Navigating car insurance can be a hassle, but it’s essential for staying on the right side of the law and protecting yourself on the road. Whether you’re a new driver or looking to renew your policy, understanding insurance requirements will help ensure you stay covered and legally compliant. Staying informed about your coverage options can help you make the best decisions for your financial security and peace of mind.
Car insurance laws in New Jersey
New Jersey car insurance laws are designed to protect drivers financially and ensure that everyone on the road has adequate coverage. Understanding and complying with these regulations is crucial to avoid penalties and make sure you’re financially covered in case of an accident. Here’s what you need to know about New Jersey auto insurance requirements:
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Drivers must meet minimum coverage requirements: Every driver in New Jersey is required to carry a minimum amount of coverage. These minimums apply to standard coverage, which covers most drivers, though available coverage and requirements may vary for nonstandard and basic policies. As of January 1, 2023, the mandatory insurance minimums are as follows.
- $25,000 bodily injury liability per person
- $50,000 bodily injury liability per accident
- $25,000 property damage liability per accident
- $15,000 personal injury protection (PIP)
- $25,000 uninsured/underinsured motorist bodily injury per person
- $50,000 uninsured/underinsured motorist bodily injury per accident
- Drivers must carry no-fault insurance: New Jersey operates under a no-fault insurance system. The state requires drivers to carry personal injury protection (PIP) to cover medical expenses regardless of who is at fault in an accident.
- Drivers must carry proof of insurance at all times: Proof of insurance must be kept in the vehicle and presented upon request by law enforcement. Both electronic ID cards and physical documentation are accepted as valid proof of coverage.
Bankrate insights
All drivers are entitled to an auto insurance policy in New Jersey. If a driver is denied standard coverage or cannot afford to pay for it, they may opt for a Basic Policy under the Automobile Insurance Cost Reduction Act. Those on federal Medicaid with hospitalization benefits also qualify for the Special Automobile Insurance Policy (SAIP), which offers medical coverage only at a rate of $365 per year. It’s important to note that the Basic Policy includes the Limited Right to Sue option which means that you agree not to sue the person who caused an auto accident for pain and suffering — although exceptions for certain permanent injuries do exist.
2026 changes to minimum car insurance requirements in New Jersey
Before 2023, New Jersey’s required minimum coverage car insurance limits were among the lowest in the nation, so the state decided to increase them in two phases. The first phase rolled out in January 2023. Starting January 1, 2026, New Jersey will implement further changes to its car insurance requirements. These changes are the second phase of a plan designed to increase the minimum liability limits to provide better financial protection for drivers.
As of 2026, the new mandatory minimums for standard car insurance policies in New Jersey will be:
- $35,000 bodily injury liability per person
- $70,000 bodily injury liability per accident
- $25,000 property damage liability per accident
- $15,000 personal injury protection (PIP)
- $35,000 uninsured/underinsured motorist bodily injury per person
- $70,000 uninsured/underinsured motorist bodily injury per accident
The aim is to ensure drivers have sufficient coverage to handle the rising costs of vehicle repairs and medical expenses. However, while these changes are intended to offer greater financial protection, they are also expected to lead to higher insurance premiums.
This may particularly impact low-income drivers who traditionally opt for minimum coverage to keep costs down. It is important for all drivers to review their policies and consider whether their current coverage levels will be sufficient under the new requirements.
Liability insurance in New Jersey
New Jersey’s update to its car insurance law is two-fold: not only did the minimum limits increase in 2023, but they will do so again on January 1, 2026. While you can get by on minimum insurance requirements for injury liability and property damage, buying extra coverage may be worth it. Minimum liability insurance may leave you with substantial out-of-pocket expenses in the event of a significant accident and won’t cover any damage to your own car if you are at fault.
For instance, if you run a red light and hit another driver in an intersection, causing $30,000 in damage to their vehicle, your minimum property damage liability coverage would only cover $25,000. You would need to pay the remaining $5,000 out of pocket. Furthermore, if your vehicle is damaged in the accident, your liability insurance won’t cover any repair costs.
It’s important to remember that the best car insurance policy isn’t necessarily the cheapest one. The idea is to carry enough coverage to ensure that you will not be financially devastated in the event of an accident. Although carrying more insurance than required will likely increase your rate, you can often add significant coverage without spending a fortune. One option is to explore insurance endorsements that you may add to your policy to tailor coverage to your unique needs. Increased coverage can not only offer peace of mind but may also be a smarter financial decision in the long run. Talk with your insurance agent to determine how much insurance is right for you.
Is New Jersey a no-fault state?
Yes, New Jersey is a no-fault state, but it allows drivers to choose between the “unlimited right to sue” and “limited right to sue” options, technically making it a choice no-fault state.
Drivers covered by a Basic Policy agree to limit their right to sue for pain and suffering and other non-economic damage in the event of an accident. However, a driver may be able to sue under basic coverage if they are impacted by a short list of significant losses specified by the state, such as:
- Loss of body part
- Significant disfigurement or significant scarring
- A displaced fracture
- Loss of a fetus
- Permanent injury (any injury shall be considered permanent when the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment based on objective medical proof)
- Death
In a no-fault state, a driver’s insurance company will automatically pay for their medical expenses and lost wages after an accident, regardless of which driver caused the accident. In an at-fault state, the at-fault driver’s insurance company is responsible for paying for the other driver’s medical bills.
Because New Jersey is a no-fault state, drivers must carry personal injury protection (PIP) insurance. The minimum amount of required PIP insurance in New Jersey is $15,000 per person or per accident, but drivers can choose to increase their coverage limits to $250,000 or more.
Penalties for driving without insurance in New Jersey
Driving without car insurance in New Jersey is illegal. Getting caught without insurance results in heavy consequences, including fines and potential license suspension. After two or more offenses, drivers can also face jail time for driving uninsured.
New Jersey also has strict laws around car insurance fraud. Giving false information to an insurance company when filing a claim or applying for a policy can result in jail time, a $15,000 fine for each fraud accusation and license suspension.
Additional auto insurance coverage options in New Jersey
Many drivers in the state choose to purchase coverage beyond the minimum New Jersey car insurance requirements. Adding endorsement coverage to your policy will increase your monthly premium, but you receive a higher level of financial protection as a result. It’s also important to note that New Jersey requires a photo inspection of your vehicle before adding collision or comprehensive coverage, so you’ll need to make arrangements for that if you are purchasing full coverage car insurance.
Here are some of the most common add-on coverage types in New Jersey:
- Collision coverage: Collision coverage will help pay for your vehicle’s damage after an at-fault accident or if you are hit by an uninsured driver. A deductible may apply, and collision coverage may not be an option if you have a basic policy.
- Comprehensive coverage: Comprehensive coverage pays for vehicle damage related to non-collision events, like fire, flooding, theft and vandalism. As with collision coverage, comprehensive may not be an option for those with a basic policy, and a deductible may apply.
- Accident forgiveness: Accident forgiveness will keep your insurance rate from increasing after an at-fault accident. This endorsement usually only applies to your first accident.
- Rental car reimbursement: If your vehicle is out of commission for repairs after a covered claim, rental car reimbursement coverage will help pay for the cost of a rental.
Frequently asked questions
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