Is New Jersey's Dollar a Day Insurance Right for Me?
New Jersey has the sixth-highest auto insurance premiums in the nation, according to a recent National Association of Insurance Commissioners research study. If you're a New Jersey resident, you probably already know that these rates are expensive. Like others, you probably want affordable insurance rates that won't break your budget.New Jersey has created several policies to offer cheaper premiums to its citizens. One of these is the state's popular Dollar-a-Day car insurance programs. But who qualifies for these policies, and do they cost $1 a day?In this article, we'll overview New Jersey's Dollar-a-Day car insurance program.
What is Dollar-a-Day Car Insurance in New Jersey?
Auto insurance is mandatory in New Jersey. It is illegal to drive on the state's roads without coverage.New Jersey created its Dollar-a-Day Auto Insurance policies to provide coverage for low-income residents who cannot afford typical auto insurance. In 2003, the state first launched this residual market government auto insurance called the Special Auto Insurance Policy (SAIP). This policy earned the "Dollar-a-Day" nickname because it costs $1 a day for annual car insurance coverage.
Motorists should only consider SAIP coverage as a last resort after exhausting all other insurance options since these policies don't meet New Jersey's minimum car insurance requirements.
Who Qualifies for Dollar-a-Day Car Insurance?
SAIP is only available to New Jersey's low-income Federal Medicaid with Hospitalization participants.Medicaid is a federal-state partnership that provides affordable health coverage to low-income people, families, children, the elderly and people with disabilities. It pays for limited emergency medical treatments for drivers.The state will require you to prove you are a beneficiary when you first buy your policy. You will have to present your Medicaid ID when you first apply. There are several additional conditions that you must satisfy to enter this program:
You don't have an auto insurance policy
You have a valid driver's license and vehicle registration
You participate in a federal Medicaid program that provides hospitalization.
Not all Medicaid participants qualify to enroll in New Jersey's SAIP. We recommend you speak with a licensed New Jersey auto insurance agent who can determine your eligibility for the program.
How Do I Apply for the Dollar-a-Day Insurance Program?
Drivers can visit most New Jersey insurance agencies to apply for SAIP. You'll have to provide copies of your Medicaid cards and other documents whenever you submit your application.You'll also need to present the insurance agent with the following documentation:
A valid driver's license
Medicaid Identification Card (for each person to be covered under this policy)
Driver's licenses for all potential drivers to be insured under this policy
When you renew your policy, the insurance will ask you to provide your current Medicaid ID card. If you lose your coverage, New Jersey will allow you to stay in SAIP for the rest of the term, but you can't renew it.SAIP participants can also list other persons in your household under this policy if they participate in a qualifying Medicaid program.You can contact a Personal Automobile Insurance Plan (PAIP) producer in your local area or call the customer service number at 1 (800) 652-2471 for details. To purchase a SAIP policy, call (856) 352-2454.
How Much Does Dollar-a-Day Car Insurance Cost?
New Jersey's SAIP provides only limited, short-term auto insurance coverage. It earned the dollar-a-day nickname because it costs $1 per day or $365 annually. You can pay for the policy in two installments. The first half ($180.50) is due when you purchase the policy. New Jersey gives a $5 discount to individuals that pay the bill in full.Dollar-a-day policies have one advantage. Its rates won't fluctuate because of personal factors like your age, driving history, ZIP code, or vehicle type.
It also has several disadvantages that may make these policies more costly over the long term. Unlike standard insurance policies, dollar-a-day policies don't provide any discounts based on a driver's record. SAIP also doesn't offer any subsidization options for low-income drivers.
Does SAIP Offer Full Coverage?
No, SAIP does not offer full coverage and as mentioned earlier, it doesn't meet minimum driving requirements. Although standard insurance policies cost more, they provide better overall protection.You can use SmartFinancial to search for a policy that is more budget-friendly. Just fill out your zip code, and we'll provide you with affordable auto insurance quotes from local agents within New Jersey.
What Does Dollar-a-Day Insurance Cover?
SAIP provides drivers with limited coverage for uninsured, low-income drivers that may forego regular insurance. It offers the following benefits:
Emergency medical care – It covers medical expenses if you need emergency treatment after you get into a car accident.
Treatment for catastrophic injuries – SAIP covers medical costs up to $250,000 for catastrophic injuries. These include brain, spinal cord, disfigurement, or other permanent or significant ones) that result from a car accident. You must receive care at a trauma or acute care hospital immediately following an accident.
Death benefit – The policy provides a death benefit of $10,000 paid to your loved one if you die in an accident.
This policy provides substantial emergency medical coverage but for very specific injuries. Unfortunately, the state weighs the circumstances of each accident before they pay any bills. If motorists are at-fault, the program may not reimburse them for their medical expenses.This coverage is cheaper compared to other car insurance. The price for SAIP is higher than standard auto policies when households must cover more than one vehicle. You'll have to purchase separate SAIP policies for each automobile, which could double the cost of your insurance.
What Dollar-a-Day Policies Don't Cover
Although SAIP policies pay for emergency medical care, they don't cover everything. The majority of expenses are covered under standard insurance policies only. Here are some things that Dollar-a-Day policies won't cover. Not every person will qualify for coverage – SAIP only covers New Jersey residents who have Federal Medicaid with hospitalization.
It doesn't cover damages to other people's cars. Dollar-a-day insurance policies don't provide liability coverage. For instance, what if your vehicle crashes into the back of another truck, damaging its bumper and injuring the driver? SAIP won't pay for the other driver's injuries (bodily liability), nor will it pay for their damaged bumper (property damage liability).
It doesn't pay for damages to your car resulting from a collision. SAIP won't pay to fix damages for your vehicle after a collision with another car or object.
It doesn't pay for losses from natural disasters or car theft. These policies won't reimburse you for damages that result from a collision. These include auto theft, vandalism, natural disasters, fire or broken windshields. This insurance will also pay if your vehicle collides with another car.
It doesn't cover non-emergency medical treatments. SAIP won't cover outpatient and non-emergency medical visits that Medicaid typically covers, like doctors' visits and physical therapy.
You're at significant financial risk if you don't have enough coverage after an accident. For instance, another driver could sue you for damages you cause. Your vehicle may also need repair due to damages. Since these policies don't provide liability or collision coverage, you may have to pay for these expenses out of your pocket.
Will My Policy Be Canceled If I No Longer Receive Medicaid?
The state won't automatically cancel your policy if you lose your Medicaid coverage during your current SAIP term. You will continue to receive limited benefits. Unfortunately, you'll be ineligible to renew your dollar-a-day policy once it expires.
Can I Get This Policy if I Have a Poor Driving Record?
No, you can't. Drivers are ineligible for SAIP coverage if the state has revoked or suspended their driver's license or registration.
Can I Get Dollar-a-Day Insurance if I Have a Low Credit Score?
Yes, you can. Unlike a typical insurance company, the state doesn't consider an applicant's credit score to determine their eligibility. New Jersey will not use someone's credit score to determine what premiums to charge them.
Additional Things to Think About Before Signing up for Dollar-a-Day Insurance
As mentioned earlier, drivers should only consider SAIP as a final option. If this coverage still seems like an attractive option, there are several other things you should remember:
It doesn't replace liability coverage – This coverage won't pay for another driver's property damages or medical expenses. If you hit another person's car, you may be on the hook for these costs.
SAIP isn't a replacement for collision coverage offered by standard auto insurance policies – Before you sign up for SAIP coverage, consider the repercussions. For example, if an accident occurs, it could leave you with costly repairs that you can't afford to pay.
It won't replace comprehensive coverage – If a non-collision event damages your vehicle, you will have to pay for these expenses out of pocket. Additionally, SAIP won't pay to replace your car if a thief steals your vehicle or when another driver totals it.
Other Affordable Auto Insurance Options to Consider
There are some cheaper alternatives for auto insurance coverage to help low-income residents. Here are some low-cost alternative options available to New Jersey residents.
Option One: Basic Auto Insurance Policy
New Jersey passed the Automobile Insurance Cost Reduction Act to provide basic auto insurance for its residents. These policies offer less protection at a lower price than standard auto insurance coverage.You can obtain a basic policy through any licensed New Jersey insurance agent. You can also use SmartFinancial's technology to compare over 200 quotes for the lowest rates.
Here are some coverage options that New Jersey's basic policy offers:
Bodily Injury Liability – The state doesn't include this coverage in basic auto insurance policies; however, individuals can purchase it as an option. The total coverage is $10,000 for all persons per accident.
Property Damage Liability – $5,000 per accident
Personal Injury Protection – $15,000 per person, per accident. Up to $250,000 for catastrophic injuries.
Uninsured/Underinsured Motorist Coverage – Not available
Collision Coverage – It is available as an option (from some insurers).
Comprehensive Coverage – Some insurers offer this as optional coverage.
Drivers should only consider a Basic Policy if they have only a few assets or responsibilities.
Option Two: Minimum Standard Auto Insurance Policy
These are policies typically selected by most New Jersey drivers. The state's Department of Banking and Insurance asks drivers to consider their own needs when choosing a policy. Ask how much auto coverage fits your budget and if other insurance will pay for certain expenses.To lower the cost, you can consider purchasing liability-only policies.
Here are the minimum amounts of coverage required by New Jersey:
Bodily Injury Liability: $15,000 per person and $30,000 per accident.
Property Damage Liability Coverage: 5,000 per accident
Personal Injury Protection (PIP): $15,000
Uninsured/Underinsured Motorist Bodily Injury Coverage: $15,000 per person and $30,000 per accident
Uninsured/Underinsured Motorist Property Damage Coverage: $5,000 per accident with a $500 deductible
Standard auto insurance policies are a better option than the SAIP and New Jersey's basic policies. You can obtain a minimum standard auto policy for a small additional cost. Although they aren't as cheap as SAIP coverage, they are easier to buy. Additionally, you can comparison-shop to find an insurance company that provides the lowest premiums and coverage that fits your budget.
Do you need to save money on your car insurance premiums? If you need a better policy that fits your budget, you can use SmartFinancial's app to search for one that fits your needs. Just fill out your zip code below, and we'll provide you with quotes from local insurance companies within your area. You can select the coverage that best fits your needs and your wallet. It's the smart, simple way to find affordable car insurance.