Dollar-a-Day Car Insurance in New Jersey (5 Surprising Facts to Know)

You can get car insurance for $1/day or $365/year in New Jersey, but this dollar-a-day car insurance is only for those on Medicaid and doesn't meet the state's legal minimum.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State...

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UPDATED: May 13, 2020

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Here's what you need to know...

  • Dollar-a-Day car insurance in New Jersey is only available to a specific demographic.
  • It doesn’t meet New Jersey’s state minimum car insurance requirements and can’t be combined with regular car insurance.
  • There are several options for legal car insurance that can be affordable.

If you live in New Jersey, you may have heard of the Special Automobile Insurance Policy (SAIP), which is often referred to as dollar-a-day car insurance in NJ. Minimum coverage laws vary by state, and while this policy is cheap car insurance, it doesn’t meet the legal minimum requirements.

This is a special car insurance program that is available only to people on Medicaid, among other requirements. This coverage can be confusing, but we will explain. This article will cover everything you need to know about the SAIP program.

Interested in getting quotes for car insurance that meets New Jersey’s requirements? Enter your ZIP code here to start saving money today.

#1 — What is New Jersey’s state minimum coverage?

Before we talk about the dollar-a-day plan, let’s talk about the coverage most drivers need. New Jersey requires all drivers to carry the coverage outlined below. Dollar-a-day car insurance doesn’t meet NJ requirements.

New Jersey Mandatory Minimum Car Insurance Coverage Requirements
New Jersey Minimum Insurance Required (Basic Policy)Minimum Limits
Bodily Injury CoverageNone required, but optional starting at a minimum of $10,000 per person and $10,000 per accident
Property Damage Coverage$5,000
Personal Injury Protection (PIP)$15,000 per person, per accident
Up to $250,000 for brain and spinal cord injuries

Why would you buy this type of car insurance if it doesn’t meet New Jersey minimum insurance requirements?  Read on for everything you need to know about New Jersey’s Special Automobile Insurance Policy.

Here are the five things you might not have known, but should.

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#2 — Dollar-a-Day Insurance in New Jersey Really Costs only a Dollar a Day

How much is dollar-a-day insurance? No gimmicks or surprise costs here. It really does cost a dollar a day, or $365 a year.

So what do you get for that price? What does dollar-a-day car insurance cover? Well, unfortunately, not much.

Dollar-a-day car insurance is a low-income car insurance program only available in New Jersey. It allows families who qualify for Medicaid to obtain medical coverage in the event of a car accident. It’s cheap for a reason – it doesn’t cover most basics you’d see in a regular insurance policy.

The plan provides no liability coverage. This means if you have to rely on dollar-a-day car insurance in an accident, you’ll have no coverage to pay for the damages or injuries of the other person or persons involved.

If dollar-a-day car insurance doesn’t provide liability protection, what does it cover?

  • Emergency treatment immediately following an accident
  • Treatment of serious brain and spinal cord injuries up to $250,000
  • A $10,000 death benefit

What does dollar-a-day not cover? Take a look below.

  • Outpatient treatments such as doctors’ visits covered by Medicaid
  • The damage you may cause to other persons or property
  • Damages to your own car

Although drivers with only dollar-a-day insurance are still driving illegally because they aren’t carrying the required property liability coverage, this program does reduce the number of accidents that result in lawsuits or unpaid medical bills. Only 200,000 people in New Jersey qualify for dollar-a-day insurance, however.

It’s important to note that this program differs from the New Jersey Automobile Insurance Plan, which is for high-risk drivers and not for low-income drivers.

#3 — You Can’t Use Dollar-a-Day Coverage to Supplement Property Damage Liability in New Jersey

Dollar-a-day car insurance is used as a last resort for drivers who would commonly go uninsured due to a lack of financial resources.

You can’t have any other coverage through another policy or insurance company to be eligible for dollar-a-day insurance. So dollar-a-day insurance policies can’t be used as supplemental coverage for medical expenses. You also can’t use it to supplement property damage liabiltiy.

This means if you qualify for dollar-a-day insurance but want property damage liability coverage as well, you’ll have to look elsewhere for car insurance in New Jersey.

If you qualify for Medicaid but aren’t on it, then you can’t purchase dollar-a-day car insurance. You’ll have to sign up for the Medicaid programs to make this purchase.

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#4 — Who Qualifies for Dollar-a-Day Insurance?

You can’t get this car insurance unless you fit certain requirements. So how do you qualify for dollar-a-day car insurance? Below are the eligibility requirements for SAIP:

  • You must be uninsured. If you hold a car insurance policy with any other company, you can’t purchase a dollar-a-day car insurance policy.
  • You must be enrolled in a Medicaid program that includes hospitalization. If you qualify for Medicaid but don’t enroll, you aren’t eligible for a Special Auto Insurance Policy in New Jersey.
  • If you cancel your Medicaid or don’t enroll for any reason, your SAIP will remain in place until your renewal. At that point, you will no longer have coverage.
  • You must have a valid New Jersey state driver’s license. You can’t have a suspended or revoked driver’s license and be eligible for a dollar-a-day car insurance policy.

It’s also only available in New Jersey and is sometimes thought of as New Jersey’s Medicaid car insurance – NY doesn’t have a similar plan, in spite of its proximity to NJ. Even if you qualify to apply for Medicaid, NY won’t extend car insurance coverage.

If you don’t qualify for New Jersey’s low-income program, you do have other options available to help make car insurance more affordable.

Cost-Saving Car Insurance Coverage Options in New Jersey
Coverage OptionsWhat It ProvidesHow to SaveConsiderations
Liability CoverageCoverage for damages you cause to another party.Get the state-required minimum coverage levels to pay the cheapest premium and still be in compliance with the law.For better protection, higher limits than what is required by the state are recommended. Compare quotes to see what you could afford.
Collision CoverageFinancial compensation for your own vehicle's damage when you cause an accident.Increase your deductible.If your car is damaged, you will have to come up with the deductible. Make sure you are prepared for the amount you decide on.
Comprehensive CoverageCompensation for your own vehicle's damage from non-accident-related incidents.Increase your deductible.If your car is damaged, you will have to come up with the deductible. Make sure you are prepared for the amount you decide on.
Pay-As-You-Go InsuranceCoverage at the level you choose for the number of miles you actually drive.Drive fewer miles.If you drive many miles annually, this option will probably not save you money and will actually cost more than standard coverage.

Raising collision and comprehensive deductibles can significantly lower your premium. If you have a lienholder or are financing your car, you’ll have requirements for how much insurance you must carry on your car. In that case, raising deductibles may not be an option.

You can also lower liability limits to state minimum requirements. While minimum limits are often not enough to cover a serious claim or loss, if you’re thinking of going without insurance coverage, minimum limits are better than no limits.

Remember, liability insurance only covers the other party’s expenses when you cause an accident — it doesn’t cover your own medical expenses or damage to your vehicle. Also, your insurance company will only pay out the limits of your policy, regardless of how much the actual damages cost.

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#5 — Dollar-a-Day Insurance Is the Cheapest Option in New Jersey

Purchasing car insurance in New Jersey isn’t cheap. If you live there, you probably know that already. Take a look at the top 25 most expensive cities to live in for car insurance.

25 New Jersey Cities with the Most Expensive Car Insurance Rates
New Jersey Most Expensive CitiesAverage Annual Rate by CityMost Expensive CompanyMost Expensive Annual Rate2nd Most Expensive Company2nd Most Expensive Annual RateCheapest CompanyCheapest Annual Rate2nd Cheapest Company2nd Cheapest Annual Rate
Irvington$8,512.59Farmers$12,685.99State Farm$11,875.78Geico$4,274.79Travelers$6,159.75
Newark$8,512.59Farmers$12,685.99State Farm$11,875.78Geico$4,274.79Travelers$6,159.75
East Orange$8,384.68Farmers$12,685.99State Farm$11,824.45Geico$4,150.14Travelers$5,980.16
Orange$8,384.68Farmers$12,685.99State Farm$11,824.45Geico$4,150.14Travelers$5,980.16
Passaic$8,293.85Farmers$12,398.77State Farm$10,907.42Geico$3,948.66Travelers$6,212.33
Elizabeth$8,277.10Farmers$12,283.07State Farm$11,789.64Geico$3,798.87Travelers$6,107.40
Elizabethport$8,277.10Farmers$12,283.07State Farm$11,789.64Geico$3,798.87Travelers$6,107.40
Paterson$8,228.41Farmers$12,394.50State Farm$11,318.82Geico$3,909.34Travelers$6,129.69
North Bergen$8,198.85Farmers$12,348.98State Farm$11,146.92Geico$3,777.25Progressive$6,021.03
Guttenberg$7,929.71Farmers$11,660.42State Farm$11,146.92Geico$3,571.92Progressive$5,657.56
Union City$7,929.71Farmers$11,660.42State Farm$11,146.92Geico$3,571.92Progressive$5,657.56
Camden$7,699.21Farmers$11,590.99State Farm$10,324.11Geico$3,635.14Travelers$5,692.37
Perth Amboy$7,587.46Farmers$11,886.13State Farm$10,195.39Geico$3,241.31Travelers$5,478.47
Atlantic City$7,564.70Farmers$11,961.16Liberty Mutual$9,785.53Geico$3,635.98Travelers$5,534.72
Linden$7,501.16State Farm$11,098.56Farmers$10,567.82Geico$3,725.10Progressive$5,175.59
Roselle$7,501.16State Farm$11,098.56Farmers$10,567.82Geico$3,725.10Progressive$5,175.59
East Newark$7,467.89State Farm$11,826.73Farmers$9,940.24Geico$3,587.95Travelers$5,258.88
Kearny$7,467.89State Farm$11,826.73Farmers$9,940.24Geico$3,587.95Travelers$5,258.88
Cliffside Park$7,392.46State Farm$11,095.37Farmers$10,213.21Geico$3,734.47Progressive$5,233.40
Palisades Park$7,392.46State Farm$11,095.37Farmers$10,213.21Geico$3,734.47Progressive$5,233.40
Ridgefield$7,392.46State Farm$11,095.37Farmers$10,213.21Geico$3,734.47Progressive$5,233.40
Hillside$7,391.94Farmers$10,700.28State Farm$10,295.93Geico$3,532.32Travelers$5,200.76
Union$7,391.94Farmers$10,700.28State Farm$10,295.93Geico$3,532.32Travelers$5,200.76
Vauxhall$7,391.94Farmers$10,700.28State Farm$10,295.93Geico$3,532.32Travelers$5,200.76
Jersey City$7,346.83Farmers$10,415.60State Farm$10,184.76Geico$3,051.71Travelers$5,214.56

Those are some high annual rates. This next table will show you the 25 cheapest cities in New Jersey when it comes to car insurance prices.

25 New Jersey Cities with the Least Expensive Car Insurance Rates
New Jersey Cheapest CitiesAverage Annual Rate by CityMost Expensive CompanyMost Expensive Annual Rate2nd Most Expensive Company2nd Most Expensive Annual RateCheapest CompanyCheapest Annual Rate2nd Cheapest Company2nd Cheapest Annual Rate
Brookside$4,592.17State Farm$6,156.55Farmers$6,106.07Geico$2,387.77Progressive$3,160.07
Mountain Lakes$4,600.77State Farm$6,156.55Farmers$6,106.07Geico$2,560.75Progressive$3,160.07
Convent Station$4,613.10State Farm$6,156.55Farmers$6,106.07Geico$2,543.78Progressive$3,160.07
Denville$4,613.63State Farm$6,573.25Farmers$6,106.07Geico$2,560.75Progressive$3,160.07
Mount Tabor$4,613.63State Farm$6,573.25Farmers$6,106.07Geico$2,560.75Progressive$3,160.07
Morristown$4,614.46State Farm$6,156.55Farmers$6,106.07Geico$2,543.78Progressive$3,160.07
Cedar Knolls$4,616.88State Farm$6,156.55Farmers$6,106.07Geico$2,560.75Progressive$3,160.07
Morris Plains$4,616.88State Farm$6,156.55Farmers$6,106.07Geico$2,560.75Progressive$3,160.07
Whippany$4,616.88State Farm$6,156.55Farmers$6,106.07Geico$2,560.75Progressive$3,160.07
Randolph$4,618.98State Farm$6,573.25Farmers$6,106.07Geico$2,543.78Progressive$3,160.07
Budd Lake$4,624.77Farmers$6,413.72State Farm$6,156.55Geico$2,427.65Progressive$3,425.84
Riverdale$4,630.07State Farm$6,156.55Farmers$6,106.07Geico$2,560.75Progressive$3,160.07
Glasser$4,641.98Farmers$6,413.72State Farm$6,156.55Geico$2,427.65Progressive$3,425.84
Landing$4,649.92Farmers$6,413.72State Farm$6,156.55Geico$2,427.65Progressive$3,425.84
Netcong$4,649.92Farmers$6,413.72State Farm$6,156.55Geico$2,427.65Progressive$3,425.84
Pottersville$4,660.24Farmers$6,764.38State Farm$6,013.78Geico$2,387.77Progressive$3,515.56
Boonton$4,660.30State Farm$6,573.25Farmers$6,106.07Geico$2,560.75Progressive$3,160.07
Butler$4,664.98State Farm$6,156.55Farmers$6,106.07Geico$2,560.75Progressive$3,160.07
Hopatcong$4,667.85Farmers$6,413.72State Farm$6,156.55Geico$2,427.65Progressive$3,425.84
Annandale$4,678.80Farmers$6,764.38State Farm$6,013.78Geico$2,387.77Progressive$3,515.56
Asbury$4,678.80Farmers$6,764.38State Farm$6,013.78Geico$2,387.77Progressive$3,515.56
Baptistown$4,678.80Farmers$6,764.38State Farm$6,013.78Geico$2,387.77Progressive$3,515.56
Changewater$4,678.80Farmers$6,764.38State Farm$6,013.78Geico$2,387.77Progressive$3,515.56
Glen Gardner$4,678.80Farmers$6,764.38State Farm$6,013.78Geico$2,387.77Progressive$3,515.56
Hampton$4,678.80Farmers$6,764.38State Farm$6,013.78Geico$2,387.77Progressive$3,515.56

Unfortunately, you aren’t going to find insurance as low as one dollar a day through any of the traditional plans. So purchasing a car insurance policy through the SAIP is the cheapest option if you’re eligible. Due to the very minimal coverage offered, it should be a last resort for drivers.

Currently, there are no other states that offer the dollar-a-day car insurance program; however, since the program is so new in New Jersey, it may simply be a matter of time before other states start using this as an option.

It will likely depend on how successful the program is in New Jersey.

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#6 — Dollar-a-Day Insurance Doesn’t Offer Quotes

Dollar-a-day car insurance isn’t like other plans, which means you won’t be able to receive quotes for your insurance. The cost doesn’t change based on your driving record or any other criteria. If you qualify, it will cost $365 a year.

You must have a valid driver’s license. If you have a lengthy record with a suspended license, you can’t get insurance through the dollar-a-day program in New Jersey. There is only one way to get dollar-a-day car insurance, and that’s through the Department of Banking and Insurance.

To apply, you must bring your valid New Jersey driver’s license with your car registration. You must also bring your active Medicaid insurance card to show proof you are enrolled.

Not everyone is a fan of the NJSAIP car insurance program, as this video explains.

This program is really only a choice when you have no other choice.

Frequently Asked Questions

Do you still have questions about the dollar-a-day plan? Don’t worry, below you’ll find responses to some of the most frequently asked questions below

#1 – Where can I find dollar-a-day car insurance near me?

Most insurance agencies can help you to get a SAIP (also called Personal Automobile Insurance Plan or PAIP) plan. If you need help, you can call the NJ PAIP insurance phone number for customer service at 1-800-652-2471, or search for a PAIP provider here.

Whether you need dollar-a-day insurance in Newark, NJ, or you’re looking for dollar-a-day insurance in East Orange, NJ, the PAIP provider search can point you in the right direction.

#2 – Can I get 1-day car insurance?

You can sign up for car insurance and then cancel it the next day, but it’s not advisable. Car insurance companies often charge fees for this kind of behavior and may short-rate your policy – meaning they won’t refund you all of your money. There are companies that offer short-term coverage, which is a better option than taking out a policy you plan to cancel.

#3 – How much does regular car insurance cost?

Car insurance can vary by price for many reasons. Insurance companies look at many factors that affect your car insurance rate. They will analyze just how much of a risk you might be to insure and price your plan accordingly.

Age, vehicle type, and location are just a few of the many factors that insurance companies will look at when determining your rate. The Insurance Information Institute ranks New Jersey as one of the top ten most expensive states for car insurance, but rates can still vary depending on the part of the state you call home.

If you don’t qualify for the SAIP program or really want more coverage, your best bet is to shop around. You can start now by entering your ZIP code here for a free no-obligation quote.

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