New Jersey Auto Insurance rates will go up significantly in 2024! ? What do experts tell you to do
As the cost of daily living continues to rise, the cost of car insurance has inevitably become a concern item in family expenses. New Jersey car owners could face higher insurance costs in 2024, according to a newly released report.
National trend
According to data released by Insurify in August 2024, auto full insurance premiums across the United States increased by 15% in the first half of 2024. However, this increase was not evenly distributed across the country, but varied from place to place.
Maryland car owners currently pay some of the highest insurance premiums in the nation, costing an average of $3,400 a year. This is not only a national record, but also a reflection of the state’s high medical costs and frequent lawsuits that have led to a surge in insurance costs. By contrast, New Hampshire drivers enjoy some of the lowest insurance premiums in the country, averaging just $1,000 a year. New Hampshire’s low population density, lower traffic accident rates and lower health care costs combined to contribute to this result.
Full-risk auto insurance costs rose 15 percent in the first half of this year, despite industry experts’ predictions that the rate of premium increases may slow in 2024. The average annual premium for full coverage is currently $2,329, according to Insurify.
Insurify predicts that the cost of auto insurance in California, Missouri and Minnesota could rise by more than 50 percent in 2024. Damage from severe storms and wildfires has led to higher insurance rates in those states.
Maryland has the highest auto insurance costs in the United States, with an average full premium of $3,400 per year. Drivers in New Hampshire pay the lowest, an average of $1,000 a year.
According to the Bureau of Labor Statistics Consumer Price Index (BLS CPI), the cost of car maintenance and repairs has increased by nearly 38 percent over the past five years. Higher repair costs mean higher claims for insurance companies and higher premiums for policyholders.
Weather events are becoming more severe and frequent, leading to higher car insurance premiums. According to CCC Intelligent Solutions, hail-related auto claims in 2023 account for 11.8% of all consolidated claims, up from 9% in 2020.
Compared to those states, New Jersey is somewhere in between. The average annual cost of full coverage in New Jersey was $2,372 in June 2024, slightly above the national average, the data show. That fee is expected to climb to $2,520 by the end of 2024, a 9% increase. While the increase may seem small, it is certainly a heavy burden for New Jersey residents who already bear the higher cost of living.
In June 2024, the average annual cost of full coverage reached $2,329, a 15% increase from $2,018 at the end of 2023. According to Insurify’s data scientists, total premiums for drivers could increase by 22 percent by 2024, bringing the average premium to $2,469 by year’s end.
In addition to liability, an all-risk policy also covers all risks and collision risks. While liability insurance is required in most states, comprehensive and collision coverage is optional but can provide greater financial protection for a driver’s vehicle.
Main cause of rise
Christine O’Brien, president of the New Jersey Insurance Commission, explained that the state’s unique laws and regulations are one of the main reasons for the increase in premiums. “There are laws in New Jersey that directly affect premium increases,” she noted. One was to raise the minimum liability limit in 2023, with plans to raise it again in 2026. The rule, which requires policyholders to buy higher limits, directly affects more than 1.3 million drivers, causing them to pay an average of $140 more per year.
This situation is not unique to New Jersey. California and Florida also went through similar changes to their laws in 2024. After California raised the minimum liability limit, the average premium for car owners increased by 8%. In Florida, the new law increased insurance companies’ liability, resulting in a 7 percent increase in premiums. Behind these adjustments, however, is often an effort to improve traffic safety and reduce litigation costs.
Although New Jersey’s premiums are higher than the national average, they still have some advantages over other high-premium states. Car owners in New York State, for example, pay an average of $2,800 a year in insurance premiums, largely due to the state’s high medical costs and complex litigation system. In contrast, New Jersey, despite having a higher cost of living, still has lower premiums than New York.
Drivers in Iowa, on the other hand, enjoy lower premiums, averaging just $1,200 a year. The state’s low population density, relatively safe road conditions and fewer lawsuits allow insurers to offer more competitive rates.
People in the insurance industry point out that behind the differences in auto insurance rates are a combination of complex factors. In addition to laws and regulations, population density, traffic accident rates, healthcare costs, and climatic conditions all have a profound impact on premiums. For example, frequent hurricanes in Louisiana have led to increased risk for insurance companies and higher premiums for car owners. In Texas, highway accidents are so frequent that insurers have had to raise premiums to cope with higher claims.
Donald Wang, senior manager at Farmers Insurance in New Jersey, said the main reason for the increase in auto insurance premiums is the significant increase in vehicle maintenance and purchase costs. In addition, the frequency of auto accidents after the pandemic has exceeded levels during or even before the pandemic, causing many insurance companies to significantly increase premiums. Some insurance companies have even stopped writing new policies due to losses. While the New Jersey law’s requirement for higher coverage is also a factor in higher premiums, it may not be the main reason. Car premiums are also affected by many other factors, one of the key ones being credit score, so maintaining a good credit history is very important. In addition, a good driving record is also crucial. A three-year driving record, including accidents and tickets, can affect premiums. Therefore, after a traffic accident or receiving a ticket, it is important to deal with it carefully and communicate with the insurance broker.
In addition, insurers’ pricing strategies vary from state to state. For example, some insurers offer more competitive rates in low-risk states to attract more customers; In high-risk states, rates need to be raised to ensure profitability.
How to deal with
While higher premiums are inevitable, Donald Wang, a senior manager at Farmers Insurance in New Jersey, advises car owners to take some steps to ease the burden.
He noted that car owners can save money by:
Take defensive driving courses: Many insurance companies offer discounts on insurance after completing such courses.
Bundled insurance: You can often get a discount by bundling auto insurance with home, life or other types of insurance.
Ask about “pay-as-you-go” insurance: This insurance model charges based on the number of miles the owner actually drives, and can be a cost-saving way for owners who drive less.
Pay a higher deductible: Choosing a higher deductible Although you will have to pay more out-of-pocket costs in the event of an accident, your usual premiums will be lower as a result.
Telematics equipment is also an option worth considering for car owners. By monitoring driving behavior in real time, such devices could help insurance companies personalize rates for car owners. For those with good driving habits, such a device could significantly reduce their insurance costs.
In addition, it should also be noted that more comparison with different insurance companies, a wide collection of quotes is also one of the most effective ways to reduce premiums.
