Like most states, New Jersey requires drivers to carry basic auto insurance. In this article, we'll examine some of the key New Jersey laws governing auto insurance, and how those laws affect drivers involved in accidents. We'll discuss what it means for New Jersey to be a "no-fault" state, and what minimum insurance New Jersey drivers are required to carry. (For more detailed information on lawsuits and insurance claims related to auto accidents in new Jersey, see our companion article, Car Accident Laws in New Jersey.)
New Jersey is a "Choice No-Fault" Auto Insurance State
New Jersey follows a "no-fault" system when it comes to auto accidents and insurance. This means that when a New Jersey driver is involved in a crash, the driver turns to his or her own auto insurance policy first to pay medical bills and other expenses related to the crash. Drivers may sue one another in court after an accident only in limited cases.
One key thing to note is that drivers in New Jersey have the option of choosing between no-fault and traditional car insurance at the time they purchase their policy. The traditional coverage option allows one driver to file a liability claim against (or sue) another driver for the rull range of damages after an accident.
For drivers who choose the no-fault option, a lawsuit is only possible in New Jersey if the accident resulted in dismemberment; significant disfigurement or significant scarring; displaced fractures; loss of a fetus; or permanent injury (other than scarring or disfigurement).
Minimum Auto Insurance Requirements in New Jersey
New Jersey drivers are required to carry a minimum amount of auto insurance coverage. Known as the "basic plan," this minimum coverage includes:
- $5,000 per accident for property damage. This coverage does not include the costs of repairing or replacing your car.
- $15,000 per person per accident for personal injury protection (PIP) benefits.
- $250,000 per person per accident in PIP benefits for certain serious injuries, such as brain or spinal cord injuries.
Optional coverage under the basic policy is available for things like bodily injury, uninsured/underinsured motorist coverage, collision coverage, and comprehensive coverage. Drivers in New Jersey are not required to have these coverages, but many drivers choose them to cover medical expenses, to pay for damage to their own vehicles, or to provide additional protection if they are in an accident with a driver who has no insurance or not enough insurance. (For more information on how uninsured/underinsured motorist coverage works, see Uninsured Motorist Coverage: The Basics and Underinsured Motorist Coverage: How It Works.)
More Information on NJ Auto Insurance Rules
The New Jersey Department of Banking and Insurance provides information on New Jersey's auto insurance requirements, as well as the types of policies that are available in New Jersey.