New Jersey Car Insurance Laws (2024)

All drivers in New Jersey must carry auto insurance, but there are several options to choose from to make it affordable and customizable to your needs.

New Jersey drivers can choose between two types of policies: basic and standard, and can also select between limited and full right-to-sue options. This means that New Jersey is what is known as a choice no-fault state – drivers can choose no-fault coverage or traditional coverage.

Mandatory Coverage: Basic or Standard

New Jersey offers two types of insurance policies, both of which meet the state’s legal requirements for coverage. The basic policy is the absolute legal minimum that any driver can carry, and comes with a no-fault, limited right to sue option. The standard policy provides more protection and higher coverage levels, and allows the choice between no-fault and traditional right-to-sue options.

The Basic Policy

The basic policy does not come with any minimum bodily injury liability coverage, but instead covers property damage and personal injury. The legal minimums for a basic policy are:

• $5000 in property damage coverage to pay for damage done to property belonging to someone else
• Personal Injury Protection (PIP) of $15,000 with coverage up to $250,000 available for specific types of injuries, to cover you and those covered under your policy in an accident

The Standard Policy

New Jersey’s standard policy comes with more coverage and more options, which results in higher premiums. The minimum coverage available under a standard policy is:

• Bodily Injury Liability coverage of $15,000 for any one person injured in an accident and $30,000 per single incident for all injuries
• Property Damage Liability coverage of $5,000 for damage to the property of others
• Personal Injury Protection (PIP) of $15,000, with up to $250,000 for specific types of serious injuries, to cover you and anyone covered by your policy in an accident

Optional Insurance Coverage

In addition to the legal minimums, both basic and standard policies have available options drivers can add to get more coverage.

Basic Policy Options

Options are more limited with the basic policy, but there are a few that can be added. Not all insurance companies offer comprehensive and collision coverage on basic policies. Available options are:

• Bodily Injury Liability coverage of $10,000 to cover all injuries in an accident
• Collision coverage to pay for damage to your vehicle if you are at-fault in an accident
• Comprehensive coverage to pay for damage from non-collision incidents such as theft, vandalism, fire, or weather damage

Standard Policy Options

A standard policy offers drivers much more in the way of options and choices than does the basic policy. Standard policies allow increased bodily injury and property damage limits of up to $250,000 per person and $500,000 per incident for bodily injury, and $100,000 for property damage. PIP levels can also be increased up to $250,000. Additionally, the following options can be selected on a standard policy:

• Uninsured/Underinsured Motorist coverage with limits matching the chosen liability levels, to pay for injuries or damages cause by a driver who is not insured or whose insurance limits are too low to cover all damages
• Collision coverage to pay for damages to your vehicle in the event that you are at fault in an accident
• Comprehensive coverage to pay for any damages other than collision, including theft vandalism, fire, and weather damage
• Additional coverage options including towing and labor, rental car coverage, and more depending on the insurance company

Choice No Fault Coverage and Right to Sue

New Jersey is a choice no-fault insurance state, which means that drivers can choose whether they want no-fault insurance or traditional coverage. The main difference between the two is the right of drivers involved in an accident to sue.

No-Fault, Limited Right to Sue

With no-fault coverage, the right to sue is limited to very specific injuries or death. Injuries must meet specific requirements in order for drivers to have the right to sue. Suits are allowed for pain and suffering, and non-economic losses. This is the only option if you choose the Basic policy plan.

Unlimited Right to Sue (Traditional)

With this option, you can sue for pain and suffering and non-economic losses in an accident situation, whether or not it meets the state’s guidelines for serious accidents.

In New Jersey, Personal Injury Protection (PIP) covers injuries to you and anyone in your car who is covered by the policy, as well as for economic loss such as lost wages. As a result, lawsuits for these items are not permitted.

It is important to note that anyone who carries a basic policy without the option of bodily injury liability may be sued for damages including pain and suffering and in some cases economic losses. Without liability coverage, the insurance company will not assist in defending the driver against a lawsuit.

Providing Proof of Insurance

Drivers in New Jersey must be prepared to show proof of insurance coverage when asked to do so by a police officer or certain other legal representatives. New Jersey has very strict laws and severe penalties for driving without insurance. Any driver caught uninsured could face:

• One-year driver’s license suspension
• Minimum $300 fine and up to $1000
• Community service determined by the court
• Surcharges on renewals of up to $250 for three years

For a second offense, the penalties are even more severe, with fines of up to $5000, license suspension, and possible jail time.

New Jersey insurance companies submit a list to the state of all policies that have been canceled or non-renewed as well as new and renewed policy information. Drivers with vehicles who show a canceled policy with no replacement will be contacted with a request to provide proof of a new insurance policy or proof of sale or non-operation of the vehicle. During this time the vehicle registration will be suspended for 30 days pending response. After an additional 30 days with no reply, the suspension becomes indefinite and the driver’s license will also be suspended.

Drivers involved in an accident while uninsured face not only stiff penalties but can be sued for pain and suffering and some types of economic losses.

Buying Car Insurance in New Jersey

New Jersey drivers can choose from a large number of car insurance companies and policy options when shopping for insurance. The basic policy option was introduced to help drivers with limited assets and income to obtain a policy, as New Jersey’s average rates rank 14th in the country at $1375 according to a 2017 Insure.com study.

The state has a special plan called the Special Auto Insurance Policy, which is only available to those drivers who are on Federal Medicaid with hospitalization. This policy costs $365 per year and is designed to help those on strict incomes obtain coverage, but is limited only to those who qualify.

Currently, there are no other programs for low-cost insurance, although the basic policy is available to all qualifying drivers to reduce premiums.

High-Risk Drivers

High-risk drivers are those who do not qualify for an auto policy through most insurers due to a problematic driving history, or bad driving record. All insurance companies are permitted to determine which drivers meet their risk level standards and to deny insurance based on driving record. However, New Jersey has a program to assist these drivers.

Those who are unable to obtain auto insurance coverage through traditional means can use the New Jersey Personal Auto Insurance Plan. This system assigns high-risk drivers to an auto insurance company, which cannot refuse to provide a policy under the plan. This system is only for drivers who have tried and failed to obtain a policy and ensures that the risk is spread among multiple insurance companies while still allowing every eligible driver to obtain insurance.

Teen Drivers in New Jersey

Teen drivers in New Jersey pass through a graduated program based on age that allows teens to develop driving skills over time. Each stage has age requirements and restrictions to keep teen drivers safe.

Student Learner’s Permit

This permit can be obtained at the age of 16 and allows teens to drive with supervision while learning. A written knowledge test is required to obtain this permit. During the permit period, the teen driver must complete 6 hours of behind the wheel training with an instructor at an approved driving school. Additionally, the permit has the following restrictions:

• A special reflective sticker must be placed on the vehicles license plates while the teen is driving
• Driving between 11:01 p.m. and 5 a.m. is not permitted, except for specific religious or employment reasons which must be pre-authorized
• A fully licensed driver over 21 with at least 3 years experience must be in the passenger seat at all times
• There can be no more than one passenger other than parents, guardians, or dependents (the driver’s children) in the vehicle
• Use of any electronic device, even hands-free, while driving, is prohibited

Examination Permit

Teens who are 17 years old when obtaining their permit can take the knowledge test for an examination permit rather than a student learner’s permit. After 6 months with this permit, the teen can take the road test for the probationary license. Restrictions on examination permits are the same as those for a student learner’s permit.

Probationary License

After completing the required time with a permit, drivers of at least 17 years old can take the road test for a probationary license. This license allows unsupervised driving, but still carries a set of restrictions.

• A decal must be placed on the car’s license plates at all times
• Driving is not permitted between 11:01 p.m. and 5 a.m., with certain exceptions for employment and religious reasons that must be authorized in advance
• The driver may have only one passenger who is not a parent, guardian, or dependent
• Use of any electronic device, even hands-free, is not permitted

Basic License

After one year with a probationary license, teen drivers who are at least 18 years old may pay a fee to graduate to a full, basic license. At this time all restrictions are lifted.

All teen drivers in New Jersey must comply with insurance laws as soon as they receive a probationary license. Parents or guardians can insure the teen driver on their policy for as long as the driver lives at home as well as during time spent away at school. Once the teen driver moves out and establishes a residence, he or she will be responsible for meeting legal requirements. The basic policy can help teen drivers to obtain the legal minimum at reduced auto insurance rates.