Why is New Jersey car insurance so expensive?

Car insurance in New Jersey is expensive because it's a no-fault state with the highest population density of any state in the country. In New Jersey, you can expect to pay approximately $1,624 per year for full coverage car insurance or $994 per year for minimum coverage. Car insurance in New Jersey is more expensive than the national average, which is around $1,500 annually for full coverage and about $600 per year for minimum coverage.

The cost of car insurance is steadily increasing, too, both in New Jersey and nationwide. As the cost of providing insurance goes up, the premiums insurers charge also rise. All insured drivers share the increasing cost of insurance. That is why your rates tend to go up every time your policy is renewed, regardless of whether any individual factors—like your driving record or location—have changed.

There are several unique reasons why car insurance goes up every year in New Jersey, too, even if your details remain the same.

Top Reasons Car Insurance Is Expensive in New Jersey

• People in New Jersey are driving more.

As a result, the number of accidents, claims, and payouts is rising, too. In New Jersey, there were approximately 591 fatal crashes in 2018, versus 556 fatal crashes in 2014.

• New Jersey auto repairs are getting more expensive.

Another reason New Jersey auto insurance is getting more expensive is that cars are becoming more expensive to repair. In 2016, the average cost of car repairs in New Jersey was $1,309.29, up from $1,220.00 in 2012. Vehicles today cost more to repair due to all the technology and features inside them now.

• People in New Jersey drive uninsured.

As the cost of car insurance continues to rise, more drivers take the risk of driving without car insurance. In 2015, 15% of drivers lacked even minimum liability insurance in New Jersey. The cost of uninsured drivers is passed on to consumers through higher premiums.

• Healthcare in New Jersey is getting more expensive.

Car insurance companies are hit hardest when paying out claims involving medical bills, and it’s not getting any cheaper. Healthcare spending increases by an average of 5.5% every year in New Jersey.

• New Jersey is experiencing more severe weather.

In New Jersey, severe weather events like winter storms and flooding are becoming increasingly common. These weather events cause insurers to pay out a higher number of claims, which tend to be more expensive and less predictable. As a result, they have to raise rates to keep pace.

However, there could be other issues elevating your rates.

If your driving record is clean and your rates are still high, your car insurance might be expensive because of your:

Age. Drivers under 25 and older than 65 pay more for auto coverage because they are statistically more likely to be involved in serious and fatal accidents. In New Jersey, 16-year-old drivers pay an average of $6,871, 25-year-old drivers pay an average of $2,004, and people over 65 pay an average of $1,434.

Location and driving patterns. Population-dense cities have higher premiums than rural areas because city living usually means more accidents, more property crime, and more frequent claims. In New Jersey, the most expensive locations for insurance are Newark, Irvington, and Passaic. You can also expect rates to change based on your driving patterns—long commutes or regular driving in high-risk areas can cost you.

Financial responsibility. In New Jersey, drivers with no credit pay 102% more on their premiums than drivers with excellent credit. You can also demonstrate financial responsibility by maintaining minimum car insurance with no gaps in coverage. Letting your coverage lapse could raise your rate by as much as 30% in New Jersey, when you get your next policy.

Claims history. You should avoid filing small claims that can drive up your premiums. In New Jersey, the average collision claim raises a driver’s rates by $1,047.40, which amounts to $3,142 over the course of three years. If you have a $500 deductible and a $1,500 claim, you’ll end up paying $3,642 through insurance, versus $1,500 out of pocket. In that case, filing a claim is not the best choice.

How to Get Cheaper Car Insurance in New Jersey

Multiple factors affect the cost of car insurance. Some things you can’t control, but you do have a say in most of the contributing factors. Driving safely, obeying traffic laws, and keeping a clean driving record are the best ways to keep your insurance costs down.

Other than that, the best way to lower your car insurance costs is to compare rates from at least three insurance companies. Ideally, you should check your rates every 6-12 months, when you renew your policy. But at a minimum, be sure to check your record and shop for rates every three to five years, since you may be able to get a lower rate if a traffic violation falls off your record.

In New Jersey, the most expensive policies cost roughly $1,887, and the least expensive coverage costs around $745, when all driver profile information is the same. That means you could save as much as $1,142 simply by shopping around. Be sure to confirm you’re getting all the discounts you’re eligible for, too.