New Jersey car owners have a choice between two types of NJ auto insurance policies: basic or standard. The basic option is the cheapest car insurance in NJ, but offers limited coverage. The standard policy costs more, but provides sufficient coverage.
The average car insurance rate in New Jersey is $1,239 a year. The severity and frequency of claims in your neighborhood, your driving record, the type of car you drive and other variables are used by insurance companies to figure out the cost of your policy. That’s why the price for the same coverage can vary significantly among insurance companies — and why you should compare rates. For example, drivers in Newark ZIP code 07102 can save $678 by shopping around. That’s because the highest rate among six carriers is $2,108 for that neighborhood, compared to $1,430, the lowest. When shopping for car insurance, use our average car insurance rates tool to compare rates. Enter a ZIP code to see the average premium for your neighborhood. You will also see the highest and lowest rates from the six major carriers surveyed to get an idea of what the most affordable car insurance price is in your area.
Cheap car insurance in New Jersey
New Jersey car insurance requirements for basic coverage
State law requires the following coverages:
Minimum property damage liability
Personal injury protection (PIP)
The basic policy, which is the cheapest car insurance in NJ, meets only the minimums needed to drive legally in the Garden State. Though you can drive with a basic policy, they are hard to find, as most insurance companies only issue standard policies. A basic policy consists of:
Property damage liability coverage of $5,000. Covers, up to your limits, damage you cause to other cars or property.
Personal injury protection (PIP) of $15,000 per person, per accident. Pays for medical expenses for you and your passengers and those you give permission to drive your car. It also covers you and your family members if you are injured while riding in someone else's car or if struck by another vehicle while on foot. PIP is sometimes called “no-fault insurance” because it kicks in regardless of who is at fault.
The basic NJ car insurance policy covers your own injuries and a small amount of damage to other cars you hit, which makes it suitable only for those who have little savings or few other assets. There is an option to add $10,000 in bodily injury liability, but uninsured motorist coverage is not available. Your right to sue for pain and suffering is limited to severe or permanent injuries.
Standard NJ auto insurance
For most drivers, we recommended New Jersey's standard policy, as explained below.
Bodily injury liability of at least $15,000 per person, up to $30,000 per accident. This pays, up to your policy limits, for injuries that others receive in an accident caused by you or other drivers listed on your policy. If you have substantial savings, a home or a business, you should raise those limits even higher.
Property damage liability of at least $5,000. Covers damage to other’s property and cars. This can be raised, and should be.
PIP of $15,000 per person or accident; this can be raised as high as $250,000.
Holders of a standard NJ auto insurance policy can choose between the limited right to sue and the unlimited right to sue. The unlimited option means you retain the right to sue for pain and suffering over any injury.
With both the basic and standard New Jersey car insurance policy, your medical bills and lost wages are paid up to your limits by your PIP coverage and then by any bodily injury liability claim or lawsuit brought against the at-fault driver.
Regardless of the limit you have chosen, PIP will pay up to $250,000 for certain severe injuries, such as damage to the spinal cord or brain.
It does cost more to buy more protection, but as you’ll see in the chart below, it usually isn’t cost prohibitive. Increasing your insurance from the state minimum to full coverage with a $1,000 deductible costs, on average, $1,291 more, or $108 a month.
Average annual rate
Liability Only – state minimum
Liability Only - 50/100/50 BI/PD
Full Coverage - 100/300/100 BI/PD $1,000 Comp/Collision deductible
Full Coverage - 100/300/100 BI/PD $500 Comp/Collision deductible
Full Coverage - 100/300/100 BI/PD $250 Comp/Collision deductible
*The table shows the average annual rate of 10 ZIP codes in the state from the following carriers, in no particular order: Progressive, Allstate, State Farm, Nationwide, GEICO and Farmers. Data was provided for CarInsurance.com by Quadrant Information Services.
Recommended car insurance coverage
The cheapest car insurance in NJ may not be the best car insurance for your particular situation.
We recommend you buy more insurance than is required to legally drive a car in your state, especially if you have savings and assets. The more money you have, the more likely you are to be sued following a car accident should your insurance be insufficient to cover all the expenses. If your net worth is:
less than $50,000, choose at least 50/100/50
between $50,000 and $100,000, choose at least 100/300/100
more than $100,000, choose at least 250/500/100
If you're leasing or financing your car, you must get coverage of 100/300/100 or higher.
Collision and comprehensive
Collision pays for damage to your car from an accident. The average annual cost for collision coverage in NJ is $356, according to the Insurance Information Institute. Comprehensive pays to replace stolen cars and for damages to your car from theft, fire, flood waters, hail, animal strikes, falling objects and vandalism. The average annual cost for comprehensive coverage in NJ is $118, according to the III. These are optional coverages.If your car is:
less than 10 years old, you should strongly consider buying collision and comprehensive.
more than 10 years old, only buy collision and comprehensive if your car is worth $3,000 or more, if you couldn’t afford to replace your car if it’s wrecked, or if you just want more protection on your policy.
These coverages are required in New Jersey and should match the liability limits you choose. Uninsured motorist coverage and underinsured motorist coverage pays for damages if you’re hit by a driver with no insurance or a driver with coverage that’s insufficient to pay for your repairs and medical expenses.
Medical coverage (MedPay)
Medical payments coverage can help pay for the medical or funeral expenses of covered drivers and passengers after an accident, regardless of fault, up to $25,000. New Jersey requires you to carry PIP, so MedPay isn’t a must-have coverage. MedPay is an optional addition to your car insurance policy. MedPay does the following:
Covers you and your passengers’ medical expenses
Pays for expenses after health insurance limits are exceeded
Offers additional protection to insured drivers who are hit by a car while walking or biking
If you and your passengers:
Don’t have health insurance, or have a plan that doesn’t cover car accidents or has low limits, we recommend that you add medical coverage of at least $5,000 to your car insurance policy.
Do have health insurance, it’s still a good idea to have medical coverage if you want the best protection in your policy, as it can pay out after your health benefits are maxed out.
If you don’t own your car outright and have an accident, gap insurance pays the difference between the cash value of your car and the current outstanding balance on your loan or lease.
If you’re financing your car, your car is less than one year old and you’ve put less than 20 percent down on it, you should buy gap insurance. If not, you don’t need gap insurance.
If you’re leasing your car, it’s a good idea to buy gap insurance if you aren’t already required to in your lease agreement.
If you own your car outright, you don’t need gap insurance.
Car insurance companies in New Jersey
Scores are based on Insure.com’s “Best Insurance Companies” customer review survey of 3,700 customers. Companies not in the top 10 of market share do not qualify. All scores are out of 100.
Best car insurance companies in New Jersey
Best customer service:
USAA -- 100
Allstate – 91.8
Travelers – 90.6
Geico – 88.7
Best claims service:
USAA – 100
Travelers – 97.5
Liberty Mutual – 96
Progressive – 92.5
Best value for the price:
USAA – 91.3
Travelers – 88.8
Progressive – 86.3
State Farm – 84.6
Geico – 88.1
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Largest car insurance companies in New Jersey
Direct premiums written
Market share %
Overall Customer Review Ranking
NJM Insurance Group
Allstate Insurance Group
Progressive Insurance Group
State Farm Group
Liberty Mutual Insurance Companies
Farmers Insurance Group
Source: A.M. Best market share rankings are based on direct premiums written in 2015.
Customer review rankings based on Insure.com's 2016 "Best Insurance Companies" survey of 3,700 customers. Scores out of 100.
New Jersey car insurance laws and resources
If you are cited for speeding, points will be tacked on your license as follows:
1 to 14 mph over limit – 2 points
15 to 29 mph over limit – 4 points
30 mph or more over limit – 5 points
Typically insurers review your driving record upon renewal, and will raise your rates if you have a speeding ticket. This higher rate typically lasts for three years. A speeding ticket in NJ will raise your rates, on average, by 27 percent, according to our analysis of rates based on Quadrant Information Services data.
NJ Points and surcharges
New Jersey uses a point system to record driving infractions. You can review a list of all the New Jersey points for citations online. If you get six or more points within three years on your driving record, you will be assessed a surcharge. This means you’ll be fined $150 plus $25 for each additional point for three years.
If you get 12 or more points on your record, your license will be suspended. You will receive a suspension notice by mail.
Getting points on your license may also increase your insurance rates. Insurers typically review your record upon policy renewal and may hike your premium if you have a moving violation.
The SAIP program is designed to help low-income drivers afford limited car insurance coverage. If you are currently enrolled in federal Medicaid with hospitalization you qualify for SAIP. A policy through SAIP costs $365 a year and covers:
Emergency treatment immediately following an accident
Treatment of serious brain and spinal cord injuries up to $250,000
It also provides a $10,000 death benefit
For help purchasing a SAIP policy, call the customer service number at 1-800-652-2471.
Eligibility points in NJ
Auto insurance companies assign motorists eligibility points for traffic violations, at-fault accidents and suspensions. Also, newly licensed drivers, regardless of age, are assigned three "inexperience" eligibility points. For each year of experience the driver gets, one point is removed. To be considered for the voluntary insurance market in New Jersey, you need to accumulate fewer than seven insurance eligibility points in the preceding three years.
To drive legally in New Jersey, you must have Personal Injury Protection (PIP) and property damage liability insurance with at least limits of:
15 / 5
Personal injury protection limits of $15,000, to cover you, your passengers and authorized drivers who are injured while in your car, and property damage liability of $5,000, to pay for damage to other cars and property.
*Bodily injury liability, uninsured/underinsured motorist bodily injury coverage and uninsured motorist property damage coverage is not required by New Jersey state law, but is required by most insurance carriers.