Auto Insurance In Japan: What You Need To Know

In Japan, there are two types of automobile insurance: compulsory insurance and voluntary insurance. Under Japanese law, all registered vehicles must be covered by Compulsory Automobile Liability Insurance (CALI). This insurance is designed to protect third parties from injury by any vehicle in an accident and covers costs in the event of death, injury, or residual disability. CALI is usually included in the Shaken process, a mandatory car check-up. Voluntary insurance, on the other hand, is purchased by vehicle owners to cover damages or injuries that CALI does not, such as self-inflicted accidents, repairs to the insured's vehicle, and accidents involving uninsured drivers.

Mandatory Liability Insurance

In Japan, Mandatory Liability Insurance, also known as Compulsory Automobile Liability Insurance (CALI), is a type of automobile insurance that is mandatory for all car owners under the law. This insurance is designed to provide financial protection in the event of traffic accidents, with a focus on compensating third parties for bodily injuries, including injury or death. The coverage limits are set by law, with a maximum insurance payment of 30 million yen for death or disability and 1.2 million yen for injuries per victim.

The insurance is typically included in the Shaken process, which is a mandatory car check-up in Japan. It is important to note that this type of insurance does not cover property damage or accidents where the insured party is injured. As a result, many individuals opt for additional voluntary insurance to fill in the gaps in coverage.

Failure to obtain Mandatory Liability Insurance can result in legal consequences, including imprisonment of up to one year or a fine of up to 500,000 yen. Driving without the insurance certificate can also lead to a fine of up to 300,000 yen, demerit points, and license suspension.

The cost of Mandatory Liability Insurance depends on the type of vehicle and its usage. For personal use vehicles, the premium is 17,650 yen every two years, while for commercial use vehicles, the premium is 17,540 yen for the same period. These premiums have been lowered recently due to improved road safety and a decrease in traffic accidents.

Automobile Insurance

There are two types of automobile insurance in Japan: Compulsory Automobile Liability Insurance (CALI), which is mandatory, and voluntary insurance, which is purchased at the owner's discretion.

Compulsory Automobile Liability Insurance

Also known as Mandatory Liability Insurance, this insurance is required for all car owners in Japan. It is designed to compensate third parties for bodily injuries (injury or death) suffered due to a traffic accident. The maximum amount of insurance payment for one victim in case of death or disability is 30 million yen, and 1.2 million yen for injuries. This insurance is typically included in the Shaken process, a mandatory car check-up.

Voluntary Automobile Insurance

Voluntary Automobile Insurance, also known as Automobile Insurance, is purchased at the owner's discretion to cover damages or injuries that Compulsory Automobile Liability Insurance does not cover. The amount of insurance benefit is determined by each insurance company, whereas the payout for Compulsory Automobile Liability Insurance is a flat rate. Voluntary Automobile Insurance covers:

• Compensation for injury that exceeds the policy limits of Compulsory Automobile Liability Insurance
• Self-inflicted accidents
• Coverage for the insurance holder
• Coverage when the other driver has no insurance
• Repair of the damaged vehicle

It is recommended to purchase insurance with English service, especially if you are not confident in the Japanese language. Some companies that provide English service include CHUBB Insurance and Meiji Yasuda Insurance Agency.

Foreigners' eligibility for car insurance in Japan

There are two types of automobile insurance in Japan: Mandatory Liability Insurance, which is required by law, and Automobile Insurance, which is optional.

Mandatory Liability Insurance

This insurance is mandatory for all car owners in Japan and is designed to compensate victims of traffic accidents. The maximum insurance payout per victim is 30 million yen in the event of death or disability and 1.2 million yen in the case of injuries. If the cost of compensation and treatment exceeds this limit, an Automobile Insurance policy is required to cover the excess.

Automobile Insurance

This insurance covers liabilities exceeding the limits of Mandatory Liability Insurance, property compensation, automobile accidents, compensation for insured persons and passengers, and vehicle repairs. The insurance premiums may vary depending on the content, compensation limits, and purpose of the insurance.

Eligibility for Foreigners

Foreigners can obtain car insurance in Japan, but they must have a valid driver's license. There are three types of driver's licenses accepted by car insurance companies in Japan:

• A Japanese driver's license obtained while residing in the country
• An international driver's license issued by Geneva Convention member countries (excluding Taiwan, Switzerland, Germany, France, Belgium, Slovenia, and Monaco)
• Driver's licenses from specific countries, including Taiwan, South Korea, certain US states (Ohio, Virginia, Hawaii, Maryland, and Washington), and various European countries, which can be easily converted to a Japanese driver's license without additional testing.

Foreign residents in Japan with limited Japanese language skills can still obtain voluntary car insurance. However, they must be able to understand the application and policy documents in Japanese or have a family member or relative who can serve as the policyholder on their behalf.

When applying for car insurance, foreigners typically need to provide the same documents as Japanese citizens, including vehicle registration, a driver's license, and an insurance certificate if they already have one. Some insurers may require additional identification documents, and having a Japanese bank account for premium payments may be necessary.

The cost of car insurance in Japan

Mandatory Liability Insurance:

Mandatory Liability Insurance, also known as Jibaiseki Hoken, is required by law for all car owners in Japan. This type of insurance covers third-party costs in the event of an accident, including death (up to 30 million yen), injury (up to 1.2 million yen), and residual disability (750,000 yen to 40 million yen). The annual premium for this insurance is relatively affordable, ranging from 17,540 yen to 17,650 yen for K-vehicles and personal-use vehicles, respectively. The premiums were lowered in April 2023 due to improved car safety and a decrease in car accidents.

Voluntary/Optional Insurance:

Voluntary or optional car insurance, also known as Ninihoken, is not mandatory but is highly recommended to fill the gaps left by compulsory insurance. This type of insurance offers more comprehensive coverage, including damage to your vehicle, theft, natural disasters, and personal injury. The cost of voluntary insurance can vary significantly depending on the insurance company, the driver's profile, and the level of coverage selected.

For example, the annual premium for full coverage on a 2008 Nissan X-Trail (white plate) from Chubb Insurance was quoted at 200,000 yen, while liability-only coverage was half of that at 100,000 yen. Another user with Zurich Insurance pays 80,000 yen per year for full coverage on a Toyota Harrier. Age, gender, license type, and driving history can also impact the cost of insurance.

Additional Costs and Considerations:

When budgeting for car insurance in Japan, it's important to consider other mandatory costs associated with vehicle ownership, such as the shaken (safety inspection), weight tax, mandatory insurance charge, annual automobile tax, and parking fees. The shaken inspection, required every two to three years, typically costs between 100,000 and 200,000 yen. The weight tax can range from 8,000 to 50,000 yen, and the mandatory insurance charge is approximately 30,000 yen. Monthly parking fees in cities can range from 15,000 yen to 60,000 yen or more, depending on location.

In conclusion, the cost of car insurance in Japan depends on the type of insurance, the vehicle, and the driver's profile. While Mandatory Liability Insurance is more affordable, Voluntary/Optional Insurance offers more comprehensive coverage at a higher cost. Additionally, there are several other mandatory costs associated with vehicle ownership in Japan that should be factored into the overall budget.

How to claim car insurance in Japan

Japan has two types of automobile insurance: Mandatory Liability Insurance, which is required by law, and Automobile Insurance, which is optional. If you are in an accident in Japan, here is what you need to know about claiming car insurance:

Step 1: Call the Police

No matter how minor the incident, the police must be notified so they can file an accident report. The number for the police in Japan is 110. If the accident is not reported to the police, you will not be able to obtain a Traffic Accident Certificate, which is required for any insurance claim. Make sure to get the police case number and the name of the police station handling the incident.

Step 2: Notify Your Insurance Company

It is important to notify your insurance company as soon as possible after the accident. Failure to do so may affect your eligibility to make a claim. Insurance companies often provide advice and support to their customers after an accident and can also negotiate on their behalf.

Step 3: Exchange Information with the Other Party

If you are able to do so at the scene, exchange the following information with the other driver:

• License plate number
• Name, address, and telephone number
• Contact details for their place of employment
• Details of their insurance company and policy number (drivers should keep these in their glove box)

Step 4: Gather Witness Information

If there are any witnesses to the accident, try to get their name, address, and contact details, along with any information they can provide about what they saw.

Step 5: Document the Accident

Take photos of the accident scene and the other vehicle involved for your records. It is also a good idea to draw a diagram of the accident scene for future reference.

Step 6: Seek Medical Attention

Even if you believe your injuries are minor, it is important to see a doctor to ensure that they are not more serious. If you are injured, be sure to obtain a medical certificate, as this will be necessary to claim medical expenses from the other driver's insurance company.

Step 7: Obtain a Traffic Accident Certificate

To make an insurance claim, you will need to submit a Traffic Accident Certificate, which can be obtained from the Japan Safe Driving Centre in the district where the accident took place.

Step 8: Submit Your Claim

Provide all the necessary documentation, including the Traffic Accident Certificate and medical certificates, to your insurance company to initiate the claims process. If you have any questions or concerns, your insurance company should be able to provide assistance and guidance.

Frequently asked questions