NJ Auto Insurance
An informational guide on NJ Assigned Risk and NJ
Preferred Risk Car Insurance for Bergen County Residents.
Where you live or, more precisely, where you keep your car at
night has a bearing on your chances of having an accident or becoming a victim
of theft or vandalism. That's why a vehicle owner in
Newark NJ, pays a higher rate than the owner of an identical vehicle in
Other factors affecting insurance
territory rates include time and efficiency of police response and law
enforcement, local road and traffic conditions and the quality of local medical
services. Insurers even factor in the litigation rates in a given area, how many
lawsuits are filed, go to trial, are settled out of court, and for how much
Why are rates different for different cars, even
if the cars cost the same?
Vehicles are also grouped into categories according to their
chances of being damaged, vandalized or stolen. Insurance companies generally
consider the size and type of car as well as the value and the cost of repairs
which vary greatly, even on cars that cost about the same amount. Therefore, it
is assumed that a new sport utility vehicle is expected to hold up better in an
accident than a sleek sports car or a sub-compact car.
That is why you should research insurance coverage before you buy
your car. It helps you to understand the actual cost and indicates those
vehicles with good safety records. Your NJ insurance company will ultimately
reward you with lower premiums for putting safety first.
What is no-fault insurance?
- No-fault insurance is a system adopted in some states that
essentially bypasses the conventional legal procedure which finds fault in an
accident. This is the procedure by which you hire a attorney, file suit and
possibly go to court to prove the accident was the other guy's fault. No-fault
simply does away with the concept of one party or the other being at fault--no
lawyers, no court, no judge, no jury, no lengthy lawsuits against the other
party. This is considered beneficial to all taxpayers, because it eliminates
costly legal proceedings that the state must manage, and to insurance
policyholders, because it helps keep rates down.
If you are insured in a no-fault state and have an accident, you
do not have to go after the other driver. You contact your own insurer and file
a claim. Your own insurance policy guarantees you immediate compensation for
damages, medical expenses, lost wages, essential services, rental car
arrangements etc. (If these coverages are included)
The type and range of no-fault coverage varies from state to
state. What defines the limitations of no-fault policies can differ in two
- Threshold--The type of damage or injury or the
cost of repair or recovery that triggers the need for legal action.
- Mandated--Benefit Level The package of benefits (medical,
wage loss, replacement services and other expenses) your state requires you to
No. Some states, while not mandating auto
insurance, have what is known as financial responsibility laws that require all
drivers to be able to pay for any damage or injury they may cause. However,
carrying liability insurance is still the best and most affordable way for you
to meet your state's financial responsibility requirements once you know what
UM and UIM policies are offered by law in all states, including no fault states.
In fact, some states require all motorists to carry this coverage in order to
gain protection from inadequate insurance coverage of other drivers that may not
carry enough or higher limits as the majority does; i.e., 100-300-50,000.
First, call the police to the scene to be sure all
pertinent information is properly recorded. Your nerves will be shaken
right after an accident, and it helps to have a calm and knowledgeable person
walking you through the necessary details.
Then, contact your policy holder services or claims number
usually on you ID Card immediately and ask about filing a claim. If you followed
all the recommended guidelines and procedures when you bought your policy, you
should be covered within the benefits and or limitations of that policy.
Remember, your car insurance policy is designed to protect you and anyone in
If the cost of your physical damages or personal injuries exceed the amount your
policy will pay for, it may be time to take legal action against the other
party. Even if you have no-fault insurance, sometimes the only way to be
compensated is to place blame and responsibility where it belongs. That is why
it is best to get a police report documenting the incident and any witnesses
statement while it is fresh in their minds. This will preserve that moment in
time and remove any room for doubt later in the legal process.
It is better to have the police report and not really need it,
than it is to need one for court and not have one because it would have taken
another thirty minutes to an hour extra at the incident scene.
Technically, in most states your insurer can cancel your policy
- you fail to pay your premium;
- you lose your driver's license;
- you are guilty of material misrepresentation during the application process
i.e., you fail to notify your insurer of a recorded violation, such as a drunken
driving, or possession of drugs or any illegal activity offense; or
- you fail to report a substantial change of risk, such as buying a new high
performance sports car to replace an old high mileage family sedan.
However, your insurer may choose not to renew your policy for a
variety of reasons.
Do you have a bad driving record? Have you received a lot of speeding tickets?
Have you ever been caught driving drunk? Not only are these scenarios considered
unsafe and illegal, they are justifiable cause for your insurer to label you a
bad risk and refuse to renew your policy. Some underwriters may feel compelled
to cancel policies after only one accident. This does not apply to State High
Risk Insurance Pool policies.
Where do you live? Has the neighborhood changed in the last few
years? Have the accident or crime rates risen noticeably? As regions are
reassessed periodically, their status could change and you could suddenly find
yourself living in a higher risk area, where your insurer's rates may not be
adequate to cover losses.
Even "good" drivers can find themselves in the position of being
dropped by their current carrier. Reasons range from a couple of moving
violations, or multiple accidents, or other serious violations that make you a
high risk to situations outside your control, such as when insurers in your
state are suffering severe business losses.
That is why it is important to note that if you are licensed to
drive, by law, you are eligible for insurance. However, your options for new
coverage may be limited. Each state has created and regulates a market of last
resort for those who cannot otherwise obtain coverage. These groups have various
names, depending on the state you live in, such as assigned risk automobile
insurance plans or the residual market, or the State high risk pool.
Regardless of the reason you were dropped or cancelled by your
insurer, you need to act immediately to get another policy. Under no
circumstance should you drive your vehicle without knowing one hundred percent
that you have current insurance. If you do find yourself in the assigned risk
residual market pool, the price may be higher but it may be your only
alternative in maintaining your freedom to drive.
The most obvious way to maintain your low risk status is to keep
a clean driving record. If you've been in an accident or two, consider taking a
defensive driving course.
Also, look into purchasing special safety and security features for your car,
such as anti-lock brakes and an alarm system, or try OnStar. Your ARAIP-NJ PAIP
insurance producer can give you further tips on how to convince your insurer
you're a safe driver.
NJ Insurers often discount their rates in order to encourage good
driving practices and the use of safety and security precautions. Depending on
the insurance company, you can often lower your rates from 5 to 55 percent.
Sometimes the investment you make in your vehicle is worth the discount, and
sometimes it's simply worth some peace of mind. For example, the purchase of
anti-lock brakes merits a discount from nearly every insurer, but the discount
probably will not pay for the brakes which cost several hundred dollars during
the normal life of your vehicle. Anti-lock brakes are touted, nonetheless, as a
life-saving feature and deserves serious consideration when safety is a top
priority. Insurers generally offer discounts for:
- Safety Features Anti-lock brakes, air bags and
passive restraint systems i.e., automatic seat belts.
- Defensive Driving Clean violation record, driver's
education courses for teenagers and defensive driving or accident prevention
courses for adults insurance discounts for the latter are required in some
- Security Systems Alarms, electronic locks, VIN etching and
automotive disabling devices.
- Changing The Driving Habits Try commuting by public
transit, using a company vehicle for work-related travel and car-pooling.
- Formal Agreements Not to Drink and Drive The availability
of a discount for signing such an agreement varies among insurers and states,
however is a powerful idea that works.
- Buying NJ Home Insurance and Auto Policies from the Same Company
If you own a home and an automobile and you are insured by two different
companies, check into the cost of carrying both policies by one insurer. Your
agent can give you guidance as to which insurers offer discounts. This will
always offer you the cheapest buy, so put it in your corner when shopping for
- You can also lower your insurance rates by
requesting higher deductibles, which is the amount of money you pay out of
pocket before you make a claim. Increasing your deductibles on collision and
comprehensive coverage from $250 to $500, or even $500 to $750 will bring your
rates down. Moreover, you may not need collision and comprehensive coverage if
you drive an older car. Ask your producer which discounts are available to you.
How does adding drivers to my policy affect my
NJ Insurance rates?
The more people you allow to drive your vehicle on a regular
basis, the greater the chances of your vehicle being in an accident. Teenagers
are especially expensive to insure because they are the least experienced
A driver's-ed course can help ease the burden of insurance costs since it
teaches your teenager defensive driving techniques. If your child's high school
does not offer drivers education, try to find one offered by another school or a
private firm in the area. After all, the cost of driver's-ed could be cheaper
than the extra cost of your insurance. Many insurers offer "good student"
discounts as well.
An adult's driving experience can also affect your rates significantly. Don't
assume that every adult you know has been driving since age 17 or 18 or is a
competent driver with a clean driving or insurance record. Again, taking a
defensive driving course is a good way for adults to prove they are also
responsible drivers, thus lowering their risk and their insurance premium rates.