If you're a New Jersey driver, get ready for another bump in your car insurance bill. Starting January 1, 2026, New Jersey becomes the only state in the country raising its auto liability minimums, completing a phased increase that started back in 2023. Your required coverage is jumping from $25,000/$50,000/$25,000 to $35,000/$70,000/$25,000. Here's what that actually means for your wallet—and your protection on the road.
What's Actually Changing in 2026
Let's break down those numbers, because insurance industry shorthand can be confusing. When you see "35/70/25," that translates to: $35,000 in bodily injury liability per person, $70,000 in bodily injury liability per accident, and $25,000 in property damage liability per accident. The first number covers injuries to one person if you cause an accident. The second covers total injuries if multiple people are hurt. The third covers damage to other people's property—usually their cars.
This isn't a surprise change. Back in August 2022, Governor Murphy signed a law creating a two-phase increase. Phase one kicked in on January 1, 2023, raising minimums from $15,000/$30,000/$5,000 (which had been in place for 50 years) to $25,000/$50,000/$25,000. That property damage jump from $5,000 to $25,000 was a whopping 500% increase, reflecting how much more expensive vehicles have become to repair. Phase two, coming January 1, 2026, pushes bodily injury coverage even higher.
Your insurance company will handle the update automatically. When your policy renews after January 1, 2026, you'll see the new minimums reflected in your coverage—and in your premium. You don't need to call your agent or fill out new paperwork, but you should definitely review that renewal notice carefully to understand how much your rate is increasing.
Why New Jersey Is Doing This
The reasoning behind the increase is straightforward: medical costs and vehicle repair expenses have skyrocketed since the 1970s, but New Jersey's minimum coverage requirements hadn't budged in five decades. If you caused an accident that seriously injured someone, $15,000 didn't come close to covering their hospital bills, rehabilitation, or lost wages. Modern vehicles—loaded with sensors, cameras, and advanced technology—can easily rack up repair bills exceeding $5,000 even in seemingly minor collisions.
New Jersey's density makes this especially relevant. With over 9 million people packed into the nation's most densely populated state, traffic is heavy, accidents are frequent, and the potential for multi-vehicle crashes is high. The state's no-fault insurance system means your personal injury protection (PIP) covers your own medical bills regardless of who caused the accident, but liability insurance still matters when you damage someone else's property or injure them beyond what PIP covers.
The law aims to provide better financial protection for accident victims—and for you. If you cause a serious accident with minimum coverage and the damages exceed your limits, you're personally responsible for the difference. That could mean wage garnishment, liens on your property, or even bankruptcy. Higher minimums reduce that risk, though they don't eliminate it entirely.
How Much Will Your Premium Increase?
Here's the part nobody likes to talk about: higher coverage means higher premiums. When the 2023 increase took effect, New Jersey drivers saw their liability insurance costs jump by an average of $145 per year. Approximately 1.1 to 1.2 million vehicles had coverage below the new requirements and were affected. The 2026 increase will hit even more drivers—over 1.4 million are expected to see premium increases.
The exact increase depends on your individual situation—your driving record, age, vehicle, location within New Jersey, and current coverage levels all factor in. Drivers who already carry higher limits might see minimal changes, while those currently at the minimum will see the biggest jump. And this comes on top of already steep costs: New Jersey drivers were paying an average of $2,372 per year for full coverage in 2024, about 7% higher than the national average. The state ranks as one of the most expensive for auto insurance in the entire country.
Low-income drivers who traditionally opt for minimum coverage to keep costs down will feel this increase most acutely. If you're in that situation, it's worth shopping around when the new minimums take effect. Rates vary dramatically between insurance companies—sometimes by hundreds of dollars for the exact same coverage.
Should You Stick With Minimum Coverage?
This is where things get real: even the new minimums might not be enough. Consider this scenario—you're driving on the Garden State Parkway, get distracted checking your GPS, and rear-end a luxury SUV carrying a family of four. The vehicle damage alone could easily hit $40,000 or $50,000. One passenger needs surgery, racking up $100,000 in medical bills. Another suffers a serious injury requiring long-term care. Your $35,000 per person and $70,000 per accident coverage runs out fast.
Most insurance experts recommend carrying at least $100,000/$300,000/$100,000 in liability coverage—or even higher if you have significant assets to protect. The cost difference between minimum coverage and more robust protection is often surprisingly small, sometimes just $20 to $30 per month. That's a reasonable investment to avoid financial catastrophe.
If you own a home, have retirement savings, or earn a decent income, you should also consider umbrella insurance. It kicks in after your auto liability limits are exhausted, providing an additional $1 million or more in coverage for a relatively modest premium—often $150 to $300 per year. Think of it as catastrophic coverage for the worst-case scenario.
Understanding New Jersey's No-Fault System
While we're talking about New Jersey auto insurance, it's worth understanding the state's unique "choice no-fault" system. You're required to carry personal injury protection (PIP), which covers your medical expenses after an accident regardless of who caused it. This keeps smaller claims out of court and theoretically keeps costs down. Your basic required coverages in New Jersey include liability insurance, PIP, and uninsured/underinsured motorist coverage.
New Jersey offers two policy types: basic and standard. Basic policies have lower minimums but restrict your right to sue for pain and suffering unless you meet specific injury thresholds. Standard policies cost more but give you more comprehensive coverage and broader lawsuit rights. The 2026 minimum increases apply to standard policies—if you have a basic policy, your minimums remain lower, but so does your protection.
What You Should Do Right Now
First, pull out your current auto insurance policy and check your liability limits. If you're already carrying $100,000/$300,000 or higher, the 2026 change won't affect you at all. If you're at or near the current minimums, start preparing for a premium increase.
Second, get quotes from multiple insurance companies before your policy renews in 2026. Don't just accept whatever increase your current insurer sends you. Competition for your business is fierce, and switching carriers could save you hundreds of dollars annually. Just make sure you're comparing identical coverage amounts—a cheap quote for minimum coverage isn't a good deal if it leaves you financially exposed.
Third, seriously consider increasing your limits beyond the new minimums. Ask your agent or run online quotes to see what it would cost to bump up to $100,000/$300,000/$100,000 or to add an umbrella policy. The peace of mind is worth the extra premium, especially if you have anything to lose financially.
Finally, look for ways to reduce your premium that don't involve cutting coverage. Good student discounts, defensive driving courses, bundling home and auto insurance, installing anti-theft devices, and maintaining a clean driving record all help. Some insurers offer usage-based programs where safe driving habits earn you discounts. Every bit helps when you're facing a mandatory increase.
The 2026 minimum increase isn't optional—it's the law. But how you respond to it is entirely up to you. Use this as an opportunity to review your entire auto insurance situation, shop around for better rates, and make sure you have enough coverage to truly protect yourself. New Jersey's roads are crowded, accidents happen, and the financial consequences of being underinsured can follow you for years. A few extra dollars per month for adequate coverage is one of the smartest investments you can make.
