New Jersey Personal Automobile Insurance Plan (NJ PAIP)

New Jersey Personal Automobile Insurance Plan (NJ PAIP)

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New Jersey law requires all drivers to carry auto insurance. In 1992 the state established the New Jersey Personal Automobile Insurance Plan (NJ PAIP) to help high-risk drivers who have been unable to find auto insurance in the voluntary market to meet the requirements.

What is the New Jersey Personal Auto Insurance Plan (PAIP)?

According to New Jersey’s Department of Banking and Insurance, the personal auto insurance plan was created "to provide personal, private-passenger automobile coverages". NJ PAIP is not an insurance company; it is a clearinghouse that assigns each driver to an insurance company for coverage. This kind of coverage is called assigned risk.

New Jersey has a point system for its auto insurance market. Insurers assign eligibility points to drivers for tickets, suspensions and at-fault accidents. If you exceed seven points in a three-year "look back period,” your insurer may decline to renew your policy. If you are unable to find any high-risk auto insurance through the voluntary market, NJ PAIP may be your last resort to stay on the road.

Any company that writes auto insurance in NJ must help cover high-risk drivers. New Jersey has standardized the rates for assigned risk coverage, so they don’t vary from company to company. There are two types of plans available through NJ PAIP: a basic policy and a standard policy.

If you end up with coverage through NJ PAIP, you’ll want to focus on improving your driving record. This might make you eligible for the voluntary market and lower insurance rates in New Jersey in the future.

New Jersey PAIP eligibility

New Jersey requires you to certify that you’ve tried and failed to find auto insurance coverage in the voluntary market at least twice in the last 60 days. If you’ve been declined twice in the regular market, you may qualify for assignment through NJ PAIP if you:

  • Live in New Jersey
  • Have a car registered (or about to be registered) in New Jersey
  • Have a valid driver’s license in New Jersey
  • Have a suspended license due to a lack of auto insurance and need insurance to have your license restored

You may not qualify for insurance through PAIP if you:

  • Don’t have a valid driver’s license
  • Don’t pay your insurance premiums on time
  • Don’t provide the information requested on your insurance application
  • Have been convicted of certain crimes, such as insurance fraud or vehicle theft

You can reapply for insurance as soon as the problem that caused your ineligibility is resolved.

NJ PAIP coverage

You can find the same two types of policies, basic and standard, through NJ PAIP as you would in the regular market in New Jersey. While the basic plan costs less than the standard plan, it also offers limited coverage. If you are in an accident where the damages exceed your coverage, you may be liable for the rest of the bill. Additionally, if you choose a standard policy, you can purchase additional coverage, such as collision and/or comprehensive, and uninsured/underinsured motorist.

The duration of coverage in New Jersey for high-risk drivers is typically three years. Every insurer will send you a notice at the end of the policy term. At that time the insurer will review your driving record from the preceding three years. Eligibility points older than three years will be dropped, and if your remaining eligibility points number less than seven, you can search for insurance in the voluntary market once again.

If you are still a high-risk driver, the insurance company you were assigned to can either renew you or place you back in the pool, where NJPAIP will assign you to a new insurer for another three-year term.

New Jersey insurers offer high-risk drivers the same mandatory coverages as those normally found in the voluntary market. These include:

Minimum coverage with a basic policy
Minimum coverage with a standard policy

Bodily injury (BI)

Not included$25,000/$50,000 per person/accident (up to $250,000/$500,000)

Property damage (PD)

$5,000 per accident$5,000 (up to $100,000 or more)
Personal injury protection (PIP)$15,000 per person per accident + up to $250,000 for certain injuries$15,000 per person per accident + up to $250,000 or more for certain injuries*

Naturally, the higher your coverage amount, the higher your premium will be.

There are optional coverages also available for purchase, with premiums that will vary based on insurer.

Optional coverage with a basic policy
Optional coverage with a standard policy

Bodily injury (BI)

$10,000 per accident
Uninsured motorist coverageNone availableUp to the amounts selected for liability coverage (15/30/5, up to 250/500/100)
ComprehensiveAvailable as an option from some insurersDeductibles of $1,000, $1,500, and $2,000 available for cash value up to $60,000
CollisionAvailable as an option from some insurersDeductibles of $1,000, $1,500, and $2,000 available for cash value up to $60,000


p>*New Jersey will cover more than the stated limits for certain injuries. According to the NJ Department of Banking and Insurance, these injuries include permanent or significant brain injury, spinal cord injury or disfigurement. Also, note that New Jersey allows coverage limits for comprehensive and collision to be set by your insurance company. Some insurers may not offer this coverage, based on how they assess you as a risk. Others will cover you, but at rates and coverage limits they negotiate with you.

NJ PAIP premiums and payments

Premiums for auto insurance through New Jersey PAIP are usually higher than those you would find in the voluntary market. Based on your driving record, eligibility points and other factors, your premium could be significantly more expensive.

You can expect to pay steep rates for insurance through NJ PAIP. New Jersey auto insurance premiums in the voluntary market are already higher than most other states, with the average driver paying $1,908 annually for auto insurance.

Another factor that could impact your premium through NJ PAIP is whether you select the basic or standard coverage plan. Standard coverage plans are always more expensive than basic plans in New Jersey, but they do offer more coverage that can protect your assets in the long term.

Car insurance rates are set based on many factors. These include your driving record, vehicle type, where you live, gender, age, marital status and how you use your vehicle. The same is true for a policy acquired through NJ PAIP.

NJ PAIP offers two different payment plans: the Advance Premium Payment Option and the Installment Payment Option. When you shop for insurance, you can discuss with your agent which payment option is more suitable for you, based on your financial circumstances.

  • Advance Premium Payment Option: When you apply for coverage through NJ PAIP, you will have to pay 100% of the premium with your application.
  • Installment Payment Option: You will have to submit a deposit of 30% of the premium at the start of the policy term and the rest in six installments over the course of nine months.

When you are insured through NJ PAIP, you can shop for cheaper insurance at any time, not just when your policy is up for renewal. If you find a better price, you can cancel your old policy and get a refund of your unused premium.

How to get insurance through NJ PAIP

Contact any PAIP producers located in your New Jersey county to inquire about high-risk insurance.

For more information about New Jersey PAIP, call the Department of Banking and Insurance Consumer Hotline at 1-800-446-7467 or visit the NJ PAIP website.

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