The Most Affordable Car Insurance In New Jersey

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With its high population density, New Jersey has some formidable traffic, both on parkways and on local streets. As a driver, you want to have the best New Jersey auto insurance coverage to brave that traffic. At the same time, it needs to be affordable.

Today, we’ll dive into the New Jersey car insurance scene by looking at state requirements, average cost, and the best car insurance in N.J. To save you the trouble of scrolling to the bottom of the page, we’ll let you know now that we chose USAA as the best New Jersey car insurance provider. While it does have restrictions, its claims and customer service are hard to beat – and it offers some of the cheapest car insurance in N.J.

In this article:

• New Jersey Car Insurance Requirements
• New Jersey Right To Sue
• Average Cost Of Car Insurance In N.J
• New Jersey Driving Statistics
• Our First Choice For New Jersey Car Insurance: USAA
• Runner-Up For Cheap Car Insurance In N.J.: Progressive

New Jersey Is A No-Fault State

Before we get into the details, we need to let you know that New Jersey is a no-fault state. That means drivers seek compensation for medical bills from their own insurance companies, regardless of who is at fault in an accident. It also means that a driver can file a first-party claim with their own insurance company to cover property damages or file a third-party claim with the at-fault driver.

While most states have insurance requirements, no-fault state requirements are usually different from what at-fault states require. These requirements are also called financial responsibility laws. Many states give you the option to forego insurance if you can prove that you have the means to cover repayment after causing an accident. If you cause an accident without insurance and can’t cover the cost, your license and registration may be revoked or suspended. Many states will also require you to file an SR-22 form, which verifies that you will carry insurance for the next three years.

New Jersey Car Insurance Requirements

New Jersey car insurance requirements are a bit different from other states, so we’re going to cover the basic coverage definitions first:

• Bodily Injury Liability (BI): Covers medical bills and lost wages for other people in accidents that you cause
• Property Damage Liability (PD): Covers damage to other vehicles and property in accidents you cause
• Personal Injury Protection (PIP): Covers your medical bills, lost wages, and death benefits no matter who was at fault
• Uninsured/Underinsured Motorist: Covers damage to your car and medical bills for you and your passengers when you get hit by an uninsured or underinsured driver
• Collision: Covers damage to your vehicle from an accident, whether you were at fault or not
• Comprehensive: Covers damage from events not related to a collision, like fire, hail, flooding, or vandalism

You actually have two options to satisfy minimum coverage amounts for New Jersey auto insurance. The bare minimum is called the Basic Policy, and it is best for people with few assets and minimal family responsibilities. While you technically satisfy minimum requirements with a Basic Policy, New Jersey recommends that you purchase at least a Standard Policy if you are able to. Here’s what the Basic and Standard Policies look like:

Personal Injury Protection in New Jersey also covers up to $250,000 for certain injuries, regardless of the chosen policy limit. This extended limit covers significant injuries like permanent brain damage, spinal cord injury, and disfigurement.

You can see that the main difference between a Standard Policy and Basic Policy is found in the first box – bodily injury liability. While everyone is required to carry PIP to cover their own medical expenses, $15,000 is not much to work with. The extra liability insurance under the Standard Policy can come in handy when you cause a serious accident.

New Jersey car insurance plans also allow drivers to purchase up to $250,000 in PIP coverage. PIP benefits require a $750 deductible, and raising or lowering that deductible will change the total cost of your PIP premium. You can also reduce the cost by naming your primary healthcare provider as your PIP provider.

Finally, each time you file a PIP claim in New Jersey, you’ll also have to make a copayment. The copay amount is 20 percent of the difference between your deductible and $5,000. If that sounds like a headache, it is. For example, let’s pretend you have a $1,000 deductible. You get into an accident and need to file a PIP claim that’s within your coverage limits. First, you’ll pay your $1,000 deductible. Then, you’ll pay a copay that’s 20 percent of $4,000, which is $800. Just for fun, here’s what your PIP expenses would be for different deductible amounts:

While the copay does decrease with a higher deductible, your overall out-of-pocket costs are higher with higher deductibles.

New Jersey Right To Sue

There’s another difference worth mentioning between the Standard Policy and the Basic Policy. Under the Standard Policy, drivers have the Unlimited Right to Sue for both economic loss and pain and suffering. Drivers with a Basic Policy can still sue for economic loss (lost wages and medical bills), but they can only sue for pain and suffering if they experienced a permanent injury.

Average Cost Of Car Insurance In N.J.

Since New Jersey has the highest population density out of the 50 states, you’d expect N.J. auto insurance to be expensive. In fact, it is. However, it’s not the worst. According to The Zebra’s State of Insurance report, Michigan residents pay the highest annual premium, which is $2,693. The same report found that New Jerseyans pay $1,671 on average. Compared to the national average of $1,470, that’s not so bad.

Average prices for the state minimum are $877 per year, while full coverage (100/300/100 liability plus comprehensive and collision) averages $1,782. Notice that the term “full coverage” doesn’t include medical coverage, uninsured/underinsured motorist coverage, or extras like Guaranteed Asset Protection (GAP) insurance. A policy with minimum liability coverage plus comprehensive and collision can cost between $1,360 and $1,490 – depending on your deductible.

To get this data, The Zebra used a profile of a 30-year-old single male with a clean driving record and a 2014 Honda Accord. So, you might find different rates when you apply for quotes. New Jersey car insurance quotes are influenced by many things, such as:

• Your zip code in N.J.
• Age, gender, and marital status
• Driving record
• Years of experience 
• Credit score
• Recent claims
• Type of car you drive and how you drive it

If you find an N.J. car insurance quote that’s below the state average, we’d say that’s a good deal. However, make sure you know exactly what the policy covers, so you aren’t caught off guard later on.

N.J. Auto Insurance Cost Change Over Time

Another thing to know is that the New Jersey car insurance market is never stagnant. Prices can fluctuate over time, and many other states have seen huge growth in premiums over the past 10 years. However, as a New Jersey car insurance policyholder, you’re lucky. The State of Insurance report found that N.J. auto insurance prices only rose 3.28 percent between 2011 and 2018. In contrast, 17 other states experienced increases of 40 percent or more. Ouch.

How To Lower Your New Jersey Car Insurance

The quickest way to lower your own insurance costs without switching companies is to increase your deductible. You can lower your yearly premium by about $200 by increasing a $500 deductible to $1,000. However, make sure you’d be able to pay your deductible if you had to. You might be a great driver, but many other drivers on the road are not.

You might also consider downgrading your coverage, though that’s a risky game. First of all, if you financed your car, your lender requires you to have a certain amount of coverage. That coverage is probably more than the state minimum, and many lenders require you to have collision and comprehensive coverage. Also, do you want to risk a lawsuit? Other drivers can sue you if your policy doesn’t cover all of the damages from an accident.

New Jersey Driving Statistics

The state of New Jersey has almost 39,000 miles of public roads, and its drivers traveled over 77.5 billion miles total in 2018. The state also has about 6.3 million licensed drivers, and there were 278,413 reported crashes in 2018. If we assume that an accident involves two drivers, New Jersey drivers had a 10 percent chance of getting into an accident during the year. Looked at another way, the average driver would experience an accident at least once every 10 years. That might not sound very often, but you never know if an accident will happen today or five years from now.

Our First Choice For New Jersey Car Insurance: USAA

In our research of the top car insurance companies, USAA stood out for its price, customer service, and claims process. We named it best overall, and we think it also offers the best auto insurance rates for New Jersey. Here are a few things we like about USAA:

• USAA has a superior financial rating of A++ from AM Best.
• The company performed very well on J.D. Power’s Claims Satisfaction Study and Insurance Shopping Study.
• It has a Consumer Reports reader score of 92, which is higher than any other New Jersey car insurance company.
• USAA offers other perks like roadside assistance, rental car reimbursement, and accident forgiveness.

USAA is available to military members and candidates in commissioning programs. It’s also available to spouses and children of USAA members who have or have had auto or homeowners insurance. Once a military member signs up for a USAA policy, they can pass on eligibility to their children, grandchildren, and so on.

Runner-Up For Cheap Car Insurance In N.J.: Progressive

We also think Progressive is a great option for New Jersey auto insurance. Progressive came in third place on our ranking of insurance companies overall, earning 4.5 out of 5 stars. Geico performed better in some areas, but we think Progressive offers better car insurance rates to drivers in New Jersey.

Progressive wrote $27 billion in premiums in 2018 and is the third-largest company for private car insurance. It has an A+ rating from AM Best, though it performed average on both of the J.D. Power studies mentioned above.

In addition to standard coverages, Progressive offers coverage options like roadside assistance, loan payoff, custom parts coverage, and insurance for rideshare drivers. The company has some decent car insurance discounts, too. You can lower your rate with the Snapshot app, and you can save $50 toward your deductible for each policy term you have without a claim.

More On Insurance:

USAA Car Insurance: Our Review

The Best Auto Insurance Companies In 2020

AAA Car Insurance Review: All You Ever Wanted To Know

Our Review Of Progressive Car Insurance