa added. “This mostly impacts low-income drivers because most people who purchase minimum limits do so because that's all they can afford.”
How much will ‘standard' car insurance increase?
Based on ICNJ’s estimations, the increased cost for low-income drivers after the 2023 limit increase was roughly $145 per year, and the organization expects that low-income drivers will have to pay at least another $150 a year on top of that when the minimum requirements are raised again in 2026.
New Jersey drivers can also buy a “basic” car insurance policy that is cheaper than the “standard” policy because it provides less financial protection for your assets after you’ve been in an accident.
Reason 2: Higher replacement costs for parts and vehicles
Another factor has been supply-chain issues and high labor costs, said Loretta L. Worters, spokesperson for the Insurance Information Institute (Triple-I). Nationally, car replacement costs are expected to rise by 2.8% in 2025 from the year before, excluding labor costs, and by 3.8%, including labor costs, according to Triple-I data.
“More costly auto repairs are also due to increased technological sophistication in vehicles,” Worters said. “While new technology helps save lives, the cost to repair them is high.”
Reason 3: Increase in severe accidents
Worters said another reason fueling higher car insurance costs is rising accident frequency and severity, which increased significantly after the pandemic. There have also been more fatalities and injuries, leading to increased attorney involvement in claims, she added.
Minimum car insurance requirements in New Jersey
New Jersey is a “no-fault” state, meaning that each driver’s insurance policy covers the costs associated with injuries and damages, no matter which driver caused the accident. The state of New Jersey requires all drivers to purchase the following minimum amounts of “basic” car insurance coverage.
Personal injury protection (PIP)
Personal injury protection (PIP) covers the medical costs of treating injuries you and/or others on your policy have sustained in an accident. The minimum coverage amount for a basic policy is $15,000 per person per accident.
If your personal health insurance adequately covers the cost of injuries sustained in a car accident, you can save money by opting for only what the state requires. However, if you receive Medicare or Medicaid benefits, you cannot rely on health insurance coverage and must use PIP instead.
Property damage liability
Property damage liability coverage pays for the cost of repairing or replacing property that you damaged in a car accident. The minimum coverage amount for a basic policy is $5,000 per accident.
Optional NJ car insurance coverage
Most drivers in New Jersey opt for more car insurance coverage than the state’s minimum requirements. While your insurance premium will rise with the more coverage options you add on, you will generally be better protected and more financially insulated from all costs associated with accidents.
Extra PIP coverage
Drivers in New Jersey have the option to purchase extra PIP coverage that includes payment for lost wages and caregiver costs, and in the case of death, death benefits for the family and payment to cover funeral costs.
Bodily injury liability
If someone is injured or dies in a car accident that you cause — and you are sued by the person or their family and found guilty, bodily injury liability coverage pays for the costs of the damages awarded for pain, suffering, and economic damages, such as lost wages.
Collision
If you damage your own car, collision car insurance coverage will pay the repair or replacement costs. This coverage is available as an option on both standard and basic policies. New Jersey law does not require you to buy this coverage, but if you lease your car or take out a loan to buy it, your lender might require you to purchase collision coverage.
Comprehensive
Any damage that you cause to your car that is not covered by collision is covered by comprehensive car insurance, including costs to repair a broken window or damage from flooding, fire, vandalism, or whether you collide with an animal. Comprehensive also covers the cost of replacing your car if it is stolen. This coverage is available as an option on both standard and basic policies.
Uninsured/underinsured motorist coverage
If you're in an accident caused by another driver who is either uninsured or underinsured, this coverage will pay the medical costs if you're injured and the repair or replacement costs if your car is damaged. If you buy a standard policy, you must choose at least the minimum limits for this coverage, but you can also opt for higher limits. A basic policy does not offer this coverage.
Learn more: How does uninsured motorist coverage work?
Unlimited right to sue vs. limited right to sue
If you want the unlimited right to sue an at-fault driver for “pain and suffering” or non-economic losses, you can choose this option if you buy a standard policy. If you buy a basic policy, you can only have a limited right to sue. You must choose either one and your choice will impact the cost of your car insurance.
These options do not cover suing the at-fault driver for medical expenses — those costs will be paid by your PIP coverage per the limits you request.
Programs and tools only available in New Jersey
The Special Automobile Insurance Policy (SAIP)
One option for low-income drivers, who are also eligible for “Medicaid with hospitalization,” is to buy a Special Automobile Insurance Policy (SAIP). This policy will only cover medical costs, but you can purchase it for just $365 a year, colloquially known as “a dollar a day” policy, La Spisa said.
Most New Jersey insurers will offer this policy after determining whether you are eligible by reviewing your Medicaid ID card. Only people with the number on their card denoting “hospitalization” can buy this policy.
“Both the basic and the SAIP policies have grown in recent years in terms of policy count,” La Spisa said. “More people are buying them, which we think is a side effect of increasing costs, as some low-income drivers are opting for those lower coverages because they've been priced out of standard auto insurance policies.”
The New Jersey Personal Automobile Insurance Plan (PAIP)
If you are deemed to be a “high-risk” driver and you can't obtain coverage from any commercial insurance company, you can purchase a policy from the New Jersey Personal Automobile Insurance Plan (PAIP).
To be eligible, you must meet one or more of these criteria:
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You just obtained your driver’s license.
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You reside in a high-risk area, particularly in urban locations.
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You previously bought a policy from an insurer that covers high-risk drivers.
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You are a young teenager.
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You are aged 70 or older.
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You’ve obtained an SR22 or an FR44 series filing.
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You’ve never had car insurance or had a lapse in coverage.
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You typically pay your bills late and/or you have poor credit.
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You’ve recently incurred traffic violations, such as speeding or DUI.
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You’ve recently caused multiple accidents or car crashes.
Learn more: What is high-risk car insurance, and who needs it?
The New Jersey Auto Insurance Purchasing Planner
The New Jersey Auto Insurance Purchasing Planner is a tool that lets you compare the cost of the coverage options you would like against the cost of the typical policy that a majority of drivers in the Garden State purchase.
To help you determine what best suits you, you will be asked a series of questions to determine your coverage needs and preferences.
The planner then calculates the savings you would obtain if you purchased a policy under the preferences you listed compared to a typical policy. You should print the results and confer with your insurance agent to determine what is right for you.
“Understand auto insurance enough that you can ask a prospective insurer informed questions,” Worters said. “Anyone you speak to should take the time to answer to your satisfaction. Remember, these are the people you'll rely on if the worst happens and you need to make a claim.”
Cheap car insurance in New Jersey
Despite the rising costs, there are still ways to get the cheapest car insurance in New Jersey.
Shop around
Prices differ from company to company, so it pays to shop around.
Worters suggests getting at least three quotes from different insurance companies and different types of insurance companies. She said it’s best to engage with insurers that sell through their own agents, those that sell through independent agents, and those that sell directly to consumers via the phone, an app, or the internet.
“Ask friends and relatives for their recommendations based on their experiences, and do your own due diligence by researching the company before committing,” Worters said.
Keep in mind that the lowest price isn't always the "cheapest" option, she said.
“Make sure the company you choose is reputable and that you're comfortable with the service you get from the insurance professionals you speak to,” Worters added.
The New Jersey Department of Banking and Insurance offers a number of resources to help you shop for car insurance, including the contact information of all car insurance companies in the Garden State as well as the contact information for the various companies that rate each insurer based on the insurer's financial stability and how well they service policyholders and handle claims.
Car insurance discounts
In addition to selecting the types and amount of coverages in your policy, the New Jersey Department of Banking and Insurance recommends you ask insurance companies whether they offer the following discounts to lower your car insurance premium:
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Safety features within your car. You can obtain discounts if your car has anti-lock brakes, airbags, passive restraint systems, and anti-theft vehicle recovery systems.
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Insuring more than one car. Your premium may be reduced if your policy covers two or more cars.
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Multiple policies with the same insurer. If you buy other types of policies from the same insurance company, such as homeowner's insurance, life insurance, or renter’s insurance, you may be able to save on your car insurance premium.
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Being a “good student.” If you are a student in high school or college and your GPA is 3.0 or higher, you can receive a discount from many insurers.
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Completing a defensive driving course. Insurers must offer you a discount if you’ve completed a course approved by the state.
Learn more: Car insurance discounts: 17 ways to save
Customize coverage to your personal situation
La Spisa said another way to save is by choosing an appropriate deductible. If you can afford it, opting for a higher deductible will lower your premium.
It’s also important to only buy the coverages you need while getting the best value for your premium dollar. “This ensures you meet your needs while still protecting your assets,” he said.
The ICNJ is a strong advocate for consulting with agents, La Spisa said. Doing this may improve your chances of ensuring that the policy you purchase will maximize all the discounts, that you will fully understand what you're buying, and that you're not purchasing any coverages that don't make sense for you.
“The expertise that an insurance agent provides is incredibly valuable in a challenging marketplace,” he said.
Car insurance quotes in New Jersey
The amount you'll pay for car insurance in New Jersey is impacted by a number of very different factors — some you can control, like driving safely and improving your credit, and some you cannot, like your age and gender.
While not all companies use the same parameters, here's a list of what commonly determines the bottom line on your car insurance policy:
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Your driving record. Simply put, the better your record, the lower your premium. You may also pay more if you're a new driver without an insurance track record.
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How much you use your car. The more miles you drive, the more chances for accidents. If you commute long distances for work, you’ll pay more.
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Location. Due to higher rates of vandalism, theft, and accidents, urban drivers pay a higher car insurance price than those in small towns or rural areas. However, insurers will discount your premium if you park in a secure garage versus the street or whether your car has anti-theft features.
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Your age. In general, mature drivers have fewer accidents than less experienced drivers, particularly teenagers. If you are a parent, insurers generally charge more if teenagers or young people below the age of 25 drive your car.
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Your gender. Women often pay less than men for car insurance because women tend to get into fewer accidents than men, have fewer accidents while driving under the influence of alcohol or drugs, and have less serious accidents than men.
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The car you drive. If you drive an expensive car that is more prone to theft, you’ll likely pay a higher premium. You’ll also pay more if the model of your car has a poor safety record or if it has a higher chance of inflicting damage when in an accident.
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Your credit. Similar to your credit score, your credit-based insurance score is a statistical tool that predicts the likelihood of your filing a claim and the likely cost of that claim.
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The type and amount of car insurance coverage. The limits on your car insurance coverages, the amount of your deductible, and the types and amounts of policy options all affect how much you'll pay for coverage.
Learn more: What is a car insurance premium, and how is it calculated?
NJ car insurance laws
If you drive a car, you must obtain car insurance in New Jersey. If you don’t, you are at risk of paying fines, having your driver’s license and car registration suspended, and you may even spend time in jail. The state is also adding more penalties in the future, including impounding your car if you drive without insurance.
You can be cited for driving while intoxicated if your blood alcohol concentration (BAC) is 0.08% or greater, though you can be convicted even if your BAC is lower. You can also be cited if you're driving under the influence of drugs or medications that negatively impact your driving.
According to the state of New Jersey, if your BAC is 0.08% or higher but less than 0.10%:
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You will be fined between $250 and $400.
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You will face up to 30 days in jail.
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You will have to forfeit your driver’s license until you install an ignition interlock.
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The interlock must stay on for three months.
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You must participate in the New Jersey Intoxicated Driving Program at one of the state’s Intoxicated Driver Resource Centers for at least six hours a day for two straight days.
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You will have to pay an additional annual surcharge of $1,000 on your car insurance for three years.
You will also face these same penalties if you let someone else drive while intoxicated or under the influence. The penalties increase if your or their BAC is higher than 0.10% or if you’ve had multiple offenses.
If you’re convicted of a DWI/DUI and you drive with a suspended license, be aware of the following:
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You will be fined $500.
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You will face 10 to 90 days in jail.
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Your license will be suspended for an additional one to two years.
Learn more: What’s the difference between DUI and DWI?
If someone is injured in an accident that you cause while driving with a suspended license due to a DWI/DUI, you’ll spend between 45 and 180 days in jail, and your car registration will be revoked.
