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New Jersey Insurance Laws

Carrying sufficient auto insurance coverage is compulsory in New Jersey. New Jersey Insurance Laws, specifically the Automobile Insurance Cost Reduction Act, mandates that a Basic Insurance Policy should be made available to all vehicle owners in the state.

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A basic insurance policy is composed of an optional $10,000 as bodily injury coverage for all injured persons. It also has a maximum of $5,000 only as property damage coverage. Policyholders who have a basic insurance policy are barred from purchasing Uninsured and Underinsured Motorist Coverage or the UM/UIM coverage, although Collision and Comprehensive coverage are offered as an option to them.  


New Jersey insurance laws define a standard insurance policy as having the following insurance minimums.

Standard Auto Insurance Coverage for Vehicles in the state of New Jersey

  • A minimum Bodily Injury coverage requirement of  $15,000 per damaged person in any single accident up to a sum total of $30,000 for all damaged persons in any single accident
  • A minimum Property Damage coverage requirement of $5,000 for damage to or destruction of other’s property in any single accident

New Jersey Insurance laws mandate vehicle owners driving in the state’s roads to have Uninsured Motorist Coverage or UM coverage as well. All insurance companies who provide motor vehicle insurance should also offer a minimum of $5,000 as Uninsured Motorist coverage in its policies. Basic auto insurance polices are exempted from this rule.


Uninsured and Underinsured Motorist Coverage or the UM/UIM coverage is an option available only to those buying standard auto insurance policies. If this is purchased, New Jersey Insurance laws require a UM/UIM insurance of $250,000 as minimum coverage per damaged person in any single accident to a total of $500,000as minimum coverage  for all damaged persons in any single accident and $100,000 as minimum coverage for property damage.

The state operates on a “No-Fault” system. With this system, injured parties involved in the accident are barred from taking a case to court. A policyholder may opt to waive the bodily injury coverage requirements detailed above and choose to use the Personal Injury Protection (PIP) policy instead.

Personal Injury Protection Policy extends its coverage to the insured, his passengers, and the pedestrians harmed in the auto collision regardless of who is at fault for the accident. Personal Injury Protection policy coverage ranges from $15,000 per person to a maximum of $250,000 per person as payment for medical treatment and/or ER visitations.

Personal Injury Protection policy limits the coverage for property damage to a maximum of $5,000 only. The policyholder may also opt to purchase further protection amounting to $10,000 per person as coverage for bodily injury. This option though is unavailable to motorbike owners.


Personal Injury Protection is another policy offered only to those purchasing standard auto insurance policies.

Driving without proper auto insurance is considered a serious traffic offense in New Jersey. The sanctions presently implemented in the state include fines, the suspension of driver’s license and/or registration and jail time. Authorities are looking into implementing impoundment of vehicles as a possible sanction to motorists who drive without insurance.

New Jersey Insurance Laws

Modified Comparative

Fault -- 51 Percent Bar
Liability Insurance required? Yes
Personal injury liability maximum for one person injured in an accident. $15,000
bodily injury liability maximum for all injuries in one accident. $30,000
property damage liability maximum for one accident. $5,000
PIP required? Yes
No-fault state? Yes
Uninsured motorist coverage required? Yes
Bodily Injury Statue Of limitations 2 Years
Property Damage Statute of Limitation 6 Years
Small Claims Court Maximum LimitS $3,000

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