Auto insurance for New Jersey drivers is essential. Not only is it critical to protect you and others in the event you are involved in a motor vehicle accident, but it is also required by state law. NJ car insurance law dictates all drivers in the state have a policy and that it provides a certain level of coverage, referred to as minimum car insurance policy limits. Car insurance policy limits in NJ are soon to be subject to a new law and higher minimum limits. We’re here to explain it to you.
Vehicle Insurance Coverage Explained
Car insurance in New Jersey provides protection against three distinct types of costs or damages if you are involved in an automobile accident:
- Property coverage pays for damage to, or the theft of, your car.
- Liability coverage pays for your legal responsibility to others for bodily injury or property damage sustained in an accident.
- Medical coverage pays for the cost of treating injuries, rehabilitation, and sometimes lost wages and funeral expenses in the event of an accident.
New Jersey auto insurance accounts for different types of liability coverage as well, including:
- Bodily Injury Liability (BI) covers costs associated with injuries that you, as the designated driver or policyholder, cause to someone else. It does not cover damage to your vehicle, or to you or other people on your policy. In most states, basic auto insurance must cover injury liability.
- Property Damage Liability (PD) covers you, or someone else driving your car with your permission, if the car damages someone else’s property. It also provides you with legal defense if another party files a lawsuit against you.
- Medical Payments (MP) or Personal Injury Protection (PIP) coverage are no-fault options that provide medical expenses to you and any of your passengers injured in an accident.
- Uninsured and Underinsured Motorist (UM or UIM) coverage reimburses you if you are hit by an uninsured or hit-and-run driver, or when an at-fault driver has insufficient insurance to pay for your total loss. This decreases the financial burden of repairing your vehicle, even if the at-fault driver is uninsured.
- Collision coverage pays for damage to your car sustained when your car hits, or is hit by, another vehicle or other object. While it is not required by most states, a lien holder may require it if you lease or finance the purchase of your vehicle.
- Comprehensive coverage pays for damage sustained to your vehicle, and sometimes other vehicles you may be driving, for losses from incidents other than collision. This coverage is also not required by most states, but a lender may insist that you carry it until your loan is paid off.
All drivers in New Jersey are required by law to carry a policy that covers liability and PIP that meet car insurance policy limits in NJ, while the others are options to add to your policy.
Changes Coming to Car Insurance Policy Limits in NJ
New Jersey Governor Phil Murphy recently signed a bill into law that will increase minimum auto insurance coverage limits in NJ, placing an estimated 1.1 million drivers (1) in the state in a position to pay more to meet the new auto policy coverage limits taking effect in 2023.
What is the minimum auto insurance coverage in New Jersey? Currently, a New Jersey basic auto insurance policy must provide at least $15,000 in coverage. In the new year, car insurance policy limits in NJ will require $25,000 minimum coverage, $50,000 coverage for accidents when multiple people are hurt, and $25,000 per incident for property damage. Car insurance liability coverage limits will increase again to $35,000 with $70,000 minimum coverage required when more than one person is hurt beginning in 2026. A driver currently paying for the minimum car insurance required in NJ will likely pay $120 to $130 more a year until the 2026 increase (1). The law also requires insurance providers to notify their customers if their policy no longer complies with the requirements and gives them the ability to automatically adjust customer car insurance policy limits.
Proponents of the new car insurance policy limits believe the changes will more properly support people who are injured in vehicle accidents. The average settlement for accidents that cause injury is around $18,000, $3,000 more than current car insurance policy limits in NJ cover (1).
Opponents of increasing the minimum car insurance requirement in NJ worry the change will add an extra burden to NJ drivers at a time of high inflation and economic uncertainty and it will disproportionately negatively impact low-income individuals and families.
At Hanson & Ryan, the lowest auto liability coverage limits we offer include a $100,000 minimum coverage, $300,000 coverage for accidents when multiple people are hurt, and $100,000 per incident for property damage, well above the new car insurance policy limits in NJ. We understand the desire to save money with cheap liability car insurance in NJ, but we stress to our customers that it is not worth the risk. Raising car insurance policy limits in NJ helps all drivers, not only the ones with increased coverage. Drivers who already carry sufficient coverage have less to worry about knowing they are better protected in the event they are involved in an accident with someone who carries a policy with the minimum car insurance policy limits in NJ.
Trying to make sense of your automobile coverage options and car insurance policy limits in NJ can be overwhelming and confusing. But we are here to help. At Hanson & Ryan, we have been working in the insurance industry for over 140 years, gaining a comprehensive understanding of all elements that encapsulate auto insurance coverage. Contact us today to get started.
(1) https://www.nj.com/politics/2022/08/at-least-11m-nj-drivers-will-pay-more-for-auto-insurance-next-year-heres-what-you-need-to-know.html