Types of Automobile Insurance in Japan

“Automobile third party liability insurance”, is more commonly referred to as mandatory liability insurance or mandatory insurance in Japan.

When having your car routinely inspected (車検 or “shaken”), in addition to the inspection fee, the insurance premium (保険料 or “hoken ryo”) for mandatory liability insurance will be collected.

Automobiles and motorized two wheeled vehicles that are driven on roads in Japan must be insured, with few exceptions.

Mandatory liability insurance is designed to compensate third parties for bodily injuries (injury or death) suffered due to a traffic accident (交通事故 or “kotsu jiko”).

Mandatory liability insurance does not cover property damage accidents that do not result in injury, nor does it cover accidents in which the driver themselves is injured.

Mandatory liability insurance policies pay out 30,000,000 JPY in the case of death (死亡 or “shibo”), and 1,200,000 JPY in the case of injury (傷害 or “shogai”) from traffic accidents.

In the case of residual or permanent disability (後遺障害 or “koi shogai”) as a result of a traffic accident, the insurance payment amount is determined based on the severity of such disability.

Whilst at first glance these amounts may seem generous, in reality this is not the case.

If you have been injured in a traffic accident and are forced to take a leave of absence from work, it may not be possible to be fully compensated for your lost wages, nor is the amount of compensation paid the same as what would be ordered by a court.

Unlike mandatory liability insurance, there is no obligation (義務 or “gimu”) to purchase voluntary automobile insurance in Japan.

Although you are free to drive in Japan without a voluntary insurance policy, there are many benefits in purchasing a policy, as the coverage provided is much wider and varied compared to mandatory liability insurance.

When a traffic accident results in the death or injury of another person, and the driver is legally liable for payment of damages, bodily injury liability coverage pays out the portion of damages which are in excess of the amount covered by mandatory liability insurance.

Personal injury compensation insurace that pays out in accordance with the insurance company’s standards when the policy holder is injured or killed in a traffic accident, regardless of whether the policy holder was inside the insured vehicle.

Passenger accident insurance that pays out in accordance with the insurance company’s standards when a passenger in the insured vehicle is injured or killed in a traffic accident.

Property damage liability insurance pays out when a traffic accident results in damage to the car, house, or other property of another person, and the driver is legally liable for payment of damages.

Automobile physical damage insurance pays out when the insured vehicle is damaged or stolen.

In addition to damages compensation, it is also possible to have insurance policies include endorsements or riders (特約 or “tokuyaku”) or road side services. If your policy includes a legal fees insurance endorsement (弁護士費用特約 or “bengoshi hiyo tokuyaku”), please make use of it as it will cover attorney’s fees.