What you need to know about car insurance in New Jersey

The Garden State has a higher cost of living than most states, so it's no surprise that car insurance tends to be expensive, too. Liability car insurance that meets the state’s minimum coverage requirements costs $853 per year on average, $350 more than the national average. Full coverage car insurance is less costly by comparison, averaging $1,902 annually or less than $10 more than the U.S. national average.

What you pay for car insurance in New Jersey will vary, but one thing is likely regardless: Premiums won’t be decreasing anytime soon.

"[Like other parts of the country] we also are experiencing an increase in the severity of claims due to an increase in the costs of auto parts, a shortage of materials, and a deficit of skilled labor," said Christine O'Brien, president of the Insurance Council of New Jersey. "Severe weather events and risky driving behaviors also are affecting premiums, as well as the surge of lawsuit abuse."

New Jersey's car insurance minimum requirements are lower than those of most states, yet liability coverage, in particular, can still be quite pricey. Affordable car insurance can be found, however, if you are diligent in pursuing discounts, comparing prices, and being a responsible driver.

Key highlights

• New Jersey drivers must maintain liability insurance coverage of at least 15/30/5, which is low even by state minimum standards nationwide.
• Average annual rates in the Garden State range from $853 for a bare-bones liability policy to $1,902 for full coverage.
• In New Jersey, insurers can take credit history into consideration to determine premiums. Drivers with poor credit pay more on average for insurance than those with good credit.

Understanding car insurance requirements in New Jersey

As in nearly all states, New Jersey law requires residents to have a minimum amount of liability car insurance in order to drive legally. However, New Jersey's coverage minimums are lower than those of most states; drivers are only required to carry the following coverage levels:

• Bodily injury liability, per per, per accident: $15,000
• Bodily injury liability, per accident, total: $30,000
• Property damage liability, per incident: $5,000

These coverage minimums — written as 15/30/5 — will not be adequate if you are involved in a major at-fault accident. Experts recommend carrying liability coverage limits of 50/100/50 or 100/300/100 if you can afford it.

If you own a newer vehicle, you may want to consider full coverage car insurance, including collision and comprehensive insurance to protect your investment. If you’ve financed or leased that auto, you will also be required to carry gap insurance.

Average cost of car insurance in New Jersey

When it comes to the cost of living, New Jersey is one of the most expensive states in the U.S. Unsurprisingly, car insurance tends to be costlier in the Garden State, too. The average cost of a liability-only policy that meets the state’s minimum coverage requirements is $853 per year or $71 per month. That’s about 41% above the U.S. average.

Full coverage car insurance isn’t quite as expensive by comparison. The average cost of a policy in New Jersey is $1,902 annually or $159 monthly. That’s less than 1% more per year than the national average.

The rates below were collected from auto insurance comparison site CarInsurance.com for single, 40-year-old male and female drivers of a 2023 Honda Accord LX with a good insurance score and no violations on their record for full coverage insurance policy with liability limits of 100/300/100 and a $500 comprehensive and collision deductible.

How to find cheap auto insurance in New Jersey

The cost of car insurance in New Jersey can be considerably more expensive than the national average, especially if you have liability-only coverage. But there are some simple strategies you can use to find cheap auto insurance in the Garden State:

• Contact your agent. A licensed representative can tell you about available car insurance discounts you may not be currently getting, such as bundling your auto and home, condo, or renter’s insurance or (if you drive infrequently) switching to a low-mileage car insurance policy.
• Complete a defensive driving course: Drivers who complete an approved in-person course or online course can qualify for a premium deduction for up to three years if you enroll in a safe-driver program. In exchange for agreeing to have your driving habits monitored by a phone app or in-car telematics device, you may be able to save even more.
• Find out if you qualify for the Special Automobile Insurance Policy (SAIP): Drivers who are eligible for federal Medicaid with hospitalization may qualify for SAIP, a low-cost car insurance policy that costs just $365 per year.

Car insurance rates, by company, in New Jersey

Rates can vary significantly by insurer. NJM, a regional carrier, has the cheapest average rate for full coverage car insurance in New Jersey: $1,318, or 31% lower than the state average. By contrast, Allstate was the most expensive insurer in the state, with full coverage policies averaging $2,294 per year.

Comparing car insurance quotes in New Jersey

In New Jersey, several factors affect your rates, including where you live. For example, drivers in Newark, the Garden's State's largest city, pay $2,641 per year for full coverage policies, about $700 more than the state average.

Your age matters, too. Teen drivers, who are statistically more likely to be involved in serious accidents than other drivers, pay more than three times the state average for insurance, or $6,557 annually.

New Jersey car insurance cost by city

Densely-populated areas and cities with higher incidence rates of property theft tend to have higher premiums than other areas. Not surprisingly, Newark drivers pay more than residents in other parts of New Jersey, $2,641 annually on average. The nearby cities of Elizabeth and Passaic also have high average yearly rates, $2,576 and $2,554, respectively

Frequently asked questions

How can I save on car insurance in New Jersey?

There are several ways to save money on your New Jersey car insurance premiums, including but not limited to the following:

• Increase your deductible: Your car insurance deductible is how much you must pay for repairs or damages after an accident. The higher your deductible, the lower your premiums will be.
• Boost your credit: New Jersey insurers can use your credit history to determine your car insurance rates. Improving your credit by paying down debt and making your payments on time can help you qualify for the best possible rates.
• Enroll in usage-based insurance: If you drive fewer-than-average miles per year, signing up for pay-per-mile coverage could allow you to save hundreds each year. In New Jersey, many companies offer usage-based insurance policies, including NJM, Mercury Insurance and Plymouth Rock.
• Adjust your coverage: If you have an older vehicle that would be inexpensive to replace, you could save money by switching from full coverage to a liability-only policy.

"Dropping comprehensive or collision coverage may be a consideration if you can afford to pay to repair or replace your car on your own, especially if it’s an older vehicle," said O'Brien. "In that case, the cost of comprehensive and collision [coverage] may be more than the value of the car."

Is New Jersey a no-fault state?

Yes, New Jersey is one of about a dozen no-fault states. If you're in an accident and you're hurt, regardless of who was at fault, you must file a claim with your own insurer to receive compensation. Neighboring New York is also a no-fault state.

Methodology

Editors collected rate information from auto insurance comparison site CarInsurance.com for single, 40-year-old male and female drivers of a 2023 Honda Accord LX with a good insurance score and no violations on their record for full coverage insurance policy with liability limits of 100/300/100 and a $500 comprehensive and collision deductible.

In addition, we also calculated rates for these hypothetical drivers, but with one or more of the following on their record: speeding ticket, at-fault accident, DUI/DWI, poor credit history, or a lapse in coverage.

We analyzed more than 53 million quotes, over 34,000 ZIP codes, and 170 insurance companies nationwide.

Note: 100/300/100 means up to $100,000 for the medical bills of those you injure, up to $300,000 per accident for bodily injury liability for all persons injured in one accident, and $100,000 to repair other drivers’ cars and property you damage.