The Search for Cheap Auto Insurance Gets Expensive in NJ
July 12th, 2010
Not too long ago, finding cheap auto insurance in the Garden State was a bit tricky: in 2004, New Jersey drivers were paying in excess of $1,200 per year just for the basics, making that state the most expensive in the nation when it came to auto coverage.
Things have changed a bit since then; this year (2010), Louisiana took the dubious honor of being the most expensive state in which to insure an automobile, at just over $2,500 a year, while New Jersey has dropped to Number 22. Still, basic NJ auto insurance is still almost $1,500 a year, having increased because of changes in that state’s laws. This is based on a driver who is aged forty, male, drives about 100 miles a week with a $500 deductible on collision and comprehensive coverage and limits of 100/300/50 (in insurance industry shorthand, this means that in the event of an accident, the insurer will pay up to $100,000 for one injury, a total of $300,000 for all injuries, and a maximum of $50,000 for property loss and damage).
One trick that drivers have often used in order to get low auto insurance rates is to register their vehicles in another state where rates are substantially lower. Technically, this is illegal and if someone is pulled over by law enforcement and his or her license says one thing but their car registration says something else, that driver can get into a whole lot of trouble.
It’s Not Just The Vehicle Owner
This practice is called reverse rate evasion. Previously, New Jersey’s state laws did not specifically define reverse rate evasion as a form of insurance fraud, meaning that drivers who engaged in this practice could not actually be prosecuted. Under a new bill recently passed by the New Jersey state legislature, this practice will now be regarded as fraud and punishable by a fine and up to a year and a half in jail.
Unfortunately, drivers who engage in reverse rate evasion in an attempt to get the best car insurance rates cost other drivers in the form of higher premiums. In addition, it hurts all citizens by costing the state revenue (meaning cutbacks on safety programs and road maintenance) as well as returns for insurance companies and their shareholders.
How New Jersey Compares
Currently, Maine has the best car insurance rates at just over $900 per year. Insurance costs in neighboring New York are slightly higher; Pennsylvania and Delaware even more so. However, none of the states bordering New Jersey are substantially cheaper when it comes to insuring a vehicle; at the most, someone might save an average of about $80 a year hardly worth it, particularly under the penalties that would be instituted under the new law if passed by the New Jersey senate and signed by the governor.
New Jersey drivers looking for better rates might do well to raise their deductibles or purchase slightly used four-door sedans that are usually the least expensive vehicles to insure.
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