New Jersey Car Insurance: America's Most Confusing System
Basic vs. Standard policies, verbal vs. monetary thresholds—here's how to decode the Garden State's insurance maze.
New Jersey Quick Facts
*Basic Policy has NO liability—see below
🤯 The New Jersey Mindblower
New Jersey has the most complicated car insurance system in America. You must choose between Basic and Standard policies, then pick verbal vs. monetary lawsuit thresholds, then decide on PIP options. Most NJ drivers don't fully understand their own coverage—and insurers don't make it easy.
Basic vs. Standard Policy: The Critical Choice
| Coverage | Basic Policy | Standard Policy |
|---|---|---|
| Bodily Injury Liability | $0 (NONE) | $15,000/$30,000 minimum |
| Property Damage Liability | $5,000 | $5,000 minimum |
| Personal Injury Protection (PIP) | $15,000 | $15,000-$250,000 |
| Uninsured Motorist | None | $15,000/$30,000 |
| Right to Sue | Very Limited | Choice of thresholds |
DANGER: The Basic Policy has ZERO bodily injury liability. If you injure someone, you're personally liable for ALL their medical bills, lost wages, and pain/suffering. One serious accident can bankrupt you. The "savings" aren't worth the risk.
Lawsuit Threshold: Verbal vs. Monetary
With a Standard Policy, you choose how you can be sued after an accident:
Limitation on Lawsuit (Verbal Threshold)
- ✓ Lower premiums (15-20% savings)
- ✓ You can only be sued for "serious" injuries
- ✗ You can only sue others for "serious" injuries
- ✗ Minor injuries = no pain/suffering recovery
"Serious" = death, dismemberment, significant disfigurement, fractures, loss of fetus, permanent injury
No Limitation on Lawsuit (Monetary Threshold)
- ✗ Higher premiums
- ✓ You can sue for any injury
- ✓ Full right to pain/suffering compensation
- ✓ Others can sue you more easily (higher risk)
Best for those with significant assets to protect or who want full legal rights.
Average Car Insurance Costs in New Jersey
| Coverage Level | Annual Premium | Monthly Cost |
|---|---|---|
| Basic Policy | $680 | $57 |
| Standard Minimum | $1,180 | $98 |
| Full Coverage | $1,920 | $160 |
Costs by New Jersey Area
| Area | Avg. Annual Premium | vs. State Avg. |
|---|---|---|
| Newark | $3,240 | +69% |
| Jersey City | $2,880 | +50% |
| Trenton | $2,340 | +22% |
| Princeton | $1,680 | -13% |
| South Jersey (suburbs) | $1,580 | -18% |
| Shore Communities | $1,720 | -10% |
Top Car Insurance Companies in New Jersey
GEICO
Often cheapest in NJ. Strong online presence. Good for comparison shopping.
NJM Insurance (New Jersey Manufacturers)
NJ-based mutual company. Consistently top-rated for service. Selective underwriting—best for safe drivers.
State Farm
Largest national insurer. Strong agent network. Good bundling discounts.
Plymouth Rock
Northeast regional carrier. Competitive rates in NJ market.
Progressive
Good for drivers with violations. Snapshot telematics can save up to 30%.
Frequently Asked Questions
Why is New Jersey car insurance so expensive?
Highest population density in America, no-fault system requiring PIP, high litigation rates, and urban traffic congestion (especially Newark-Jersey City corridor). NJ consistently ranks in the top 5 most expensive states.
Should I choose verbal or monetary threshold?
Verbal threshold saves 15-20% but limits your lawsuit rights. If you have significant assets or want full legal protection, choose monetary. If you're budget-conscious and accept limited rights, verbal can work.
What's the Special Automobile Insurance Policy (SAIP)?
SAIP is an ultra-basic policy for Medicaid recipients with no license and no car. It provides $10,000 medical expense coverage only. It's not suitable for anyone who actually drives.
Is the Basic Policy worth it?
No. The Basic Policy has ZERO bodily injury liability. One accident could cost you everything. The Standard Policy costs more but provides actual protection.
Bottom Line: New Jersey Car Insurance
New Jersey's insurance system is deliberately confusing. Here's what matters:
- Always choose Standard Policy—Basic has no liability protection
- Verbal threshold saves money but limits lawsuit rights
- Increase PIP if you don't have good health insurance
- Shop aggressively—NJ rates vary 40%+ between insurers
Try NJM (local, highly rated), GEICO (often cheapest), and Progressive. Newark residents will pay nearly double the state average—consider the Shore or South Jersey if location flexibility exists.