Photo: Famartin, CC BY-SA 4.0, via Wikimedia Commons
New Jersey sells two main types of car insurance policy: the Standard Policy, which most drivers choose, and the cheaper Basic Policy, which meets the legal minimum but leaves big gaps. This guide is for new New Jersey drivers and their parents choosing a first policy. It compares the two side by side, explains the “right to sue” choice, and covers what the law says you must do after a crash, as of November 2026.
Key facts
- Insurance is mandatory for every vehicle registered in New Jersey, and you must carry the insurance ID card (paper or electronic) whenever you drive, including on a permit.
- Standard Policy: bodily injury liability starts at $35,000 per person and $70,000 per accident, with $25,000 property damage, according to the Department of Banking and Insurance (DOBI).
- Basic Policy: $5,000 property damage and $15,000 personal injury protection (PIP). Bodily injury liability is not included; $10,000 is only an option.
- Basic always comes with the limited right to sue. Standard lets you choose limited or unlimited.
- After a crash with injury or property damage over $500, you must notify your insurer at once and send a written report to the MVC within 10 days if the police did not file one.
Basic vs Standard policy in New Jersey: side by side
This table follows DOBI’s own comparison chart.
| Coverage | Standard Policy | Basic Policy |
|---|---|---|
| Bodily injury liability (people you hurt) | From $35,000 per person / $70,000 per accident, up to $250,000 / $500,000 | Not included. $10,000 for all persons per accident is available as an option |
| Property damage liability | From $25,000 per accident, up to $100,000 or more | $5,000 per accident |
| Personal injury protection (PIP) | From $15,000 per person or accident, up to $250,000 or more. Up to $250,000 for certain serious injuries whatever limit you pick | $15,000 per person, per accident. Up to $250,000 for certain serious injuries |
| Uninsured/underinsured motorist | Available up to your liability limits; a minimum amount is required | None |
| Collision and comprehensive | Always available as options | Optional, and only from some insurers |
| Right to sue for pain and suffering | Your choice: limited or unlimited | Limited right to sue only |
The “certain injuries” that unlock up to $250,000 of PIP are permanent or significant brain injury, spinal cord injury or disfigurement, and some trauma-center treatment straight after a crash.
What the Standard Policy minimum changed to
The Standard Policy minimums rose to $35,000 / $70,000 bodily injury for new and renewal policies from January 1, 2026. Property damage stays at $25,000. That increase does not apply to the Basic Policy. Our minimum car insurance by state table puts these numbers next to other states.
What the Basic Policy leaves you exposed to
DOBI says the Basic Policy “offers less protection, but at a lower cost”. In practice:
- No bodily injury liability unless you add the $10,000 option. If you injure someone, DOBI warns you pay for their pain, suffering and some economic losses yourself, your insurer will not pay a lawyer to defend you, and a court judgment can be taken from your wages.
- $5,000 of property damage will not go far if you hit a newer car.
- No uninsured or underinsured motorist cover, so if an uninsured driver hits you, your own policy will not step in.
- Limited right to sue, so you usually can’t claim pain and suffering from the other driver unless your injury is on the permanent-injury list below.
DOBI suggests the Basic Policy for people with few family responsibilities and few assets, and says it can be a stepping stone for younger drivers starting work. It also notes that New Jersey law shields producers (agents) from liability for selling minimum cover. You decide, so read the coverage selection form before signing.
Limited vs unlimited right to sue
On a Standard Policy you must choose. The choice only affects lawsuits for pain and suffering (non-economic loss). Medical bills and some economic losses are paid through PIP whichever you pick.
- Unlimited right to sue (No Limitation on Lawsuit option): you keep the right to sue the at-fault driver for pain and suffering for any injury. It costs more.
- Limited right to sue (Limitation on Lawsuit option): you can only sue for pain and suffering if you suffer loss of a body part, significant disfigurement or scarring, a displaced fracture, loss of a fetus, a permanent injury, or death. You can still sue for economic damages such as medical costs and lost wages.
Two details matter for families:
- Your choice also binds your spouse, children and other relatives living with you who are not covered under another auto policy.
- If you don’t make a choice on the coverage selection form, the limited right to sue is imposed by law.
PIP choices that change your price
- Medical deductible: the guide lists $250 as the most common choice, with $500 to $2,500 options that cost less. You also pay a 20% co-payment on medical costs between your deductible and $5,000.
- Health insurer as primary: you can make your own health insurance pay first for crash injuries. Check your health plan covers auto injuries before choosing it. Medicare and Medicaid can’t be used for this option.
- Extra PIP package (Standard only): income continuation, essential services, death benefit and funeral expenses. Most drivers keep it, according to DOBI.
Collision and comprehensive have a standard $750 deductible on the Standard Policy, with higher and lower options. A “named driver exclusion” can lower your price, but if the excluded driver crashes your car, you have no collision or comprehensive cover for it.
The Special Policy (Medicaid only)
Drivers eligible for federal Medicaid with hospitalization can buy a medical-only Special Automobile Insurance Policy for $365 a year, according to DOBI’s buyer’s guide. It is not a substitute for liability cover for everyone else.
Teen and new driver considerations in New Jersey
- Permit holders need insurance too. The NJ Driver Manual says anyone driving in New Jersey, including on a validated permit, must carry valid insurance and registration cards.
- Road test cars must have a valid insurance ID card (paper or electronic) for the vehicle you test in.
- Tell your insurer when a teen starts driving. Each insurer sets its own rule on when a permit or probationary driver must be listed. See adding a teen driver to car insurance.
- The lawsuit choice covers teens in your household unless they have their own policy.
- Points and convictions can raise premiums. The manual notes that motor vehicle convictions may increase what your insurer charges, and an MVC-approved defensive driving course can remove two points and may earn a discount. See New Jersey points and surcharges and the probationary license rules.
- You can change at any time. DOBI says you can shop around and switch mid-term, and if you change to cheaper options you are entitled to a refund of unused premium within 60 days.
What New Jersey law says to do after a crash
- Stop and stay at the scene without blocking traffic if you can.
- Call the police for any crash with injury, death, or vehicle or property damage. If someone has died, don’t move the body until police or an ambulance arrive.
- Hit a parked car? Notify the police and try to find the owner.
- Show your insurance ID card. The manual says you must show it when involved in a crash.
- Notify your insurer at once with full details if there is injury or property damage over $500.
- Send a written report to the MVC within 10 days if property damage is over $500 or anyone is hurt and no police report was filed. No written report is needed if the police filed one.
- See a doctor if you are shaken up.
The full national checklist: what to do after a car crash in the US.
Penalties for driving uninsured in New Jersey
| Offense | License loss | Fines and surcharges | Jail | Community service |
|---|---|---|---|---|
| First offense | 1 year | $300 to $1,000 fine, plus $250 a year for 3 years surcharge | None listed | Set by the court |
| Second offense | 2 years | Up to $5,000 fine, plus $250 a year for 3 years surcharge | 14 days | 30 days |
The manual says a first-offense suspension may be reduced or dropped if you show the court proof of liability insurance at the hearing. If your insurance ends, you must surrender your license plates.
Common questions
Is the Basic Policy legal in New Jersey?
Yes. DOBI says it provides enough coverage to meet New Jersey’s minimum insurance requirements, and any NJ-licensed insurance producer can sell it.
Should a teen driver be on a Basic Policy?
That is a family decision, but note the gaps: no bodily injury liability unless you add $10,000, $5,000 property damage, and no uninsured motorist cover. A family with a home or savings to protect is usually exposed by those limits.
What does “What most drivers choose” look like?
DOBI’s options chart lists $300,000 liability, $250,000 PIP with a $250 deductible, the extra PIP package, $300,000 uninsured/underinsured cover and $500 collision and comprehensive deductibles as the common choices. These are typical picks, not legal requirements.
Do I need to report a minor fender bender to the MVC?
Only if there is injury or more than $500 of property damage and no police report was filed. You must still notify the police of any crash with injury or vehicle or property damage.
Can I switch from Basic to Standard later?
Yes. DOBI says you can change coverages and limits at any time, not just at renewal.
Does the right-to-sue choice affect my medical bills?
No. It only affects lawsuits for pain and suffering. Your medical expenses are paid up to your PIP limit either way.
Back to the full route: learning to drive in New Jersey.
Sources
- New Jersey Department of Banking and Insurance, “Auto Insurance New Jersey Buyer’s Guide” (2026) (nj.gov/dobi)
- New Jersey Department of Banking and Insurance, “Basic Policy” and “Automobile Insurance” consumer pages (nj.gov/dobi)
- New Jersey Department of Banking and Insurance, “Bulletin No. 25-06: Auto Insurance Coverage Limits Pursuant to P.L.2022, c.87” (nj.gov/dobi)
- New Jersey Motor Vehicle Commission, “New Jersey Driver Manual” (2026 edition), Chapters 1, 2, 5, 7 and 10 (nj.gov/mvc)