TRENTON — For the fifth consecutive year, New Jersey motorists paid the highest car insurance premiums in the nation, according to a new report by the National Association of Insurance Commissioners.
New Jersey drivers forked over an average of $1,263 per car in 2014, the most recent year studied. That’s $106 more than they paid in 2011. The national average was $866, a $77 increase from 2011, the report said.
New Jersey’s crowded and relatively urban landscape and its high cost of living, have always made auto insurance premiums pricey.
“We live in an urban area with more cars and more accidents,” said Marshall McKnight, spokesman for the state Department of Banking and Insurance. “New Jersey drivers tend to drive more expensive cars, so if a car is totaled, it is going to be more expensive to replace.”
N.J. once again has costliest auto insurance in U.S., report says
Marc Pfeiffer, the assistant director at the Bloustein Local Government Research Center at Rutgers University, agreed: blame the state’s density.
“We have more people per square mile and a limited number of roads, so you will have more car accidents,” said Pfeiffer, the former head of the state Division of Local Government Services.
The health insurance component of an auto insurance policy in New Jersey, known as “personal injury protection offers one of the richest health care plans in the country,” McKnight added. Unless a policy holder elects for less, an injured driver is covered for $250,000 in claims, he said.
Some 61.5 percent of Jersey drivers receive this rich benefit, he added.
New Jersey has always been a notoriously expensive state — home to the nation’s highest property taxes. Its per-pupil costs for public education are among the highest, too.
But it wasn’t that long ago when New Jerseyans got a break on car insurance rates thanks to regulatory changes made in 2003 during Gov. Jim McGreevey’s term. Among the changes, the state phased-out the requirement that insurance companies “must take all comers” regardless of risk, and committed to expediting requests for rate increases.
Competition grew. There are 82 companies writing policies in the state, up from 63 since the beginning of Gov. Chris Christie’s first term in 2010, McKnight said.
New Jersey dropped to the second and third place for the highest insurance rates in the country. Rates went from $1,138 in 1998 to $1,081 in 2008, according to previous association reports.
“Premiums did go down a little bit. Driving that was competition,” McKnight said. Competition is still keeping premiums in check, he added.
New Jersey has topped the list for the highest premiums from 2010 through 2014, according to the the association’s latest report, which covers all 50 states and the District of Columbia.
The report showed that Michigan had the second highest average auto insurance, at $1,227, followed by New York at $1,205. Pennsylvania’s rates averaged $857, while Delaware’s were $1,125.
The cheapest auto insurance in the nation was in Iowa, where the rates averaged $585, according to the report.
New Jersey’s $1,263 average auto insurance bill, which includes liability, collision and comprehensive coverage, was has risen steadily, according the report. Since 2010, it was:
- $1,255 in 2013
- $1,220 in 2012
- $1,186 in 2011
- $1,157 in 2010
The report notes that New Jersey’s numbers are difficult to compare because the insurance industry considers this a mostly urban state.
Here’s one bright spot for Garden State drivers, however, according to the report. Insurance companies here routinely cut dividend checks to their policy holders.
“Historically, New Jersey has paid two to four times the national average in dividends to policyholders, and, at times, this has been as high as six times the national average, which would reduce the average expenditure and combined average premium for New Jersey consumers if dividends were included in premium,” according to the report.
The state offers an auto insurance shopping tool at http://www.state.nj.us/dobi/autoplanner.htm
Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio. Find NJ.com Politics on Facebook.
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