New Jersey Has the Highest Car Insurance Rates in the U.S. - Can Anything Be Done?

The state of New Jersey gets a bad rap from the media and in popular culture. Until the Sopranos came around, seemingly nothing about New Jersey was very cool. Adding insult to injury (or more appropriately, injury to insult), New Jersey residents pay the highest car insurance rates in the entire country. This is because so much of the state is urban, the urban areas are densely packed, and more urban residents drive cars than in other areas like New York City. This leads to more accidents, and the high density of people leads to more instances of vandalism and theft.

What Could Be Worse Than Wrecks, Vandalism, and Theft?

But even worse than all of this is the high number of uninsured drivers that come with exorbitant car insurance rates. Uninsured drivers put a strain on the entire system, causing everyone's rates to go up. Therefore, the state government of New Jersey has always tried to play a role in keeping prices down to limit the number of uninsured drivers. Until recently, they did so with a 1983 law that capped urban rates at thirty-five percent above the average rate, but it was argued that this coercive measure led to too much inefficiency in the market.

Now the market may be more efficient, but it sure is costly. A thirty-five-year-old man living in urban Jersey City would pay $1,118 for Allstate coverage, which is seventy-two percent more than if he lived in rural Sussex County. Rates this high inevitably lead to uninsured drivers, which is why Governor John Corzine has proposed a plan to cap urban rate increases until the state completes its efforts to create a better car insurance marketplace by easing regulations and encouraging competition.

The Pros and Cons of Regulation

Opponents of regulation say that it distorts the market and makes low-risk drivers pay more to subsidize high-risk drivers. "The less restrictions you have, the more you let the marketplace work," says Richard Stokes, a lobbyist for the Property Casualty Insurers Association of America. But on the other hand, you have to look at the consequences of not regulating. "If rates go through the ceiling and people can't afford to pay, you are just going to increase the number of uninsured motorists," says New Jersey state senator, Joseph Doria Jr. And uninsured motorists make everyone's costs go up but their own.

The good news is that, with or without the government's help, you can get yourself the lowest possible car insurance rates by shopping around. Rates vary greatly from company to company, so while one insurer may charge seventy-two percent more for urban dwellers, another may charge only thirty-five percent more. Furthermore, yet another company may offer discounts that lower your rates even further! You have to look around to find the best deals, and carinsurancerates.com is a great place to begin your search. Just scroll up to the top left corner and select a type of quote under "Start Your Quote." Good luck!