Car Insurance in New Jersey

A handful of online quotes saved me $466.

I’ve got bad news and I’ve got good news. New Jersey’s high population density and no-fault system drives monthly auto insurance premiums $40 above the national average — that’s the bad news. The good news is with a little bit of research, you can find the policy that’s right for you and save hundreds in the process.

I got quotes for New Jersey’s minimum coverage with five different companies and found that prices varied as much as $466. GEICO was the best option for cheap car insurance option for me (and my driving record), but it might be a different story for you. Quotes are highly personalized, so it’s impossible to say one company is the absolute best for everyone.

Insurance rates are based on algorithms that calculate your individual risk as a driver. That risk profile includes driving specific data like the make and model of your car and you driving record, but it also includes personal factors that are less directly related to your driving record, including your age, your credit score, and your zip code. Even if you know the risk factors that you’re triggering, it’s not easy to predict which company will be the cheapest; every insurance company uses its own formula that weights those factors differently. The only way to find the best company for your particular scenario is to get at least five quotes and compare them.

The key to getting the most out of your premium dollars is to comparison shop among insurers. Before you start shopping, consider what insurance coverage you need, then compare how much the same coverage would cost from several insurers. Comparison shopping takes time, but the effort may result in a lower premium since different companies charge different rates for identical products and services. — New Jersey Department of Banking and Insurance

Really, getting a quote isn’t as big of a fuss as it’s often made out to be. Most of the national companies let you get an online quote in less than five minutes, but if you have to call for a quote, know it’ll add 10 to 15 minutes to the process. If you don’t know your annual mileage or the details of any accidents you’ve had in the last five years, look that up before getting started. Otherwise, it’s as simple as clicking a few buttons and checking some boxes. Personally, I put on a podcast and by the time it was over, I’d already finished getting my quotes.

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Our Top 5 Picks for the Best Car Insurance in New Jersey

I began my search with five companies I picked for their top-shelf customer service and financial ratings. These factors are incredibly important because they speak to each company’s ability to actually pay out on claims and handle them swiftly and effectively. Who wants to be stuck in a quabble with their provider in the heat of an accident?

Insurer My quote
GEICO $365
Progressive $442
Allstate $592
Travelers $674
State Farm $831

Specifically, I required an “excellent” or “superior” financial stability grade from A.M. Best, a top financial strength rating agency, and high customer satisfaction ratings from J.D. Power, a global leader in customer satisfaction surveys.

If you’re not against slogging through a giant table, another way to approach finding the cheapest company for you is to use New Jersey’s auto premium comparison tool. To start you pick a risk profile that’s similar to yours from a few driver profiles, then enter your zip code, and it pops you over to a table full of estimates. The data is from 2014, and there weren’t any profiles that were very similar to mine, so I didn’t find it very accurate in my scenario, but if you do match one of the profiles, you could easily target the absolute cheapest companies. The state also maintains a complaint report that tallies the number of complaints a company gets each year compared to other insurers. It’s another helpful way to determine if your insurance company is going to be there for you when you’re working through the claims process.

Of the five quotes, GEICO was my best car insurance option. At $365 a year, it’s nearly $80 less than my next-best policy. Even that second-best rate from Progressive is a steal compared to the $831 State Farm wanted to charge me. With such a difference in price, I can purchase significantly higher coverage from GEICO and still pay less than State Farm’s rate for minimum coverage. In my opinion, it’s definitely worth investing in better coverage before paying more for the exact same plan.

Even If You’re Happy, It’s Best to Shop for a New Policy Every Couple of Years

Auto insurers don’t just care about risk when calculating rates anymore; they also consider how likely you are to leave them for another company. They’ve got big data, that includes information on your online shopping habits, how long you’ve been with your cellular carrier, and even your social media activity, on their side. And they’re using it not only to determine your individual risk (or how much they’re likely to pay out on your behalf), they’re gauging the likelihood that you’ll apply for quotes somewhere else. That’s what they call the “price elasticity of demand.” In other words, it’s how willing you’d be able to stretch and pay more. They use the data to charge you as much as they think you’re willing to pay — a process called price optimization. If they don’t expect you to shop for a better deal, they’ll sneak a few extra dollars into your monthly premiums. Loyal customers are likely not getting rewarded for their loyalty; they’re often taken advantage of because they’re less risky to dabble with than people who frequently apply for quotes.

It is important to remember that you have the right to change your coverages and policy limits at any time, even if you are not near your renewal date. — New Jersey Department of Banking and Insurance

Insurance companies want to maximize their profits, but they also want to keep your business. So if they fear you’re going to move to a competitor, they won’t take the chance of hiking your rates. It’s smart to shop around at least every year or two, if only because it prevents you from being marked as someone willing to pay a higher rate.

More than a dozen states have outlawed price optimization, saying that the use of non-risk related data in ratemaking results in unfair discrimination. However, New Jersey hasn’t yet followed suit. For now, it’s up to you to make sure you’re not being charged more than necessary simply because your company has data to show you’re not averse to a price increase.

New Jersey’s Minimum Coverage

The Bare Minimum

New Jersey structures its auto insurance policies differently than most other states. Residents have a choice between a Basic or Standard policy. The Basic policy is cheaper, but provides limited coverage. You must have at least $15,000 of personal injury protection, with a limit of $250,000 for serious injuries, and $5,000 of property damage liability coverage.

The Standard policy requires bodily injury liability coverage of $15,000 per person and $30,000 per accident, plus $5,000 of property damage liability coverage. It also requires uninsured motorist coverage of $15,000 per person and $30,000 per accident as well as personal injury protection in the same quantities required by the Basic policy. If you chose a Basic policy, it’s likely to be cheaper, but it also requires that you relinquish your unlimited right to sue if you’re involved in an accident; you’ll be able to sue for medical bills and lost income, but you’ll only be able to sue for pain and suffering in cases of particular and severe injuries.

New Jersey also offers a Special Auto Insurance Policy (SAIP) for individuals who are eligible for Federal Medicaid with hospitalization. This is a limited policy that costs only $365 a year, but only covers only medical expenses that result from a car accident. It doesn’t cover damages to any property involved in the accident — your car or the other driver’s car.

The Best Car Insurance Isn’t Just Cheap Car Insurance

The state minimums are so low that I recommend purchasing a higher coverage limit if you can reasonably afford it

Here’s why:

The average driver files a claim for an accident every 17.9 years and the average cost of a disabling, nonfatal injury is $80,700.

If you get into a serious accident and you only have the minimum coverage, you’ll be left with a $65,000 bill after your insurance has paid its portion. You’ll likely be sued for the rest and end up emptying your bank account to pay for the damages.

That’s a scenario no one wants to end up in, so it’s better to go with higher coverage limits if you can. To raise my liability coverage to $100,000/$200,000/$100,000 only raises my rates with GEICO to $432 — just $67 more per year than what I’d pay for minimum coverage. That’s $6 a month or so and over 18 years only hits $1,206. That’s pocket change compared to the $65,000 in damages I’d be liable if I got into an accident.

If You Skip Coverage, It’ll Cost You

New Jersey is tough on uninsured drivers and if you get caught, you’ll wish you’d just paid the premiums. A first offense will earn you a fine of somewhere between $300 and $1,000, plus suspension of your driver’s license for one year. You’ll also be sentenced to some period of community service, as determined by the court. Repeat offenders can face up to $5,000 in fines, a two-year suspension of their license, 30 days of community service, and 14 days in jail. The Basic policy was introduced to make it more affordable to get enough coverage to be legal.

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Beat the Average Premium: 9 Ways to Snag Cheap Car Insurance Rates

Dozens of factors influence your insurance premiums, but there is actually plenty you can do to shave off a few dollars here and there. Take a look at our lists of factors that affect your premiums and see what else you can do once you have a cheap quote in hand.

Nine Ways to Lower Your Car Insurance

FAQs

Why are New Jersey’s rates the way they are?

What to Expect
Average Monthly Premiums
United States $139
New Jersey $179
Newark $201
East Orange $200
Union City $187
Paterson $187
Elizabeth $187
Passaic $182
Clifton $179
Jersey City $178
Bayonne $173
Camden $169
Trenton $150
Vineland $145

New Jersey’s auto insurance premiums are 23 percent above the national average, partly because it has the highest population density of any state in the country. This means more people living in closer quarters, and to insurers, that translates to a greater risk of accidents.

One study also found New Jersey to be one of the most expensive states for auto repair. In the event of a claim, insurers are going to have to pay more in New Jersey than they would for a similar claim in a less expensive state. The insurance companies pass that extra expense along to drivers in the form of higher monthly premiums.

New Jersey’s no-fault auto insurance system also contributes to the high rates. Under this system, claims are handled by your own insurance, regardless of who was at fault in an accident. This approach was intended to reduce auto insurance premiums, although in practice, rates in no-fault states are higher than in tort states.

Only 12 states in the nation have no-fault systems and only three — including New Jersey — have choice no-fault systems, enabling consumers to choose if they want that coverage or the more traditional tort insurance. The limited tort (no-fault) option is cheaper, but it also limits your ability to sue for damages. You always retain the ability to sue for medical bills or lost income, but you give up your right to pursue damages for pain and suffering. The full tort option enables you to retain that right, but only you can decide if that’s worth paying extra on your monthly premiums.

Your Rights in New Jersey

From the New Jersey Department of Banking and Insurance

  • Agents, brokers and companies must inform you of your coverage options when applying for a new policy, or at any time upon your request if you are already insured.
  • You have the right to know how each choice may affect what you pay and what your benefits would be in the event of an accident.
  • You always have the right to ask about additional options.
  • You can shop for auto insurance at any time — not just when your policy is up for renewal, and if you find a better price, you can cancel your old policy and seek a refund of your unused premium.
  • You have the right to change your coverages and policy limits at any time, even if you are not near your renewal date. If you select options that save you money, you have a right to a refund of your unused premium within 60 days.

The Bottom Line

No one company provides the best car insurance for everyone. It’s a fact. The only way to find the right fit for you is to get quotes and compare their prices and coverages. I know it sounds like a lot of legwork, but it doesn’t have to be. I found almost $500 in savings and thanks to a little bit of preparation, it took less than 30 minutes.

Get Quotes Now

Enter your zip code to compare rates from some of my top recommendations.

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