Car insurance is mandatory in New Jersey — but what if you’ve been turned down for coverage? Drivers flagged as high-risk by insurance companies may need to seek coverage under New Jersey’s assigned risk car insurance program: the New Jersey Personal Automobile Insurance Plan (NJ PAIP). Bankrate’s insurance editorial team breaks down the ins and outs of the high-risk New Jersey automobile insurance plan below.
What is the New Jersey Personal Automobile Insurance Plan (NJ PAIP)?
New Jersey isn’t known for cheap car insurance, but some drivers may have an especially hard time finding affordable coverage. Negative marks on your driving history, poor credit or a high number of claims could cause some insurers to charge you high rates or even turn your application down. For some drivers, repeated rejections might make it tempting to go without coverage entirely — according to the Insurance Information Institute (Triple-I), over 10 percent of New Jersey drivers were uninsured in 2022.
The problem: when some people drive without insurance, it increases costs for everyone else. The New Jersey Personal Automobile Insurance Plan (NJ PAIP) was founded in 1992 to meet the needs of NJ drivers who can’t find coverage due to a high risk profile and ensure that all New Jerseyans can afford to have auto insurance.
Bear in mind that the NJ PAIP is not an auto insurance agency. Rather, it is a program that matches drivers with insurance companies for adequate coverage, also called an “assigned risk plan.”
Who is eligible for the NJ PAIP?
As with most state-sponsored insurance programs, to qualify for the NJ assigned risk auto insurance plan, you first have to offer proof that you have failed to get regular insurance — at least twice in the span of 60 days. Only those who have been declined all other insurance options can apply for the NJ PAIP.
You’ll also need to prove that you are a New Jersey resident and licensed to drive. Your vehicle must be registered in the state of New Jersey. You might also be eligible if your license was suspended for driving without insurance or if you need insurance in order to have your license reinstated.
Your credit history does not have any significance in applying for PAIP (although it can be a contributing factor to your premiums), but certain factors can still make you ineligible, such as:
- Invalid driver’s license
- History of car insurance policy lapses or non-payment of premiums
- Withholding information in the application
If you are turned down once by the PAIP, you are free to apply again if the ineligibility factors no longer exist.
What kind of coverage is available with the NJ PAIP?
New Jersey car insurance law mandates that all drivers maintain a minimum limit of liability coverage. Under the New Jersey Assigned Risk Plan, drivers may choose between a basic and a standard policy, with the former offering fewer coverage options than the latter.
| Bodily injury liability | Not included, but available up to $10,000 per accident | $25,000 to $250,000 per person/$50,000 to $500,000 per accident |
| Property damage liability | $5,000 per accident | $25,000 to $100,000 per accident |
| Personal injury protection | $15,000 per person, per accident (up to $250,000 for certain injuries) | $15,000 to $250,000 per person, per accident (up to $250,000 for certain injuries regardless of limit) |
| Uninsured/underinsured motorist coverage | Not available | Available matching liability limits |
| Collision coverage | Available from some insurers | Available from all insurers |
| Comprehensive coverage | Available from some insurers | Available from all insurers |
| Right to sue | Limited | Limited or Unlimited |
High-risk auto insurers associated with the New Jersey Assigned Risk Plan are obligated to provide coverage to drivers who qualify for three years. After that duration, if you are still a high-risk driver and fail to get regular insurance, you will likely be able to apply for PAIP again. Coverage options may differ from one insurance provider to another, however, so comparing available options will give you the best idea of what will suit your needs and budget.
How much does car insurance cost with the New Jersey Assigned Risk Plan?
High-risk car insurance is typically more expensive than the options in the general market and the NJ Assigned Risk Plan may be consistent with that trend. Your premium will also depend on the rate factors that individual insurance providers evaluate to set a price for you, which can include your ZIP code, age, type of vehicle and marital status, among other variables.
To give a general sense of how these risk factors can raise your rates, Bankrate’s insurance editorial team compared average minimum coverage premiums for New Jersey drivers with a variety of high risk factors to the state minimum average:
- Average cost of NJ minimum coverage: $984 per year
- Driver with a DUI conviction: $2,042 per year
- Driver with poor credit: $2,165 per year
- 18-year-old on own policy: $2,664 per year
- 21-year-old with a DUI conviction: $2,891 per year
The NJ PAIP has two payment options: you can either pay the total annual premium in full at the start of your policy, or you can choose to pay a 30 percent deposit initially and the rest in installments over the next few months. If you are insured through this program, you are not bound to stay with it if you are eligible for a cheaper policy elsewhere. You are free to cancel the policy and your remaining premiums will be refunded. However, be sure your replacement policy is in force before terminating your NJ PAIP plan to avoid any lapse in coverage.
How to buy insurance from the NJ PAIP
For the most accurate quote, you will first need to find a NJ PAIP insurance producer. Then, you can select an agent in your area and contact them for a quote. The information you provide will be used to determine the amount you can expect to pay for insurance, so it is important that you provide as many details as possible.
The company that the NJ PAIP assigns to you must commit to providing you with insurance for the next three years, regardless of your driving history. Unlike purchasing regular car insurance, your options are likely to be fairly limited when it comes to high-risk insurance providers, so the three-year obligation can potentially be a huge benefit.
Other ways to find cheap car insurance in New Jersey
New Jersey is a no-fault state and seeks to ensure low-cost insurance is available to help drivers remain insured. There are ways to get high-risk insurance without state-sponsored programs if you look in the right places. If you have an imperfect driving history or little to no credit, you have the following options in New Jersey besides the Assigned Risk Plan:
- Special Automobile Insurance Policy (NJ SAIP): This specialized insurance plan is only available to those who are on Medicaid with hospitalization. Also called New Jersey Dollar a Day car insurance, it’s a last-resort coverage option that provides only medical coverage for emergency treatment after an accident.
- High-risk insurance companies: It is possible to find insurers that accept high-risk drivers, although you may have to do your own research to find those with which you will be eligible for coverage, and the three year guaranteed coverage period would not necessarily apply. Most national insurers also have different coverage options for motorists with DUIs, accidents and other violations on their record.
The laws in New Jersey seek to give every motorist access to car insurance. By gradually improving your driving record, you may become eligible for various discounts offered by most insurers that can reduce annual premiums either up front or over time. Otherwise, you may be able to obtain insurance through state-supported initiatives like the NJ PAIP.
Frequently asked questions
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Because each driver comes with unique coverage needs and rating factors, the best New Jersey car insurance company is subjective. For instance, some companies may be better for high-risk drivers, while others cater to those with clean driving records. Additionally, some carriers are regional and only offer policies in select states. However, one of the most effective ways to find the best company for you may be to request quotes from multiple companies and narrow your search based on your individual circumstances.
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Due to the passing of Bill S481, the minimum liability requirements for New Jersey car insurance are increasing. Standard policies renewed on or after January 1, 2023, are required to meet the following coverage limits:
- $25,000 bodily injury liability per person
- $50,000 bodily injury liability per accident
- $25,000 property damage liability per accident
- $15,000 personal injury protection (PIP)
- $25,000 uninsured motorist bodily injury per person
- $50,000 uninsured motorist bodily injury per accident
- $25,000 underinsured motorist bodily injury per person
- $50,000 underinsured motorist bodily injury per accident
Additionally, the New Jersey state minimums are slated to increase once more in 2026; the minimum limits for bodily injury and uninsured motorist for policies renewed on or after January 1, 2026, will be:
- $35,000 bodily injury liability per person
- $70,000 bodily injury liability per accident
- $35,000 uninsured motorist bodily injury per person
- $70,000 uninsured motorist bodily injury per accident
- $35,000 underinsured motorist bodily injury per accident
- $70,000 underinsured bodily injury per accident
Please note that required coverage levels for PIP and property damage coverage are not affected by this second increase.
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The average cost of car insurance in New Jersey as of August 2024 is $984 per year for state minimum coverage and $2,412 per year for full coverage. That’s slightly higher than the national average, but your own rates may be higher or lower depending on the risk factors in your profile.
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Methods of saving on auto insurance costs include comparing quotes from multiple carriers, researching discount opportunities and practicing safe driving tactics. Speaking to a licensed agent may help you understand the key risk factors impacting your rates, which could help you to reduce your premiums strategically. For instance, if your car insurance costs are high due to your credit history, building credit could help to lower your rates. If you’re paying a high rate due to a recent ticket or accident, enrolling in a telematics program could earn you a safe driving discount while you wait for the ticket to age off your record.
Methodology
Bankrate utilizes Quadrant Information Services to analyze August 2024 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a single, 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:
- $100,000 bodily injury liability per person
- $300,000 bodily injury liability per accident
- $50,000 property damage liability per accident
- $100,000 uninsured motorist bodily injury per person
- $300,000 uninsured motorist bodily injury per accident
- $500 collision deductible
- $500 comprehensive deductible
To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2022 Toyota Camry, commute five days a week and drive 12,000 miles annually.
These are sample rates and should only be used for comparative purposes.
Credit-based insurance scores: Rates were calculated based on the following insurance credit tiers assigned to our drivers: “poor, average, good (base) and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. Four states prohibit or limit the use of credit as a rating factor in determining auto insurance rates: California, Hawaii, Massachusetts and Michigan.
Incidents: Rates were calculated by evaluating our base profile with the following incidents applied: clean record (base) and single DUI conviction.
Age: Rates were calculated by evaluating our base profile with the ages 18-21 (base: 40 years) applied. Depending on age, drivers may be a renter or homeowner. Age is not a contributing rating factor in Hawaii and Massachusetts due to state regulations.
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