The personal auto policy itself (Parts A through F, who is an insured, covered autos, exclusions) is covered in the national Personal Auto Policy guide. New Jersey layers a no-fault system on top of it, with three policy types (Standard, Basic and the Special Automobile Insurance Policy), a required lawsuit option election, and some of the most detailed cancellation and claims rules in the country. This guide covers those New Jersey rules, with citations to the New Jersey Statutes (N.J.S.A.) and Administrative Code (N.J.A.C.). Figures are those in effect in 2026.

Compulsory insurance

• Every owner of a vehicle registered or principally garaged in New Jersey must carry at least the required liability coverage, or a Basic or Special policy (N.J.S.A. 39:6B-1; 39:6A-3).
• Driving uninsured (first offense): a $300 to $1,000 fine, community service, and possible loss of driving privileges for up to one year (up to two years for later offenses) (N.J.S.A. 39:6B-2).
• The driver must carry the insurance identification card, on paper or electronically (N.J.S.A. 39:3-29).
• A person required to carry PIP who didn't has no right to sue for economic or noneconomic loss suffered while driving that uninsured car. Neither does a driver convicted of DWI in connection with the accident (N.J.S.A. 39:6A-4.5).

The three policy types

Standard Policy (2026 minimums)

(N.J.S.A. 39:6A-3; 39:6B-1; 17:28-1.1.) When the minimums rose, insurers raised limits at renewal and notified the insured. No new coverage selection form was needed (N.J.S.A. 39:6B-1d).

Basic Policy

A low-cost option with limited protection (N.J.S.A. 39:6A-3.1):

• $5,000 property damage liability.
• No bodily injury liability unless the optional $10,000 limit (one limit for all persons per accident) is bought.
• PIP of $15,000 per person per accident, but up to $250,000 for permanent or significant brain, spinal cord or disfigurement injuries and certain trauma-center treatment.
• No UM/UIM. A car covered by a Basic policy isn't an "uninsured motor vehicle" (N.J.S.A. 17:28-1.1e(2)).
• Everyone it covers is automatically under the limitation on lawsuit option.
• Collision and comprehensive may be available from some insurers, but they aren't required to offer them.

Special Automobile Insurance Policy (SAIP)

• Only for drivers enrolled in federal Medicaid with hospitalization (N.J.S.A. 39:6A-3.3).
• Provides emergency PIP up to $250,000 per person and a $10,000 death benefit. It has no liability, collision, comprehensive, UM or UIM coverage. Because it has no liability coverage, an SAIP car counts as an uninsured motor vehicle (N.J.S.A. 17:28-1.1e(2)(d)).
• One statewide rate administered through the auto insurance plan: $365 a year ($360 if paid in full), per the Department in 2026. Insureds are under the limitation on lawsuit option.

Personal injury protection (PIP)

PIP pays the insured's medical expenses and related losses regardless of fault (N.J.S.A. 39:6A-4).

• Medical expense options (Standard policy): $250,000 default, or $150,000, $75,000, $50,000 or $15,000 if chosen in writing. Even with a lower option, up to $250,000 is paid for permanent or significant brain, spinal cord or disfigurement injuries (N.J.S.A. 39:6A-4.3e).
• Deductible and copay: the standard deductible is $250, and insurers must offer $500, $1,000, $2,000 and $2,500. There is a 20% copayment on expenses between the deductible and $5,000 (N.J.S.A. 39:6A-4.3). On a $10,000 bill with the $250 deductible, the insured pays $250 plus 20% of $4,750 ($950), or $1,200 in all.
• Health insurance primary option: the insured can make health coverage primary for auto injuries, but Medicare and Medicaid can't be used this way (N.J.S.A. 39:6A-4.3d).
• Other PIP benefits: income continuation up to $100 a week / $5,200 per person; essential services up to $12 a day / $4,380; funeral expenses up to $1,000 (N.J.S.A. 39:6A-4). Insurers must offer an option to drop these and keep only medical expense benefits (N.J.S.A. 39:6A-4.3b).
• Whose PIP pays: the named insured's own PIP covers the named insured and resident relatives, and nobody collects PIP under more than one policy for the same accident (N.J.S.A. 39:6A-4.2). Policies on motorcycles and other non-auto vehicles must give PIP to pedestrians they injure (N.J.S.A. 17:28-1.3).
• Offsets: PIP is reduced by workers' compensation, temporary disability benefits, Medicare and certain military benefits (N.J.S.A. 39:6A-6).
• Claim timing: the treating provider gives notice within 21 days of starting treatment. PIP is overdue after 60 days unless the insurer denies the claim or gives notice that it needs up to 45 more days (N.J.S.A. 39:6A-5). Insurers must offer PIP dispute resolution (N.J.S.A. 39:6A-5i).

The lawsuit options

Every Standard policyholder elects one of two options on the coverage selection form, which shows the price difference (N.J.S.A. 39:6A-8.1):

• Limitation on Lawsuit (the verbal threshold) costs less. The insured can sue for pain and suffering only for death, dismemberment, significant disfigurement or scarring, a displaced fracture, loss of a fetus, or a permanent injury. A permanent injury is a body part or organ that hasn't healed and won't heal to function normally. The plaintiff needs a physician's certification based on objective clinical evidence (N.J.S.A. 39:6A-8a).
• No Limitation on Lawsuit costs more and keeps the right to sue for pain and suffering for any injury.
• Default: a named insured who doesn't choose in writing is deemed to have chosen Limitation on Lawsuit (N.J.S.A. 39:6A-8.1b). The choice carries over at renewal until a new form is signed.
• The option covers the named insured, spouse and resident relatives who don't have their own policy. It limits only noneconomic damages, never economic losses.
• The deemer statute makes out-of-state insurers include New Jersey liability, UM and PIP when their insured's car is used in New Jersey, and those insureds are under the limitation on lawsuit option (N.J.S.A. 17:28-1.4).

Uninsured and underinsured motorists

• UM/UIM is required on every liability policy except Basic (N.J.S.A. 17:28-1.1a). Limits up to at least $250,000/$500,000 are available, but they can't exceed the insured's own liability limits (N.J.S.A. 17:28-1.1b).
• No stacking across vehicles or policies (N.J.S.A. 17:28-1.1c). UM property damage excludes the first $500 of damage.
• Limits-to-limits test: a car is underinsured only when its liability limits are less than the injured person's UIM limits and those limits have been exhausted (N.J.S.A. 17:28-1.1e(1)). Example: an at-fault driver with $35,000 of liability causes $45,000 of damages to a person who has $100,000 of UIM. The liability insurer pays $35,000, and the injured person's UIM pays the remaining $10,000.
• Uninsured vehicles include those with no bodily injury coverage, an insolvent or denying insurer, hit-and-run cars and SAIP cars.
• An employee covered under a business's auto policy gets the same UM/UIM as the named insured (N.J.S.A. 17:28-1.1f).

Buying the policy

• No new policy may be issued unless the application comes with a buyer's guide and coverage selection form. Insureds get them again at least annually (N.J.S.A. 39:6A-23). A signed form is prima facie evidence of the insured's choices.
• Insurers give an Automobile Insurance Consumer Bill of Rights to applicants and at least annually to insureds (N.J.S.A. 17:29A-52a).
• Physical damage deductibles default to $750 each for collision and comprehensive, and options up to at least $2,000 must be offered (N.J.S.A. 17:29A-39).
• A producer or insurer isn't liable for an insured's choice of minimum limits or decision not to buy UIM, collision or comprehensive, unless the conduct was willful, wanton or grossly negligent (N.J.S.A. 17:28-1.9).

Eligibility and the residual market

• Insurance eligibility points are assigned by insurers and are separate from the Motor Vehicle Commission's driving-record points. A driver with 7 or more points in the relevant three-year period isn't eligible for the voluntary market. Every newly licensed driver gets 3 points for inexperience (N.J.A.C. 11:3-34).
• A person convicted of DWI within three years before application or renewal isn't an "eligible person" (N.J.S.A. 17:33B-13). An at-fault accident is one where the insurer paid at least $1,000 (N.J.S.A. 17:33B-14).
• The Personal Automobile Insurance Plan (PAIP) is the residual market. It isn't an insurer: it assigns drivers to companies, at standardized rates that can be much higher than voluntary rates. All admitted insurers participate. The plan stops taking new eligible applicants when it reaches 10% of the market (N.J.S.A. 17:29D-1; N.J.A.C. 11:3-1).
• The Urban Enterprise Zone (UEZ) program encourages auto insurance availability in designated urban areas. A UEZ agent keeps a bona fide office in the zone (N.J.S.A. 17:33C-1, -2).
• The Department states that insurance scores may be used in rating but not to deny, cancel or nonrenew coverage.

Cancellation and nonrenewal

• Underwriting cancellation is allowed only within the first 60 days after the policy is issued (N.J.S.A. 17:29C-7).
• After 60 days, a policy can be cancelled only for nonpayment, suspension or revocation of the driver's license or registration, or knowingly false or misleading information (N.J.S.A. 17:29C-7).
• Notice: at least 20 days, or 15 days with the reason for nonpayment (N.J.S.A. 17:29C-8). Notices go by certified mail, or regular mail with a postal proof of mailing (N.J.S.A. 17:29C-10).
• Nonrenewal: notice 60 to 90 days before expiration, stating the specific reasons and facts (N.J.A.C. 11:3-8.6; N.J.S.A. 17:29C-9).
• Nonrenewal limits: an insurer may nonrenew up to 2% of its voluntary policies in a rating territory, plus one more for every two new cars it writes there. Each such driver must have at least two of these within five years: an at-fault accident, a moving violation of 4 or more points, or a failure to keep PIP. No more than 20% of one producer's book may be nonrenewed this way (N.J.S.A. 17:29C-7.1).

Physical damage claims (N.J.A.C. 11:3-10)

• Within 7 working days after notice of loss, the insurer inspects the vehicle, starts negotiating and makes a good-faith offer.
• The insured may use any licensed repair shop and is entitled to the payment. The insurer pays the shop directly only if the insured chooses that in writing.
• Actual cash value includes sales tax. A comparable vehicle is the same make, model, year and condition, with no more than 4,000 more miles.
• Payment or a proof-of-loss form goes out within 5 working days after the insured accepts the offer.

Commercial vehicles

Commercial motor vehicles need at least $1,500,000 per accident, or $300,000 for a vehicle rated 10,001 to 26,000 pounds. Umbrella or excess policies can be combined to reach the limit (N.J.S.A. 39:6B-1a).

Common exam traps

• No written lawsuit election means Limitation on Lawsuit, not No Limitation.
• Basic policy: $5,000 property damage, no automatic bodily injury liability (optional $10,000), $15,000 PIP, no UM/UIM.
• 2026 Standard minimums are $35,000/$70,000/$25,000. The older 15/30/5 figures are gone.
• UIM is limits-to-limits: compare the other driver's liability limits with your own UIM limit, not with the state minimum.
• 60-day line: underwriting cancellation only in the first 60 days. After that, only nonpayment, license or registration suspension, or fraud.
• PIP copay: 20% between the deductible and $5,000, whichever deductible was chosen.