Why Is Car Insurance So Expensive In New Jersey?

Last Updated on November 5, 2022

car insurance so expensive in NJCar insurance is egregiously expensive in New Jersey for a variety of reasons. For one, New Jersey residents are jam-packed into a small, fairly urban area with ample traffic congestion. The fact that so many drivers are tasked with sharing roads in tight spaces with one another is problematic in and of itself. The close proximity to other drivers, sizable population, and resulting high frequency of auto accidents are a large part of the reason why New Jersey drivers pay more than others for auto insurance.

All in all, the average New Jersey driver pays about $400 more than other drivers in the United States. The National Association of Insurance Commissioners has determined New Jersey drivers have paid more for auto insurance than drivers throughout the rest of the United States in each of the last five years. Let’s take a closer look at why this is the case.

The Logic Behind Charging New Jersey Drivers More for Auto Insurance Than Others

The Garden State’s heavily populated urban environment has resulted in an abundance of traffic. The comparably high number of people per square mile combined with the limited space has led to an incredibly high number of traffic accidents. However, there are other reasons why New Jersey drivers pay more for auto insurance than most other drivers. The state’s high cost of living combined with the average New Jersey driver’s comparably expensive taste in vehicles has the potential to result in an uber-expensive auto crash.

New Jersey’s Pricey Auto Insurance Benefits

New Jersey’s standard auto insurance policy’s personal injury and protection clauses are absurdly expensive. New Jersey drivers are eligible for $250,000 worth of personal injury claims unless the driver opts for less. However, about two-thirds of all New Jersey drivers are eligible for this costly auto insurance benefit. Plenty of drivers could elect to reduce their coverage level to save money, yet surprisingly few actually do.

New Jersey is also a no-fault state. In a no-fault state, your insurer is required to cover your medical bills, no matter which party is responsible for the accident. Under the no-fault system, insurers are also required to pay for the medical treatment for any passengers also traveling in your vehicle (regardless of fault).

While the no-fault system helps streamline the claim process and prevents claim payouts from being denied or delayed, it can also lead to higher-than-average auto insurance premiums. Since New Jersey is a no-fault state, its average auto insurance rates are higher than most states in the rest of the country.

Are There Any Other Ways to pay Less for Auto Insurance in New Jersey?

Alterations in state policies have opened the auto insurance space to that many more providers. In theory, the influx of auto insurance companies should reduce the price of auto insurance for New Jersey residents. If you feel as though you are paying too much money for auto insurance, take some time to review the auto insurance rates of other providers. After all, the state has more than 80 companies currently writing auto insurance policies. It will only take 45 minutes or so to obtain quotes from half a dozen companies. You can also find the lowest possible quote by using our quote comparison tool located at the top of this page.

If you are looking for a new car insurance company in New Jersey, consider using one of the following companies that are licensed to write private auto insurance policies in New Jersey:

InsurerTelephone Number(s)Website(s)
Allstate Group1-866-222-4586www.allstate.com
American Family Insurance Group
American International Group
Amica Group1-800-242-6422www.amica.com
Berkley Insurance Company1-800-866-2308www.berkleyone.com
Bristol West1-888-888-0080www.bristolwest.com
California Casualty & Fire Insurance Company1-866-680-5143www.calcas.com
California State Auto Group1-888-222-0094www.AAA4insurance.com
CHUBB Group1-866-324-8222www.chubb.com
Cincinnati Insurance Company1-888-242-8811www.cinfin.com
Citizens United Reciprocal Exchange (CURE)1-800-535-2873www.cure.com
Electric Insurance Company1-800-342-5342www.electricinsurance.com
Encompass Insurance1-800-262-5238www.encompassinsurance.com
Esurance Insurance Company of New Jersey1-800-378-7262www.esurance.com
Farm Family Group1-800-843-3276www.farmfamily.com
Farmers Insurance Group
Founders Insurance Company1-717-234-4941
1-800-388-4764 (Toll-Free)
Hanover Insurance Company1-800-257-5720www.hanover.com
Hartford Group1-800-843-7824 (AARP)
1-800-460-9783 (Non-AARP)
Liberty Mutual Group1-800-526-1547www.libertymutual.com
Mercury Indemnity Company of America1-800-987-2032www.mercuryinsurance.com
MetLife Auto and Home1-800-888-2308 (Met Group and Met Direct)
1-800-422-4272 (Met P&C, Met Casualty, and Met General)

Metromile Insurance Company1-888-244-1702www.metromile.com
MIC General Insurance Corporation1-800-325-1190www.NationalGeneral.com
Nationwide Group
New Jersey Manufacturers Group609-883-1300
New Jersey Skylands Insurance Association1-866-279-7688www.njsi.com
Personal Service Insurance Company1-800-954-2442www.personalserviceinsurance.com
Plymouth Rock1-888-506-4410
Privilege Underwriters Reciprocal Exchange (PURE)1-888-814-7873www.purehnw.com
Progressive Group1-800-PROGRESSIVEwww.progressive.com
Selective Auto Insurance Company of New Jersey1-973-948-3000
1-800-777-9656 (Toll-Free)
State Farm Group1-800-STATEFARM (1-800-782-8332)www.statefarm.com
Travelers Group1-888-695-4625www.travelers.com
USAA Group1-800-531-8722www.usaa.com
Vault Reciprocal Exchange1-844-368-2858www.vault.insurance
Source - https://www.state.nj.us/dobi/division_consumers/insurance/autoinscontacts.htm

Additional Factors That Influence Auto Insurance Rates in New Jersey

The average New Jersey driver assumes a high coverage level is necessary to protect him or herself in the event of an accident.  The logic in paying for higher coverage is that most of New Jersey is an urban area in which there is a comparably high rate of crime and frequency of auto accidents.  The high crime rate combined with the increased likelihood of auto accidents is likely to spur that many more auto insurance claims. It is also important to note the state of New Jersey permits a comparably high Personal Injury Protection (PIP) coverage limit.  PIP is applicable to medical costs stemming from the auto accident. The high PIP level spikes the cost of car insurance that much more. All in all, the Garden State permits the second-highest PIP coverage level in the United States. Only Michigan drivers have a higher PIP coverage limit.

New Jersey’s Location on the Map Also Matters

New Jersey is close to a number of large cities. New Jersey drivers often travel to New York City, Washington DC, Philadelphia, and other busy areas. These nearby cities are chock full of drivers, many of whom drive in a haphazard manner. As a result, New Jersey drivers are that much more likely to be involved in a car accident. From an insurance company’s perspective, hiking New Jersey drivers’ auto insurance rates is sensible simply because the chances of an auto accident are significantly higher than those for someone living in a rural area with comparably less traffic and people.

Location Matters

A driver’s specific location in New Jersey matters a great deal in the context of auto insurance premiums. The city in which a driver lives ultimately determines the cost of his or her auto insurance. The most expensive auto insurance in New Jersey is about 40% more than the least expensive. Newark is by far the most expensive city in New Jersey for auto insurance. However, those who live in less-busy parts of the state often pay nearly 30% less for auto insurance than the rest of New Jersey drivers.  As an example, drivers in Morristown typically pay less than $2,000 per year in auto insurance. This figure is about 25% less than the state average.

Final Word on New Jersey’s Expensive Insurance Rates

New Jersey’s auto insurance rates are higher than average due to its population density, crime rate, and minimum coverage requirements. While you might not be able to find cheap auto insurance in New Jersey, you can still find affordable coverage if you shop around. The best way to save on your auto insurance premiums is to comparison shop. Get quotes from multiple insurers by using our quote comparison tool at the top of this page, or contact insurers directly to see how much your premiums will be.

James Shaffer
James Shaffer James Shaffer is a writer for InsurancePanda.com and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
Back to Top