Auto Insurance In New Jersey: Nationwide Cost Analysis

If you're looking to insure your car in New Jersey, you might be wondering how much it will cost. The price of auto insurance varies depending on factors such as age, gender, location, driving record, and credit score. On average, car insurance in New Jersey costs $124 per month, or $1,596 per year, for full coverage, which is higher than the national average. However, the exact cost will depend on individual factors, and it's worth shopping around and comparing quotes to find the best deal.

Discounts for safe driving and students

Safe driving discounts are a great way to save money on your auto insurance. Nationwide's SmartRide program gives customers a discount just for signing up. The program tracks your driving and measures things like hard braking, nighttime driving, and fast acceleration – all of which can increase your chance of having an accident. The safer you drive, the higher the discount you can earn. This discount is locked in for as long as you have your vehicle insured under that Nationwide policy.

Nationwide also offers a defensive driver discount for drivers 55 years or older who live in select states and have had no at-fault accidents in the past 35 months. To qualify, you must complete a state-approved accident prevention course with a passing grade. The defensive driving insurance discount usually amounts to around 5%.

If you have at least 5 years of safe driving experience, you could be eligible for a safe driver discount. It's important to maintain a clean driving record and avoid tickets for speeding, reckless driving, and other violations.

Nationwide also offers a student discount for drivers aged 16 to 24 who maintain a B average or better and are full-time students.

No-fault insurance

In New Jersey, there are three types of no-fault car insurance: personal injury protection (PIP) insurance, liability insurance, and uninsured motorist insurance. PIP insurance covers medical expenses for the driver, their passengers, and members of their household after a car accident, regardless of who is at fault. It also covers medical care for any injuries sustained as a passenger in another person's vehicle. The minimum amount of PIP coverage is $15,000 on a standard plan, but most drivers opt for $250,000 to cover serious or catastrophic injuries.

Liability insurance covers the cost of damages suffered by others in an accident that the policyholder causes. The only liability insurance required in New Jersey is property damage liability coverage ($5,000), but bodily injury liability insurance is also available at an additional cost.

Uninsured motorist insurance protects drivers financially if they are in an accident with a driver who does not have insurance.

New Jersey is one of only 12 no-fault car insurance states, and its system is further complicated by its use of a "'choice' no-fault law", which allows drivers to choose between the "limited" and "unlimited" right to sue after a car accident. A "Basic" policy includes no-fault/PIP coverage and bare-bones liability insurance, while a "Standard" policy provides additional coverage options, including bodily injury liability and uninsured motorist coverage.

The "limited right to sue" option is cheaper but restricts the ability to pursue legal action against the at-fault driver for non-economic damages like pain and suffering, unless the injury is permanent or involves disfigurement. The "unlimited right to sue" option is more expensive but allows the victim to pursue legal action for any level of injury or damage and to recover pain and suffering damages.

Liability coverage

Property Damage Coverage

Property damage coverage pays for any damage caused to another person's property, such as repairs to the other driver's vehicle, a rental vehicle while the other person's car is being repaired, damage to buildings or fences, and damage to personal property inside a vehicle. It also covers legal fees if you are sued for property damage.

Bodily Injury Coverage

Bodily injury coverage provides payment for injuries sustained by others in an accident. This includes legal fees if you are sued for injuries you caused. It is important to note that bodily injury coverage may have different requirements and limitations depending on the state.

When selecting liability coverage, you will need to choose a coverage limit, which is the maximum amount your policy will pay for injuries or property damage you cause to others. It is generally recommended to choose a liability limit that matches or exceeds your total net worth to adequately protect your assets.

Factors affecting insurance rates

Several factors influence car insurance rates, and some of these are within a person's control, while others are not. Here are the key factors that affect insurance rates:

Driving Record

A person's driving history, including traffic violations and at-fault accidents, is one of the most significant factors in determining car insurance rates. A history of tickets, violations, or accidents will result in higher insurance premiums. Insurance companies typically review a person's driving record from the past three to five years. Maintaining a clean driving record can help reduce insurance costs over time.

Age and Driving Experience

Age is a critical factor in insurance rates, especially for young and inexperienced drivers. Teen drivers are considered high-risk and tend to pay significantly higher insurance premiums. Statistics show that teen drivers are more prone to reckless driving and accidents than older age groups. Insurance rates generally decrease after age 25 and then increase again after age 65, as older drivers are more likely to be injured in collisions.

Vehicle Type

The type of vehicle driven also impacts insurance rates. Insurance companies consider the safety ratings, repair costs, theft rates, and comprehensive claims history of similar models when setting rates. Vehicles with high safety ratings may be eligible for discounts, while certain models that are frequently stolen tend to be more expensive to insure.

Location

Location plays a role in insurance rates at both the state and zip code levels. State regulations and coverage requirements differ, leading to variations in insurance costs. For example, Michigan's no-fault insurance requirement results in higher insurance rates compared to neighbouring Ohio. Within a state, insurance rates can vary by zip code, with higher rates in areas with more drivers, higher crime rates, or natural disaster risks.

Credit History

Credit history is a significant but often overlooked factor in insurance rates. Individuals with poor credit tend to file more insurance claims, and these claims are generally more expensive. States like California, Hawaii, Massachusetts, and Michigan have banned the use of credit history in setting insurance rates.

Insurance History

Insurance companies view continuous coverage as a positive sign. A gap in insurance coverage, such as a period without insurance or a cancellation due to non-payment, is considered a higher risk and can lead to higher premiums.

Annual Mileage

The number of miles driven annually can impact insurance rates, especially in states like California. Individuals with longer daily commutes or higher annual mileage tend to pay more for insurance as they are considered more likely to be involved in accidents.

Marital Status

Marital status has a minor effect on insurance rates. Married individuals are statistically less risky to insure, with lower accident rates, resulting in slightly lower insurance premiums.

Gender

Gender can influence insurance rates, particularly for young drivers. Male teen drivers often pay higher premiums than their female counterparts, as they are perceived to be more likely to take risks. However, this gender gap tends to even out as drivers reach their 30s.

Insurance Company

The choice of insurance company is a significant factor in determining insurance costs. Rates can vary substantially between companies, even for the same level of coverage. Shopping around and comparing quotes from multiple companies can help individuals find the most competitive rates.

Optional coverages

Collision Coverage

Collision coverage is used to repair your vehicle when physical damage occurs due to a collision with another vehicle or object. This coverage is subject to a deductible, and it does not include mechanical failure or normal wear-and-tear. However, it will cover damage from potholes or if you roll your car.

Comprehensive Coverage

Comprehensive coverage protects your vehicle from events beyond your control. This includes theft, fire, vandalism, hail, falling objects, and other hazards. It also covers damage caused by incidents other than collisions, such as hitting an animal or a tree. If your car is stolen, comprehensive coverage can provide a daily allowance for transportation expenses until your claim is settled. Comprehensive coverage is often paired with collision coverage, and both are typically required if you lease or finance your vehicle.

Uninsured/Underinsured Motorist Coverage

This coverage protects you in the event of an accident where the at-fault party doesn't have insurance or has insufficient insurance to cover the damages. It includes bodily injury protection, which helps pay for injuries to you and your passengers when the other driver is uninsured or underinsured.

Personal Injury Protection (PIP)

PIP is a type of no-fault insurance that reimburses a portion of wage loss, medical expenses, and essential services incurred as a result of an accident. It covers eligible injured parties, such as passengers or pedestrians. In some states, PIP is offered with additional benefits compared to standard medical payments coverage.

Roadside Assistance Coverage

Roadside assistance coverage provides services like fuel delivery, lockout service, jump-starts, and towing. It is often available at different levels, allowing you to choose the option that best suits your budget.

Accident Forgiveness

With accident forgiveness coverage, your insurance rates will not increase after your first at-fault accident. This can provide peace of mind and help you avoid higher premiums due to a single mistake.

Rental Car Expense/Reimbursement

If your car is out of commission due to a covered loss, rental car expense coverage helps pay for a rental car or alternative transportation expenses. This ensures you can stay mobile while your vehicle is being repaired or replaced.

Frequently asked questions