Guide to Car Insurance in Japan


Compulsory Car Insurance

Driving a car in Japan requires Japanese Compulsory Automobile Insurance, or JCI (sometime Compulsory Automobile Liability Insurance, or CALI).  JCI mandatory insurance only covers the other parties of the accident up to 30 million yen in coverage for death (of a third party), 40 million yen for ongoing injuries (to a third party), and 1.2 million yen for injury (to a third party) as a result of an at-fault accident.

If involved in a serious “at fault” accident, the driver will have to pay out of pocket for any damages over and above the coverage provided, as well as their passenger’s injury, death, or property damage. It really is very, very basic coverage only.

JCI insurance is taken out as a part of the “shakken” process, which includes both the compulsory insurance and a mandatory 60-point inspection including both essential safety equipment (headlights and indicator lamps) and functional equipment (tires and wheel alignment, brakes, speedometer, emissions, suspension, steering, driveshaft, muffler, engine (oil or coolant leaks), etc.

The insurance issuance/renewal and inspections are required:

  • For the initial registration when purchasing a new car
  • Three years after the initial registration of a new car
  • Every two years after that in perpetuity

In this manner, the Japanese government is able to ensure that nearly every car on the street is both roadworthy and carries at least the legal minimum of insurance coverage.

Voluntary Car Insurance

Voluntary (comprehensive – full coverage) insurance isn’t required by law, but it is highly recommended. Compulsory insurance provides some basic protection for other drivers on the road in the event of an accident, but voluntary insurance is designed to protect you and your investment by offering higher levels of coverage and covering more types of damages, for example:

  • Collision coverage pays for damage to your vehicle if it is involved in a collision with another vehicle or object
  • Comprehensive coverage pays for damages not related to a collision, such as vandalism or theft
  • Medical payments coverage pays for injuries to your passengers
  • Uninsured and underinsured motorist coverage
  • Emergency road Service
  • Rental reimbursement
  • Mechanical breakdown insurance

Not every policy will contain these options or even the same levels of protection for each. You can tailor your policy to fit your individual needs and budget better.

Premiums

The price a consumer pays for their insurance premiums in Japan is determined using a system of numbered levels between one and 20; most people start at level six when buying insurance for the first time.  Recent arrivals to Japan should be aware that only their time driving in Japan will count, and will almost always be started at level 6 regardless of actual years driving experience or past non-accident history that they may have.

Filing a claim may cause the driver’s points to drop below six, which will make their premiums more expensive. If the driver drops below level 3, it is possible that the range of coverage becomes limited and/or that the premium(fee) increases, and becomes much more expensive. If you plan to stay in Japan for 2 to 3 years, we can offer a long term plan(maximum of three years). Your insurance fee will be fixed during the 2 or 3 years of the contract period, even if you file claims.

Rising to a higher level will significantly lower a driver’s rates.  Gaining points over time through good driving, and not filing claims, will lower the premiums paid by the driver significantly.

“Everyone is at fault” Liability

Liability is one of the most notable differences between insurance in Japan and other countries; accidents here are almost never decided as entirely the fault of only one party unless one car was physically stationary.

Liability here in Japan will always be divided between all parties at some level; anecdotally, this is often 80/20, but of course, it would depend a great deal on circumstances, location, etc. If a driver is involved in an accident and their car was moving, in almost all cases, they will be held liable to some extent. This also explains why regardless of how small the accident is, if it involves another car, the police must always be contacted to come to the scene before both parties leave to have them fill in a report. This is required at all times. A driver’s Insurance firm’s role is to help negotiate their client’s portion of this liability as low as possible. But to assist them in this, they will require a full accident report including photos of the car and location. So always remember to take photos at the accident scene if physically possible.

English Speaking Service

In general, Japanese insurance agents lack English speaking ability, and documents are only presented in Japanese. Lease Japan can offer excellent service in English, and we will take the time to learn your needs and fully explain your options.

Common Mistakes


Too Little Insurance Coverage

In Japan, accidents are almost never decided to be 100% the fault of one party over the other; unless one car is not moving. If the car is moving, it can be expected in nearly all cases that the car’s driver will be held liable to some extent.

Negotiating the extent of their client’s liability is one of the primary benefits insurance companies offer to holders of voluntary over compulsory only insurance coverage.

Using Coverage Too Readily

Using insurance to cover even small bumps, scratches, or other minimal damage to a car raises premiums and lowers the driver’s “point level” within the system. Reporting too many incidents may result in significantly higher rates, and make the driver uninsurable in some cases.

Sometimes paying out of pocket to ensure a good insurance record is the best bet.

Too Much Insurance Coverage

Insuring a used vehicle for full replacement value unnecessarily is a common mistake. Insuring some vehicles for full replacement value usually means paying premiums that are way too high.

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