How high? Car insurance rates increase sharply in New Jersey

⚫ Auto insurance premiums are up by an average 17.2% in NJ, a report finds

⚫ Insurers need the green light from state officials in order to raise your rates

⚫ Do your homework: premiums vary significantly from insurer to insurer

New Jersey drivers are experiencing another round of sticker shock in 2025, in the way of rising insurance premiums.

The yearly cost is going up by hundreds of dollars for policyholders this year. Industry observers say there are several factors contributing to the purse-draining trend.

According to a state-by-state report published by the personal finance website ValuePenguin (by LendingTree), insurers in the Garden State are hiking premiums by an average of 17.2% in 2025.

That follows a double-digit percentage hike in 2024, and an increase of 6% in 2023.

According to the ValuePenguin report, the average cost of automobile insurance in New Jersey is expected to hit a record high of nearly $2,400 per year.

Why are NJ auto insurance rates rising?

Insurance providers can't increase your rates unless they get the green light from the Department of Banking and Insurance.

Rate increases paused during the height of the COVID emergency. Coming out of the pandemic, rate increases were rather slow, according to Christine O'Brien, president of the Insurance Council of New Jersey.

"But what has happened now is, that rate that wasn't granted for a while still needs to be sought by the auto insurers," O'Brien said. "If rate requests and premium collections don't keep pace with the overall cost of paying claims, eventually higher rates have to be sought and granted."

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The cost of paying claims, O'Brien said, has gone up, due to rising costs of labor and necessary parts, as well as the growing prevalence of smarter vehicles, which are lined with equipment that's much more expensive to replace or repair.

Due to these factors and more, the number of rate increase requests that have come to the Department of Banking and Insurance for review has increased significantly in recent years.

"The Department takes seriously its responsibility to regulate the insurance industry in a manner that promotes consumer protection and the stability of the industry," a DOBI spokesperson said. "All rate changes must be reasonable, adequate, and not unfairly discriminatory."

Adding to the significant cost spike absorbed by drivers over the past few years is a rule that took effect at the start of 2023, which increased the minimum amount of liability insurance that drivers need to purchase. That move alone was projected to raise rates by about $120 yearly for more than a million drivers.

Auto insurers in New Jersey

According to the ValuePenguin report, New Jersey is the 10th most expensive state to insure a car. It was the 21st most expensive in 2024.

Most policies in New Jersey are written for six-month periods. And you should be given a month or two notice by your insurance company, prior to renewal, if rates are going to rise.

"Drivers do have an opportunity, at least once or twice a year, to shop around," O'Brien said.

Drivers can actually cancel their policy at any time and receive a prorated refund, O'Brien said.

There are approximately 80 insurance companies selling auto policies in the Garden State.

According to the ValuePenguin report, there is a 133% price difference between the seven largest auto-insurance providers in the state.

Nationwide, drivers are experiencing a 7.5% insurance rate hike in 2025.

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