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Is New Jersey a no-fault car insurance state?

Here's what you need to know...
  • In states with no-fault insurance systems, motorists are required to carry their own personal injury coverage
  • Fault is not used to determine which insurer pays for bodily injury claims in no-fault states
  • New Jersey has a unique no-fault system in place that gives motorists the option to purchase no-fault coverage
  • Under New Jersey law, you’re required to buy a basic auto insurance policy if a vehicle is registered in your name
  • If you select the basic plan, you have a limited right to sue only when you suffer significant injuries

If you’re shopping for auto insurance in New Jersey, you need to be familiar with how insurance laws in the state work.

While many states have basic tort systems in place, which allow you the right to sue if you’ve suffered injuries in a crash, New Jersey is unique.

Let’s discuss what you should know about no-fault systems in the Garden State.

If you are in New Jersey and need better auto insurance, compare at least three to four policies today! Enter your ZIP code above to begin!

What is no-fault car insurance?

No fault is a term that’s used to define a particular type of car insurance system that runs in some states. While fault is still used in a sense to determine whether or not a policyholder will be surcharged for the loss, it isn’t considered when it comes to settling a claim.

– What is a tort system?

Tort is a term used to describe an act where someone is responsible for paying for damages because of a negligent act. Most states operate under a tort-based system.

Tort means that you’ll have to pay for financial losses and lawsuits if you’re the at-fault driver in a loss where there’s injuries or damages.

– What is the difference between tort and no-fault systems?

The main difference between a no-fault system and a fault-based system is the way that fault is used for claims settlement purposes.

Instead of filing claims against the at-fault driver’s insurance, you’ll file a claim against the coverage that you carry on your own insurance.

No-fault states also have policies in place that limit your right to sue in scenarios where you are injured at the negligence by someone else.

Is New Jersey a no-fault state?


There are currently only 12 states that have some type of no-fault system in place. Believe it or not, there’s no such thing as a pure no-fault system where someone is restricted from suing for their injuries in all cases.

All states have some form of modified no-fault system in place, but one can vary from the other. New Jersey is one of the 12 no-fault states, but it has a unique form of choice system in place.

– What is a choice no-fault state?

In many states, you don’t have a choice as to whether or not your right to sue will be limited but luckily you do when you’re a motorist in New Jersey.

In this choice no-fault state, you can decide if you want to pay a lower premium for a limited right to sue or if you’d like to pay more for an unlimited and unrestricted right to sue.

In choice states, buying Personal Injury Protection is still compulsory. The no-fault coverage is mandatory, and you can’t avoid paying premiums for the coverage even though you technically have a choice in the matter.

Your choice doesn’t pertain to the coverage itself but what your rights will be when you’re injured in a claim.

– What types of coverage are mandatory?

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You have to comply with the mandatory coverage requirements that are set by the New Jersey Insurance Commissioner. If you don’t carry the mandatory coverage from a producer in the state, it’s virtually the same thing as being uninsured in the eyes of the DMV.

Here are the state requirements:

  • Liability Insurance — Pays for property damages and bodily injury damages when someone is injured in an accident due to your negligence
  • Personal Injury Protection — Pays for your medical expenses if you’re injured in an accident if you were or weren’t at fault
  • Uninsured Motorist Coverage — Protects you if you have an accident with a driver who doesn’t have sufficient coverage

– What is the limited right to sue?

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You will have the choice to buy a basic policy or a policy where you have an unrestricted right to sue negligent motorists for their actions. If you’re trying to keep your premiums low, take basic coverage as long as you can sue in certain scenarios.

Unfortunately, there are a lot more restrictions than you might think.

It’s your duty to know what you’re selecting before you decide on your insurance policy. If you can’t sue for an injury and you’re in a crash, you don’t want to find out when it’s time to file your claim.

Here are the scenarios where you can sue when you have basic coverage:

  • Loss of a body part
  • Serious disfigurement
  • Significant scarring
  • Displaced fractures
  • Death
  • Permanent injury to a body part that won’t function normally again
  • Loss of a fetus

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Auto Insurance in New Jersey

When you own a car and register it in New Jersey, you have to have a minimum amount of coverage. It’s best that you carry higher limits, although carrying a minimum amount will still keep you in compliance.

Here are the mandatory limits that are required under basic policies:

  • Property Damage Liability — $5,000
  • Bodily Injury Liability — Not required under basic policies (option to add $10,000)
  • Personal Injury Protection — $15,000
  • Limited right to sue

– Additional Coverage Options Available

Having sufficient coverage is critical. When you have a loss, you need to know that you can file a claim and your insurer is going to help you.

Opting to carry additional coverage is what’s going to give you the most protection. 

Here’s what you have to know about coverage options that you can add to your policy:

  • Comprehensive — Pays for the car to be repaired or replaced after a fire, theft, or vandalism
  • Collision — Pays for the car to be repaired or replaced after a collision
  • Uninsured Motorist — Pays for your medical bills if someone hits you without liability coverage
  • Towing — Pays for towing when your car is disabled
  • Rental Car — Pays for a temporary substitute when your car is not operational because of a covered loss

– Penalties for Driving Without Insurance

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Driving without insurance in New Jersey is a serious offense. If you’re caught driving your car without purchasing and maintaining the right level of coverage, you will be given harsh penalties.

The first time you violate the law, you’re fined between $300 and $1,000.

You’ll also have to complete mandatory community service and will have your license suspended for one year.

The penalties for just one offense is bad enough, but the consequences get even more severe.

After a second conviction, you’ll pay a fine of $5,000 and have to serve a jail sentence of at least 14 days. The license suspension period for motorists guilty of a second offense is a minimum of two years.

Finding the Best Car Insurance

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New Jersey’s no-fault system isn’t working like it was intended to.

That’s why it has the highest average claims settlement in the U.S. and also has the highest average auto insurance premium of $1,263 per year for full coverage.

It’s never been more important to find the best company.

The best way to find a deal on your auto insurance is to compare several rates. You should see what each carrier is charging in the state and then continue to follow up with the comparisons when your policy renews every six months.

Comparing each company’s strengths is also important. Here are some things to consider as you’re making your comparisons:

— Financial Strength

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When a company is financially stable, they are more likely to offer fair claims payout offers in a timely manner. You should only do business with a company that’s financially strong.

Be sure to check the ratings through an independent rating organization. Here are the most popular options:

  • AM Best
  • Fitch Ratings
  • Moody’s Investor Services
  • Standard & Poor’s Insurance Ratings Services
  • JD Power
  • Consumer Reports

— Ask for Discounts

One way to save money is to ask for discounts. If you’re eligible for discounts, you’ll see your premiums drop.

Most insurers in New Jersey offer at least a small menu of discounts. Here are a few of the most popular options that are available to policyholders:

  • Good driver
  • Good student
  • Anti-theft
  • Multi-line
  • Multi-car
  • Driver education
  • Accident-free

Shopping for auto insurance in New Jersey has never been easier. 

With new technologies, you can get instant quotes from producers all over the state in the blink of an eye. Use these quoting systems to get basic and standard quotes today and find the best deal.

Try our FREE online quote tool and start comparison shopping for better auto insurance today! Enter your ZIP code below!

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