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NJ Auto Insurance Requirements
As mandated by the state, New Jersey requires all drivers to be insured with a minimum coverage policy of..
 
 
 
A Short History of NJ Auto Insurance
New Jersey’s insurance history has been controversial and far from static..
 
 
New Jersey Tier Rating System
As established in the AICRA legislation, IFA insurance passes on rate reduction benefits to consumers..
 
 
 
New Jersey Insurance Scoring
It has become common practice for insurance carriers to use credit scores..
 
 
Understanding The Rules For NJ Auto Insurance
Licensed New Jersey drivers must comply with NJ auto insurance requirements. With individual states setting rules for consumers, it is important to be fully informed about New Jersey auto insurance requirements when purchasing your policy. In addition, there are common industry practices that are helpful to know during the quoting process. That way, you can better understand optimal coverage needed for your particular circumstance and driving history.
NJ Auto Insurance Requirements
As mandated by the state, New Jersey requires all drivers to be insured with a minimum coverage policy of 15/30/5, with an additional requirement of $15,000/30,000 UM/UIM and $15,000 PIP coverage. In brief, the 15/30/5 rule translates to the following:
  • Bodily Injury—coverage of $15,000 for injury or death of any one
    person per accident, and $30,000 for all persons involved in any one
    accident
  • Property Damage—coverage of $5,000 for damage to property of another person
Further, you must select the right to recover damages, otherwise known as the tort option or threshold, when purchasing NJ auto insurance. Choices include:

  • Limited right to recover damages (Limited Tort) or verbal threshold
  • Full right to recover damages (Full Tort) or no threshold
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A Short History of NJ Auto Insurance
New Jersey’s insurance history has been controversial and far from static. Due to several issues affecting insured and insurers, several laws were passed in the last 15 years that have impacted mandates and provisions. The highlights are as follows:
  • Automobile Insurance Cost Reduction Act of 1998—otherwise known as AICRA, this legislation was designed to control costs and open up consumer choice, while protecting insurers from fraud and abuse. More specifically, AICRA offers Standard and Basic policy options to the consumer, established a PIP resolution system, created thresholds to limit lawsuits, eliminated surcharges, established a tier rating system, created an insurance fraud prosecutorial office, among several other provisions.
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New Jersey Tier Rating
As established in the AICRA legislation, IFA insurance passes on rate reduction benefits to consumers by rewarding good drivers. This allows qualifying drivers to pay the lowest tier rates as stipulated by insurance tenure loyalty for a minimum 1 year by receiving a 15% discount on premiums. Consumers continue to enjoy rate reductions on standard rates of:
  • 20% discount for two years
  • 25% discount for three years
  • 30% discount for four years

Insured must also carry comprehensive and collision coverage to quality.
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New Jersey Insurance Scoring
It has become common practice for insurance carriers to use credit scores to aid in risk calculations for coverage and premium pricing. It is objective and confidential and IFA does not see personal details on a credit report. Rather, underwriting only sees a score from Choicepoint. This is used to determine risk factors for overall coverage and does not consider personal factors such as race, nationality, religion, gender, marital status, age, income or net worth.
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