New Jersey requires car insurance, but what if you've been denied coverage? Drivers identified as high-risk by insurance companies may need to obtain coverage under New Jersey's assigned risk vehicle insurance program, the New Jersey Personal Automobile Insurance Plan (NJ PAIP).
What is the New Jersey Personal Automobile Insurance Plan (NJPAIP)?
New Jersey isn't known for its low car insurance rates, but some drivers may have a particularly difficult time getting affordable coverage. Negative marks on your driving record, low credit, or a high number of claims may cause certain insurers to charge you expensive rates or even deny your application altogether. For some drivers, frequent rejections may make it tempting to go without coverage entirely; according to the Insurance Information Institute, over 10% of New Jersey drivers were uninsured in 2022.
The problem is that when some people drive without insurance, it raises costs for everyone else. NJ PAIP was established in 1992 to satisfy the needs of NJ drivers who are unable to obtain coverage owing to their high risk profile and to ensure that all New Jerseyans may afford vehicle insurance.
Please keep in mind that the NJ PAIP is not an auto insurance firm. Rather, it is a program that connects drivers with insurance companies' special high-risk branch to ensure proper coverage, often known as an "assigned risk plan."
Who is eligible for the New Jersey PAIP?
To qualify for the NJ assigned risk vehicle insurance plan, like with most state-sponsored insurance programs, you must first provide documentation that you failed to obtain normal insurance with two standard carriers in the previous 60 days. Only those who have been denied all other insurance options may apply for the NJ PAIP. Keep in mind, your PAIP agent will have these information, and it is not necessary for you as the insured to have in hand.
You'll also need to show that you're a New Jersey resident and be a New Jersey licensed driver. You must have prior driving experience of 3 years(valid driver's license for consecutive 3 years). Your vehicle must be registered in the State of New Jersey. You may also be eligible if your license was suspended for driving without insurance or if you require insurance in order to have your license reinstated. In order to obtain PAIP without an active license, you will need to include a driver in your household that holds an active NJ license. Please be advised that you are required by law to maintain auto insurance if you have an active registered vehicle, even if your license is suspended.
Your credit history has no significance in applying for PAIP, but certain criteria may still make you ineligible, such as:
What kind of coverage is provided through the NJ PAIP?
New Jersey car insurance law requires all drivers to have a minimum level of liability coverage. Under the New Jersey Assigned Risk Plan, drivers can select between a basic and a standard policy, with the former providing fewer coverage options.
Coverage type | Basic policy | Standard policy |
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 protection | $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 | Available matching liability limits |
Collision coverage | Available from some insurers | Available from all insurers |
Comprehensive coverage | Available from some insurers | Available from all insurers |
Right to sue | Limited | Limited or Unlimited |
High-risk vehicle insurers participating in the New Jersey Assigned Risk Plan are required to provide coverage to drivers who qualify for three years. After that time, if you are still a high-risk driver and do not have ordinary insurance, you will most likely be allowed to apply for PAIP again. Coverage options may change from one insurance company to the next, so evaluating available alternatives can help you determine what would best meet your needs and budget.
How much does vehicle insurance cost under the New Jersey Assigned Risk Plan?
High-risk vehicle insurance is often more expensive than general market options, and the NJ Assigned Risk Plan may follow this trend. Your premium will also be determined by the rate criteria that individual insurance carriers consider when determining a price for you, which may include your ZIP code, age, kind of vehicle, and marital status, among others.
To get a feel of how these risk factors can affect your rates. Here are typical minimum coverage prices for New Jersey drivers with a variety of high risk criteria to the state minimum basic average to minimum standard average. Prices do not include collision or comprehensive.
Criteria | Basic policy | Standard policy |
Average cost for clean driver over 30 | $1500-$2000 yr | $2500-$3000 yr |
20-year-old with own policy | $1800-$2500 yr | $2500-$4000 yr |
A 21-year-old with a DUI conviction | $2300-$3500 yr | $3000-$6500 yr |
Driver with a DUI conviction. Over age 30 | $1800-$3000 yr | $2500-$4000 yr |
The NJ PAIP offers two payment options: you can pay the complete annual premium in full at the start of your policy, or you can pay a 30% deposit upfront and the remainder in 5 installments over the next 10 months. If you are insured through this program, you are not required to continue with it if you are qualified for a lower-cost coverage elsewhere. To avoid a lapse in coverage, ensure that your replacement policy is in force before canceling your NJ PAIP plan.
How to Purchase Insurance from the NJ PAIP
To get the most accurate price, first find a NJ PAIP insurance producer. Then, find an agent in your area and contact them for a quote. The information you submit will be used to calculate the amount you can anticipate to pay for insurance, so provide as much data as possible.
The business that the NJ PAIP assigns to you must agree to provide you with insurance for the next three years, regardless of your driving record. Unlike when obtaining conventional auto insurance, your alternatives for high-risk insurance carriers are likely to be restricted, therefore the three-year commitment can be a significant advantage.
Other Insurance Options?
New Jersey is a no-fault state that works to guarantee that low-cost insurance is accessible to help drivers stay covered. If you look in the appropriate locations, you can find high-risk insurance without having to go via state-sponsored programs. If you have an imperfect driving history or little to no credit, you have the following options in New Jersey, in addition to the Assigned Risk Plan:
Special Automobile Insurance Policy (NJ SAIP): This customized insurance plan is only offered to Medicaid recipients with hospitalization. Also known as New Jersey Dollar a Day vehicle insurance, it is a last-resort coverage option that only covers emergency medical expenses in the event of an accident. No liability, personal injury protection, property damage, collision, or comprehensive is provided.
High-risk insurance companies: It is feasible to locate insurers who take high-risk drivers, but you may need to conduct your own research to find those with whom you will be eligible for coverage, and the three-year guaranteed coverage period may not apply. Most national insurers also provide alternative coverage options for drivers with DUIs, accidents, or other offenses on their record.
New Jersey rules aim to ensure that every motorist has access to vehicle insurance. By steadily improving your driving record, you may be eligible for various reductions offered by most insurers, which can cut annual premiums either immediately or over time. Otherwise, you may be able to get insurance through state-sponsored programs such as the NJ PAIP.
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