Car insurance rates in New Jersey are on the rise and are expected to continue climbing in the coming years, according to Gary La Spisa, the senior vice president at the Insurance Council of New Jersey. This increase in costs is likely to result in a higher number of uninsured drivers on the state's roads.
La Spisa highlighted that the state's uninsured rate has significantly risen due to the soaring expenses of insurance. While New Jersey previously boasted the lowest uninsured rate in the country at 3.1% in 2019, it has surged to 14.1% now, although it remains lower than the national average of 15.4%.
The escalating car insurance rates in New Jersey are driven by three main factors: changes in the minimum liability insurance requirements by the legislature, higher costs associated with parts and vehicle replacements, and a rise in both the frequency and severity of accidents.
The legislative changes in minimum liability insurance requirements for "standard" car insurance policies in New Jersey have been implemented in two stages, with the first becoming effective on Jan. 1, 2023, and the second on Jan. 1, 2026.
The revisions to the minimum limits for injuries, accidents, and property damage have led to increased costs for policyholders. La Spisa noted that this could significantly impact low-income drivers who often opt for minimum coverage due to affordability constraints.
Additionally, supply chain disruptions, high labor costs, and technological advancements in vehicles have contributed to higher replacement costs for automotive parts and repairs, further driving up insurance expenses.
Another factor influencing the rising insurance costs is the surge in accident frequency and severity, particularly exacerbated after the pandemic. This has resulted in more fatalities, injuries, and increased attorney involvement in claims.
In New Jersey, drivers are required to purchase minimum amounts of "basic" car insurance coverage, including personal injury protection (PIP) and property damage liability. However, drivers have the option to customize their coverage with additional options like bodily injury liability, collision, comprehensive, and uninsured/underinsured motorist coverage.
Low-income drivers who are eligible for Medicaid with hospitalization may consider the Special Automobile Insurance Policy (SAIP) as a cost-effective option, providing coverage for medical costs at an affordable rate of $365 per year.
For high-risk drivers unable to obtain coverage from commercial insurers, the New Jersey Personal Automobile Insurance Plan (PAIP) offers a solution, with eligibility based on specific criteria such as a history of traffic violations or lapses in coverage.
To secure the best and most affordable car insurance in New Jersey, drivers are advised to compare quotes from different insurers, explore available discounts for safety features, multiple policies, good students, and defensive driving courses, and tailor their coverage to suit individual needs and financial circumstances.
Ultimately, understanding the factors impacting car insurance rates in New Jersey, exploring coverage options, and leveraging available discounts can help drivers navigate the evolving insurance landscape effectively while ensuring adequate protection on the road.