What you need to know about New Jersey car insurance laws
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. New Jersey car insurance requirements have recently changed, making it more important than ever for drivers to stay updated. Whether you’re a new driver or looking to renew your policy, understanding these requirements will help ensure you stay covered and compliant. With new regulations in place and more changes on the horizon, 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:
- Drivers must meet minimum coverage requirements: Every driver in New Jersey is required to carry a minimum amount of coverage. 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, requiring 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.
- Every driver has the right to auto insurance: In New Jersey, all drivers are entitled to an auto insurance policy. If denied standard coverage or unable to afford it, drivers can opt for the Basic Policy under The Automobile Insurance Cost Reduction Act. Additionally, those on federal Medicaid with hospitalization benefits qualify for the Special Automobile Insurance Policy (SAIP), which costs $365 per year.
2026 changes to minimum car insurance requirements in New Jersey
Prior to 2023, New Jersey’s required minimum coverage car insurance limits were among the lowest in the nation, so the state decided to increase those required limits in two phases, the first of which 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 that drivers have sufficient coverage to handle the rising costs associated with 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.
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Powered by Coverage.com (NPN: 19966249)
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
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 Jan. 1, 2026. While you can get by on minimum insurance requirements for injury liability and property damage, it may be worth it to buy extra coverage. 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 cause the accident.
For instance, if you run a red light and hit another driver in an intersection, causing $30,000 worth of 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 own vehicle is damaged in the accident, your liability insurance wouldn’t cover any of those 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. Increased coverage not only offers peace of mind but could be a smarter financial decision in the long run. Talk with your insurance agent to find out how much insurance is right for you.
Is New Jersey a no-fault state?
Yes, New Jersey is a no-fault state. 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 are required to 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 comes with heavy consequences, including fines and potential license suspension. After two or more offenses, drivers can also face jail time for driving without insurance.
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 get a higher level of financial protection. 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 if you have a basic policy, collision coverage may not be an option.
- Comprehensive coverage: Comprehensive coverage pays for vehicle damages 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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The best car insurance company in New Jersey is different for every driver. Some drivers want a company with great customer service, some are looking for the best discounts and others are simply looking for the cheapest rate. To find the best car insurance company for your needs, shop around and compare providers based on the factors that are important to you.
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Car insurance companies look at many rating factors when calculating premiums. Your driving record, ZIP code, vehicle and credit score can all impact your rate in New Jersey. Since every driver comes from a unique background, there is not one car insurance company that will be the least expensive for all drivers. However, our extensive research shows that some of the cheapest car insurance companies in New Jersey for many drivers include Selective, Geico and NJM.
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The annual average cost of car insurance in New Jersey as of July 2024 is $2,352 for a full coverage policy and $958 for a minimum coverage policy, compared to the national average of $2,278 for full coverage and $621 for minimum. How much you actually pay for car insurance depends on your rating factors. One of the best ways to ensure you get the cheapest rate possible is to shop around at your renewal.
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New Jersey law requires that insurers provide a paper or electronic New Jersey Insurance Identification Card. The card must contain the insurance company’s name, your name and address, the policy number, its effective and expiration dates, a vehicle description (make, model and VIN), a heading of “State of New Jersey Insurance Identification Card,” the insurance company code and the name and address of the company or office issuing the card.
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In August 2022, Governor Phil Murphy signed Bill S481 into law, which gradually increases the minimum liability coverage drivers in New Jersey must carry on a standard policy. Going forward, drivers in New Jersey must carry bodily injury and uninsured/underinsured motorist coverage with minimum limits of 25/50. In addition to these changes, the property damage liability limit increased from $5,000 to $25,000. For policies renewing on or after January 1, 2026, the minimum limit for these coverages will be 35/70. So far, no additional changes to the increased $25,000 property damage limit have been announced.
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