New Jersey Car Insurance Laws: Minimum Coverage, Penalties and SR-22

Car insurance is required in New Jersey, and drivers choose between two main policy types. The Standard Policy (chosen by most drivers) has bodily injury liability as low as $35,000 per person and $70,000 per accident (35/70), property damage liability as low as $25,000 per accident, personal injury protection (PIP) as low as $15,000 per person or accident (up to $250,000 for certain serious injuries regardless of the limit selected), and uninsured/underinsured motorist coverage. The lower-cost Basic Policy meets the legal minimum with $5,000 property damage liability and $15,000 PIP (up to $250,000 for certain injuries); bodily injury liability is not included but $10,000 is available as an option. A medical-only Special Automobile Insurance Policy (SAIP) is available to drivers eligible for federal Medicaid with hospitalization for $365 a year.

New Jersey is a no-fault state for injuries: PIP pays your own medical expenses no matter who caused the accident. With the Standard Policy you choose a lawsuit option. Under the Limitation on Lawsuit (limited right to sue) option, which the Basic Policy includes, you may sue the at-fault driver for pain and suffering only for loss of a body part, significant disfigurement or scarring, a displaced fracture, loss of a fetus, a permanent injury, or death; the No Limitation on Lawsuit option keeps the right to sue for any injury. Fault for property damage and other liability claims is apportioned among drivers under the Comparative Negligence Act (N.J.S.A. 2A:15-5.2).

With the Standard Policy, a minimum amount of uninsured/underinsured motorist coverage is required, and higher limits (up to the amounts selected for liability coverage) may be purchased. The Basic Policy does not include UM/UIM coverage, though some insurers offer it as an option.

New Jersey law requires every registered vehicle to be insured; driving without insurance is against the law. According to DOBI, failing to maintain coverage can lead to suspension or revocation of your driver's license or registration, additional fines and penalties, higher prices for new policies, and placement in the assigned risk pool. A lapse of more than 30 days could place you in the assigned risk market. If a car is off the road, the plates should be surrendered to the Motor Vehicle Commission before letting insurance lapse.

An insurer may cancel during the policy period (a mid-term cancellation) only when fraud is discovered, when the driver's license is suspended, or when premiums are not paid, and a 15-day warning notice must be sent before the policy is canceled; a cancellation notice for nonpayment must be mailed at least 15 days before the policy expires. A written nonrenewal notice must be sent at least 60 calendar days before the policy expires. Insurers may nonrenew drivers who no longer meet the company's written acceptance criteria and may use the "2-for-1" or "2 percent" rules, which must be stated on the notice. Canceled policyholders can appeal to DOBI.

New Jersey uses a tier rating system. Insurers that use insurance scores (based on credit reports) cannot use them to deny, cancel or nonrenew coverage, cannot use them for Special Automobile Insurance Policy or Basic Policy customers, cannot use a scoring model that considers race, ethnicity, sex, age, religion, income, address or unpaid medical bills, and cannot offer less favorable payment plans based on credit; they must give written notice of the practice and specific explanations of adverse actions. Insurers may still consider driving record, years of driving experience, vehicle type, coverage limits, claims and credit history for tier placement, and age, gender and marital status may affect the rate within a tier.

Ownership transfers must be done in person at a Motor Vehicle Commission agency, not by mail. The seller removes and surrenders the plates (unless moving them to another vehicle they own), signs the seller's section on the back of the title, and gives the buyer the title and a bill of sale with the buyer's name and address, sale date, odometer reading and price. The buyer signs the buyer's section, adds their driver's license number, and visits an agency to transfer the title, complete a Vehicle Registration Application (BA-49) if needed, and get plates. To avoid a $25 penalty, New Jersey titles must be transferred within 10 working days of the sale. The title fee is $60 ($85 for a financed vehicle).

New residents must transfer their out-of-state driver's license and their vehicle title and registration within 60 days of moving (or before the current license or registration expires, whichever is first); the MVC page notes 120 days during a Public Health Emergency. Bring identification, the original title, insurance information, a Universal Title Application (OS/SS-UTA) and a Vehicle Registration Application (BA-49). Customers receive a temporary inspection card with the new registration.

Contact the New Jersey Department of Banking and Insurance, Consumer Inquiry and Response Center (CIRC), P.O. Box 471, Trenton, NJ 08625-0471; phone (609) 292-7272 or the Consumer Hotline 1-800-446-7467. Complaints can be filed online at www.dobi.nj.gov/consumer.htm. For disputed claims, the Office of Insurance Claims Ombudsman (P.O. Box 472, Trenton, NJ 08625-0472; ombudsman@dobi.nj.gov) can review the matter after the insurer's internal appeal.