First-Time Car Insurance in Japan: Important Points for Foreigners

1. Introduction to Car Insurance in Japan

Car insurance is a legal requirement in Japan, and all vehicle owners must have at least mandatory coverage. Whether you are a resident or a foreigner living in Japan, understanding the insurance system is crucial before purchasing or driving a car.

There are two main types of car insurance in Japan: Compulsory Automobile Liability Insurance (CALI), known as “Jibaiseki,” and Voluntary Car Insurance. The compulsory insurance is required by law, while voluntary insurance provides additional protection.

Compulsory Automobile Liability Insurance (CALI)

Jibaiseki insurance is the minimum coverage required by law. It covers bodily injury and death in case of an accident but does not cover property damage or vehicle repair costs. When purchasing a car or registering a vehicle, you must have this insurance.

The cost of CALI depends on the type of vehicle but typically ranges from ¥25,000 to ¥30,000 ($170 to $200) per year for a standard passenger car. Since this insurance has limited coverage, it is highly recommended to get additional voluntary insurance.

Voluntary Car Insurance

Since CALI only covers bodily injury, voluntary car insurance is essential to protect against vehicle damage, property damage, and other risks. The main types of voluntary car insurance include:

• Property Damage Liability: Covers damage to another person’s vehicle or property.
• Collision and Comprehensive Insurance: Covers damage to your own vehicle.
• Personal Accident Insurance: Provides compensation for injuries to you and your passengers.
• Uninsured Motorist Coverage: Protects against accidents caused by uninsured drivers.

The cost of voluntary car insurance varies depending on factors such as your driving history, car model, and coverage level. On average, it costs between ¥50,000 and ¥150,000 ($350 to $1,000) per year.

Why Is Car Insurance Important for Foreigners?

For foreigners living in Japan, car insurance is particularly important because of potential language barriers, unfamiliar road rules, and liability risks. Some key reasons to get proper insurance include:

• Legal compliance: Driving without CALI is illegal and can lead to penalties.
• Financial protection: Medical and repair costs can be expensive without proper coverage.
• Peace of mind: Many insurance providers offer support services in English, making it easier to handle accidents and claims.

Understanding Japan’s car insurance system is the first step to ensuring a safe and hassle-free driving experience. In the next sections, we will explore the types of insurance available, key considerations for foreigners, and how to apply for car insurance in Japan.

2. Types of Car Insurance Available

In Japan, car insurance is divided into two main categories: Compulsory Automobile Liability Insurance (CALI) and Voluntary Car Insurance. While CALI is required by law, voluntary insurance provides additional protection and is highly recommended for all drivers, especially foreigners who may not be familiar with Japan’s driving regulations.

Compulsory Automobile Liability Insurance (CALI)

Compulsory Automobile Liability Insurance, known as Jibaiseki in Japanese, is a mandatory insurance policy that every vehicle owner must have. This insurance primarily covers bodily injury or death of the other party in an accident but does not cover vehicle damage or property damage.

The main features of CALI are:

• Required by law for all vehicles, including motorcycles.
• Covers only bodily injury or death of third parties.
• Does not cover damage to your own vehicle or property.
• Issued for a period of 2 to 3 years when registering a vehicle.

The cost of CALI depends on the vehicle type and is generally around ¥25,000 to ¥30,000 ($170 to $200) per year for a standard passenger car. This insurance is renewed along with the vehicle’s mandatory safety inspection (Shaken).

Voluntary Car Insurance

Because CALI offers limited coverage, most drivers in Japan opt for voluntary car insurance, which provides comprehensive protection. There are several types of voluntary car insurance policies:

1. Bodily Injury Liability Insurance

This insurance covers medical expenses, lost income, and other compensation for injuries or deaths caused to third parties in an accident. It complements CALI, which has compensation limits.

2. Property Damage Liability Insurance

This policy covers damages to another person’s vehicle or property in an accident. Since repair costs can be high in Japan, having this insurance is crucial. Most policies offer coverage up to ¥100 million to ¥500 million ($700,000 to $3.5 million).

3. Collision and Comprehensive Insurance

This insurance covers damage to your own vehicle, whether caused by a collision, theft, natural disasters, or vandalism. Depending on the policy, it may also cover rental car fees while your vehicle is being repaired.

4. Personal Accident Insurance

This policy provides financial support for injuries sustained by the driver and passengers, regardless of who is at fault. Compensation may include medical expenses, disability benefits, and even death benefits.

5. Uninsured and Underinsured Motorist Coverage

This type of insurance covers you in case you are involved in an accident with a driver who does not have sufficient insurance. It ensures that medical expenses and damages are covered even if the other party lacks proper insurance.

Cost of Voluntary Car Insurance

The cost of voluntary insurance depends on several factors, including the driver’s age, experience, vehicle type, and accident history. On average, voluntary insurance costs between ¥50,000 and ¥150,000 ($350 to $1,000) per year. Some providers offer discounts for safe drivers or policies with higher deductibles.

Choosing the Right Insurance Policy

When selecting a car insurance policy in Japan, consider the following factors:

• Coverage Needs: Assess whether you need full coverage or basic liability insurance.
• Premium Costs: Compare quotes from different insurance companies.
• English Support: Some insurers offer customer service and claim processing in English.
• Roadside Assistance: Many policies include 24/7 roadside support for breakdowns or accidents.

Understanding the types of car insurance available in Japan will help you make an informed decision and ensure you are properly covered in case of an accident.

3. Key Considerations for Foreigners

As a foreigner in Japan, obtaining car insurance can be a complex process due to language barriers, unfamiliar regulations, and different driving norms. However, understanding the key considerations will help ensure you get the right coverage and avoid potential issues. Below are important factors to keep in mind when applying for car insurance in Japan.

1. Understanding Legal Requirements

In Japan, all vehicles must have Compulsory Automobile Liability Insurance (CALI), which covers bodily injury or death in an accident but does not cover vehicle or property damage. Foreign drivers must also consider purchasing voluntary car insurance to cover additional risks, such as collision damage and third-party liability.

2. Language Barriers and English-Speaking Insurance Providers

Most Japanese insurance documents, contracts, and customer support services are available only in Japanese. To avoid misunderstandings, consider choosing an insurance provider that offers support in English. Some companies, such as Tokio Marine, Sompo Japan, and Mitsui Sumitomo Insurance, provide policies with English documentation and customer service.

3. Required Documents for Foreign Drivers

When applying for car insurance, you will typically need to provide the following documents:

• Residence Card (Zairyu Card): Proof of your legal residency in Japan.
• Japanese Driver’s License or International Driving Permit (IDP): Depending on your country, you may need to convert your foreign license to a Japanese one after one year.
• Vehicle Registration Certificate (Shaken Sho): Proof of vehicle ownership.
• Previous Insurance History: Some insurers may offer discounts for a clean driving record from your home country.

4. Cost of Car Insurance for Foreigners

The cost of voluntary car insurance varies based on factors such as driving experience, accident history, and vehicle type. On average, voluntary insurance costs between ¥50,000 and ¥150,000 ($350 to $1,000) per year. However, foreigners with no prior driving record in Japan may face higher premiums.

5. Differences in Driving and Insurance Policies

Foreigners should be aware of unique aspects of driving and insurance in Japan:

• No-Fault Insurance System: Even if you are not fully at fault in an accident, you may still be required to pay part of the damages.
• High Repair Costs: Car repairs in Japan can be expensive, making comprehensive insurance highly recommended.
• Strict Traffic Laws: Violations such as DUI (driving under the influence) can result in immediate insurance cancellation.
• Limited Car Rental Insurance: If you frequently rent cars, check if your insurance policy extends to rental vehicles.

6. Discounts and Special Offers

Some insurance companies offer discounts to safe drivers, long-term policyholders, and those who install safety features in their vehicles. If you have a no-claims record from your home country, check if the insurer can recognize it for a discount.

7. Roadside Assistance and Support Services

Many insurance providers offer 24/7 roadside assistance, which can be useful if you experience a breakdown or accident. Services may include towing, jump-starting a battery, and emergency fuel delivery. When choosing an insurance policy, confirm whether roadside support is included.

Conclusion

Understanding these key considerations will help foreigners in Japan navigate the car insurance process with ease. Choosing the right policy, ensuring proper coverage, and being aware of legal requirements will contribute to a safer and more comfortable driving experience in Japan.

4. How to Apply for Car Insurance

Applying for car insurance in Japan can be a complex process, especially for foreigners who may not be familiar with the system. However, by understanding the necessary steps and requirements, you can ensure a smooth application process. Below is a step-by-step guide on how to apply for car insurance in Japan.

1. Choose the Right Insurance Type

Before applying, you need to decide on the type of car insurance that best suits your needs. There are two main types:

• Compulsory Automobile Liability Insurance (CALI): This is mandatory by law and covers injuries or deaths caused to third parties.
• Voluntary Car Insurance: This provides additional coverage, including property damage, collision insurance, and personal accident insurance.

Most drivers in Japan purchase both CALI and voluntary insurance for better protection.

2. Compare Insurance Providers

There are several insurance companies in Japan offering car insurance plans, including:

• Tokio Marine & Nichido
• Sompo Japan
• Mitsui Sumitomo Insurance
• Aioi Nissay Dowa Insurance
• Direct insurers like Sony Assurance and SBI Insurance

When comparing insurance providers, consider factors such as premium costs, coverage options, English support, and claim processing efficiency.

3. Gather Required Documents

To apply for car insurance in Japan, you will need to provide the following documents:

• Residence Card (Zairyu Card): Proof of your legal residency in Japan.
• Driver’s License: Either a Japanese license or an International Driving Permit (IDP) if applicable.
• Vehicle Registration Certificate (Shaken Sho): Required to register your vehicle for insurance.
• Previous Insurance History: If you have a no-claims history from your home country, some insurers may offer discounts.

4. Get a Quote

Once you have selected an insurance provider, you can request a quote online or by visiting an insurance office. You will need to provide details such as:

• Vehicle make, model, and year
• Estimated annual mileage
• Primary driver information
• Coverage options and deductible preferences

The premium cost varies based on these factors, with voluntary insurance typically ranging from ¥50,000 to ¥150,000 ($350 to $1,000) per year.

5. Submit Your Application

Once you receive a quote and agree to the terms, you can proceed with the application. The process usually involves:

• Filling out an application form (online or in-person)
• Submitting required documents
• Choosing a payment method (bank transfer, credit card, or automatic deduction)

Some insurers allow applications via phone or online, while others require in-person applications.

6. Receive Your Insurance Policy

After processing your application, the insurer will provide an insurance policy document, which includes:

• Policy number and coverage details
• Premium payment schedule
• Claim procedures
• Emergency contact numbers

It is important to keep this document in your vehicle, as you may need to present it in case of an accident or police inspection.

7. Renewing and Cancelling Your Insurance

Most car insurance policies in Japan are valid for one year. It is the policyholder’s responsibility to renew the insurance before it expires. Insurance providers usually send a renewal notice a few weeks before the expiration date.

If you wish to cancel your insurance before the end of the term, you will need to notify your insurer in advance and may be required to pay a cancellation fee.

Conclusion

Applying for car insurance in Japan requires careful consideration of coverage options, insurance providers, and required documents. By following these steps, you can secure the right insurance policy that meets your needs and ensures a smooth driving experience in Japan.

5. Common Mistakes and Tips to Avoid

When purchasing car insurance in Japan for the first time, many foreigners make mistakes that can lead to unexpected costs, legal issues, or insufficient coverage. Understanding these common pitfalls and knowing how to avoid them will help you get the right insurance plan and ensure a stress-free driving experience in Japan.

1. Relying Only on Compulsory Automobile Liability Insurance (CALI)

One of the most common mistakes is assuming that Compulsory Automobile Liability Insurance (CALI) is enough. While CALI is required by law, it only covers bodily injury or death of third parties and does not cover:

• Damage to your own vehicle
• Property damage to others (e.g., another person’s car, buildings, or infrastructure)
• Medical expenses for the driver and passengers

Without voluntary car insurance, you could face huge financial burdens in case of an accident. It is highly recommended to purchase additional coverage.

2. Not Checking for English Support

Many Japanese insurance companies offer policies and support services only in Japanese. This can make it difficult for foreigners to understand the terms and conditions, file claims, or communicate during an emergency.

Tip: Choose an insurance provider that offers English support, such as Tokio Marine, Sompo Japan, or Mitsui Sumitomo Insurance.

3. Choosing the Cheapest Plan Without Understanding Coverage

Many first-time buyers opt for the cheapest insurance plan without fully understanding what it covers. While saving money on premiums is important, insufficient coverage can lead to higher expenses in the long run.

Tip: Carefully review the coverage details and make sure it includes:

• Third-party liability for property damage
• Collision and comprehensive coverage
• Personal accident insurance for yourself and passengers
• Uninsured motorist coverage

4. Ignoring Deductibles and Policy Limits

Insurance policies in Japan often have deductibles and payout limits. A deductible is the amount you need to pay out-of-pocket before the insurance coverage kicks in. If you set a high deductible to lower your premium, you may struggle to pay for repairs in case of an accident.

Tip: Choose a deductible amount that balances affordability and financial security.

5. Not Informing the Insurer About Changes

If you change your address, vehicle, or primary driver, failing to update your insurer can lead to problems when filing a claim.

Tip: Always notify your insurer of any significant changes to your vehicle or personal information.

6. Overlooking Discounts and Special Offers

Some insurance companies in Japan offer discounts for:

• Safe driving history (No-claims discount)
• Installing safety features like dashcams and anti-theft devices
• Bundling multiple insurance policies (e.g., home and car insurance)

Tip: Ask your insurer about possible discounts to lower your premium.

7. Not Knowing the Claims Process

In case of an accident, knowing how to file a claim is crucial. Many foreigners are unaware of the necessary steps, which can delay the claims process.

Tip: Keep your insurer’s contact number in your car and understand the claims process, including:

• Reporting the accident to the police
• Contacting your insurance company immediately
• Providing necessary documents (accident report, photos, etc.)

8. Forgetting to Renew the Insurance Policy

Car insurance policies in Japan typically last one year. If you forget to renew, you may be driving uninsured, which is illegal.

Tip: Set reminders for renewal dates and check for any changes in policy terms before renewing.

Conclusion

Avoiding these common mistakes will help ensure you get the right car insurance coverage in Japan. Take the time to research, compare plans, and understand the policy details to make an informed decision. Proper insurance coverage will provide peace of mind and protect you from unexpected financial burdens.