Who are the biggest car insurance companies in New Jersey?
The state of New Jersey Department of Banking and Insurance lists State Farm, Allstate, 21st Century, and GEICO as the largest car insurance companies doing business in that state. Their website lists approximately 40 companies licensed to write policies, but interestingly enough, many of them are listed as no longer accepting new business. Among those who are still taking new customers, State Farm appears to be the largest.
Perhaps one of the reasons why there are so many New Jersey car insurance companies not taking new business rests in the fact that it is one of the states with the highest losses in terms of lawsuits, insurance fraud, taxes, and financial regulations. In fact, things were so tough in that state back in the 1980s, insurance companies were pulling out in large numbers. One particular company known as CURE was originally established to help close the gap left by fleeing insurance companies.
New Legislation in 1998
In 1998, the state’s leaders got together and passed a piece of legislation known as the Automobile Insurance Cost Reduction Act. The new law was aimed at providing both consumer relief and an easier business climate for car insurance companies to operate under. Through the legislation government, leaders were attempting to bring down the high cost of New Jersey’s car insurance by cleaning up the state’s legal system, which allowed for astronomical injury awards, unending frivolous lawsuits and both insurance and medical fraud.
From the standpoint of the consumer, the most important effect of the law was that it gave New Jersey’s drivers more choice about the types of coverage they could purchase. It also mandated that insurance companies reduce their premiums by as much as 15% on any policies purchased or renewed beginning in the second quarter of 1999.
Yet, despite the good intentions of lawmakers, the legislation did little to make a significant impact on New Jersey’s insurance industry. Today, the state still ranks among the worst states for car insurance companies to do business in.
Smaller Companies are Doing Well
Surprisingly, despite the poor insurance environment in New Jersey, smaller, regional companies are doing well. One would normally expect just the high-powered companies would be able afford business in New Jersey, but that’s not entirely true.
One example of a successful regional insurance company is the sixth-ranked High Point Group. The High Point Group is part of a private financial services firm known as Plymouth Rock. They currently insure more than 350,000 New Jersey drivers and received just one registered complaint in 2010.
There are still other regional companies doing well in New Jersey; companies like 12th ranked AAA Mid-Atlantic Group, 13th ranked Encompass Group, and the New Jersey Skylands Insurance Association. All three companies insure less than a combined 200,000 vehicles across the state and, just like the like High Point Group, each received only one registered complaint in 2010. That’s pretty impressive in a state known for its very tough customer satisfaction environment.
Purchasing Car Insurance in New Jersey
New Jersey became one of 12 states with no-fault car insurance through legislation enacted in 1973. No-fault insurance is supposed to keep the court system free of unnecessary auto accident-related lawsuits by requiring individual car insurance companies to cover their own drivers regardless of who causes a crash.
As such, if you are involved in an accident caused by another driver, you cannot recover the cost of your medical expenses beyond his liability limits unless certain verbal thresholds are reached. Even at that, your right to sue is restricted according to New Jersey law. As a no-fault state, New Jersey requires all drivers to carry three types of minimum auto coverage. They are known as:
- Liability insurance
- Personal injury protection (PIP)
- Uninsured motorist coverage (UMC)
The minimum limits for all three types are represented by the formula 15/30/10. Each number in the formula represents tens of thousands of dollars. For example, the number 15 indicates each driver must carry a minimum amount of $15,000 coverage to pay for liability.
By way of definition, liability insurance pays for injuries sustained by other people you’ve hit. Examples would include pedestrians and bicyclists. It does not cover your own injuries or those of your passengers. Personal injury protection coverage is what covers your medical bills and those of your uninsured passengers. In either case, PIP kicks in only after your regular health insurance is exhausted.
Finally, UMC coverage protects you against financial loss if you are hit by another driver who has no insurance or insufficient coverage to meet his own liability obligations.
New Jersey Car Insurance is Mandatory
Like just about every other state, New Jersey mandates car insurance for any vehicle that is registered with New Jersey tags. Proof of insurance is required before a vehicle can be registered and must be maintained throughout the entire time the registration is in force.
Drivers are also required by law to carry an insurance identification card provided by their provider in their car. That card must be presented at the time of annual inspection, during a traffic stop, and after an accident. Failure to produce an insurance identification card in any one of those circumstances can result in fines.
If insurance is allowed to lapse, drivers are required to immediately surrender their registration and plates. Driving without insurance in New Jersey is a serious offense, which could result in a suspension of your driver’s license. Heavy fines are also part of the equation as well. If your license is suspended due to insurance lapse, you will pay a reinstatement fee if you want your license back at the conclusion of the suspension period.