Auto insurance is required in New Jersey, but what do you do if you’re denied coverage? Drivers who are deemed high-risk by insurance companies may need to purchase insurance under New Jersey’s designated risk auto insurance program, the New Jersey Personal Automobile Insurance Plan (NJ PAIP). Bankrate’s insurance editorial team provides details on New Jersey’s high-risk auto insurance plan below.
What is a New Jersey Personal Automobile Insurance Plan (NJ PAIP)?
New Jersey isn’t known for cheap auto insurance, but some drivers may have an especially hard time finding affordable coverage. A negative driving history, poor credit score, or a high number of claims could lead some insurers to charge higher premiums or reject your application. For some drivers, repeated rejections may tempt them to not get insurance at all. According to the Insurance Information Institute (Triple-I), more than 10% of New Jersey drivers were uninsured in 2022.
The problem is, when some people drive without insurance, costs increase for everyone else.The New Jersey Personal Automobile Insurance Plan (NJ PAIP) was established in 1992 to meet the needs of New Jersey drivers who are too high-risk to get insurance and to ensure that all New Jerseyans can afford auto insurance.
Keep in mind that NJ PAIP is not an auto insurance agency, but rather a program that matches drivers with insurance companies to provide appropriate coverage, also known as an “assigned risk plan.”
Who is eligible for NJ PAIP?
Like most state-sponsored insurance programs, to qualify for New Jersey’s assigned risk auto insurance plan, you must first prove that you have been unable to get regular insurance at least twice within a 60-day period. Only people who have been denied all other insurance options can apply for New Jersey’s PAIP.
You must also prove that you are a New Jersey resident and have a driver’s license. Your vehicle must be registered in New Jersey. You may also be eligible if your license was suspended for driving without insurance or if you need insurance to reinstate your license.
Your credit history doesn’t matter when applying for a PAIP (though it may affect your premiums), but certain factors can disqualify you, including:
- Invalid Driver’s License
- History of lapsed or unpaid auto insurance policies
- Information provided in the application form will not be made public
If you are denied once by PAIP, you can apply again if the disqualifying factors no longer exist.
What kind of coverage does NJ PAIP provide?
New Jersey auto insurance laws require all drivers to maintain minimum liability coverage limits. New Jersey assigned risk plans allow drivers to choose between basic and standard insurance, 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 Compensation | $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 | Matching Liability Limits Available |
| Collision Coverage | Available with some insurance companies | Available from all insurance companies |
| Comprehensive Coverage | Available with some insurance companies | Available from all insurance companies |
| Right to sue | limited | Limited or unlimited? |
High-risk auto insurers who participate in the New Jersey Assigned Risk Plan are required to offer coverage to eligible drivers for three years. After that period, if you’re still a high-risk driver and don’t have regular insurance, you may be able to reapply for a PAIP. Coverage options may vary by insurer, but it’s best to compare available options to find one that fits your needs and budget.
How much does New Jersey assigned risk plan auto insurance cost?
High-risk auto insurance is generally more expensive than general market options, and New Jersey assigned risk plans may fall into that category. Premiums also vary depending on the rate factors that individual insurance companies evaluate to set prices. These include a variety of variables, such as zip code, age, type of vehicle, marital status, and more.
To give you a rough idea of how much these risk factors can increase your premiums, Bankrate’s insurance editorial team compared the average minimum coverage premiums for New Jersey drivers with various high-risk factors to the state’s minimum average.
- Average cost of minimum coverage in New Jersey: $984 per year
- Drivers convicted of drunk driving: $2,042 per year
- Drivers with bad credit: $2,165 per year
- Self-insured age 18: $2,664 per year
- 21-year-old convicted of DUI: $2,891 per year
NJ PAIP offers two payment options: you can pay the full annual premium at the start of your policy, or you can make an initial 30 percent down payment and pay the remainder in installments over several months. If you are insured under this program, you do not have to stay in the program if you can get cheaper insurance elsewhere. You are free to cancel your insurance and your remaining premiums will be refunded. However, to avoid a lapse in coverage, make sure you have a replacement policy in place before canceling your NJ PAIP plan.
How to Purchase Insurance from NJ PAIP
To get the most accurate quote, you will first need to find a NJ PAIP insurance agent. Then, select an agent in your area and request a quote. It is important to provide as many details as possible, as the information you provide will be used to determine how much you are expected to pay for insurance.
The company that NJ PAIP assigns to you must commit to providing you with insurance for the next three years, regardless of your driving history. Unlike when buying regular auto insurance, your options are likely quite limited when it comes to high-risk insurers, so the three-year obligation could potentially be a big benefit.
Other ways to find cheap car insurance in New Jersey
New Jersey is a no-fault state and strives to make low-cost insurance available so drivers can stay insured. If you look in the right places, there are ways to get high-risk insurance without relying on a state-sponsored program. If you have a spotty driving history or little or no credit, you have the following options in addition to an Assigned Risk Plan in New Jersey:
- Specialized Automobile Insurance Policy (NJ SAIP): This special insurance plan is only available to those with Medicaid coverage that involves hospitalization. Also known as $1 a day auto insurance in New Jersey, this plan is a coverage option of last resort that only provides medical coverage for emergency treatment after an accident.
- High Risk Insurance Companies: It’s possible to find insurance companies that accept high-risk drivers, but you’ll have to do your own research to find one that will cover you, and the three-year period doesn’t always apply. Most national insurers also offer a variety of coverage options for drivers with a history of drunk driving, accidents, and other infractions.
New Jersey law aims to give all drivers access to auto insurance. By gradually improving your driving record, you may qualify for a variety of discounts offered by most insurance companies that can reduce your annual premiums, either initially or over time. If not, you may be able to obtain insurance through state-sponsored initiatives such as NJ PAIP.
FAQ
Methodology
Bankrate uses Quadrant Information Services to analyze August 2024 rates for every zip code and insurer in all 50 states and Washington, D.C. Rates are weighted based on population density in each area. Estimated rates are based on a 40-year-old male and female solo driver with a no-accident record, good credit, and the following full coverage limits:
- $100,000 bodily injury liability per person
- Bodily injury liability of $300,000 per accident
- Property damage liability of $50,000 per accident
- $100,000 per person in bodily injury claims caused by uninsured motorists
- Uninsured motorist bodily injury compensation of $300,000 per accident
- $500 collision deductible
- $500 comprehensive deductible
To determine the minimum coverage limits, Bankrate used the minimum coverage that meets each state’s requirements: Our base profile driver owns a 2022 Toyota Camry, commutes to work five days a week, and drives 12,000 miles per year.
These are sample rates and should be used for comparison purposes only.
Credit-Based Insurance Score: The rates were calculated based on the insurance credit tier that the driver was assigned: “Poor, Average, Good (Basic), Excellent.” Insurance credit tiers take into account your official credit score, but they don’t rely solely on that variable. Four states — California, Hawaii, Massachusetts, and Michigan — prohibit or limit the use of credit as an assessment factor in determining auto insurance rates.
Incident: Rates were calculated by assessing a baseline profile applying the following incidents: no criminal record (baseline) and one DUI conviction.
year: Rates were calculated by assessing a base profile applying ages 18-21 (baseline: 40 years old). Depending on age, drivers may be renters or homeowners. In Hawaii and Massachusetts, age is not an assessment factor due to state regulations.
