Step-by-Step Guide to Getting Car Insurance in Japan: Everything You Need to Know

1. Understanding Car Insurance in Japan

In Japan, car insurance is a legal requirement for all vehicle owners. There are two main types of car insurance: Compulsory Automobile Liability Insurance (CALI) and Voluntary Insurance. Understanding the differences between these types of insurance is crucial for drivers in Japan.

Compulsory Automobile Liability Insurance (CALI)

CALI, also known as Jibaiseki Hoken (自賠責保険), is mandatory for all vehicles in Japan. This insurance covers bodily injury and death of third parties in an accident but does not cover property damage or the driver’s own injuries. The cost of CALI is included in the vehicle inspection fee (Shaken, 車検) and varies depending on the type of vehicle. The estimated cost for a standard passenger car is around ¥20,000–¥30,000 ($140–$210) for two years.

Voluntary Car Insurance

Since CALI provides only limited coverage, most drivers opt for voluntary car insurance to cover additional risks. Voluntary insurance typically includes:

• Liability Insurance: Covers property damage and injuries to third parties beyond CALI’s coverage.
• Collision and Comprehensive Insurance: Covers damage to your own vehicle due to accidents, theft, fire, or natural disasters.
• Personal Injury Protection: Provides compensation for medical expenses and lost wages.
• Uninsured/Underinsured Motorist Coverage: Protects against drivers who lack adequate insurance.

Insurance Premiums and Costs

The cost of voluntary car insurance depends on various factors such as the driver’s age, driving history, vehicle type, and coverage level. On average, voluntary car insurance premiums range from ¥50,000 to ¥150,000 ($350–$1,050) per year. Discounts may be available for drivers with a good driving record or those who install safety features in their vehicles.

Key Insurance Providers in Japan

Several major insurance companies provide car insurance in Japan, including:

• Tokio Marine Nichido
• Sompo Japan
• Mitsui Sumitomo Insurance
• AIU Insurance
• Direct insurers like Sony Assurance and SBI Insurance

Each provider offers different plans and benefits, so it’s essential to compare policies before making a decision.

2. Types of Car Insurance Available

When enrolling in car insurance in Japan, drivers can choose from several types of coverage to protect themselves and others in case of an accident. The two main categories of car insurance available are Compulsory Automobile Liability Insurance (CALI) and Voluntary Car Insurance. Each type serves a different purpose, and many drivers opt for a combination of both to ensure comprehensive coverage.

Compulsory Automobile Liability Insurance (CALI)

Known in Japanese as Jibaiseki Hoken (自賠責保険), CALI is a mandatory insurance that all vehicle owners must purchase. It is designed to provide financial protection for third-party victims of accidents, covering injuries or death but not property damage or the driver’s own medical expenses.

The cost of CALI is fixed by the government and depends on the type of vehicle. For example, for a standard passenger car, the premium for a two-year policy is typically around ¥20,000–¥30,000 ($140–$210). Motorcycles and other smaller vehicles generally have lower premiums. CALI is required for passing the mandatory vehicle inspection (Shaken, 車検), and failure to maintain valid CALI can result in penalties, including fines and vehicle registration suspension.

Voluntary Car Insurance

Since CALI provides only limited coverage, most drivers choose to purchase voluntary car insurance (Nini Hoken, 任意保険) for additional protection. This type of insurance offers various coverage options, including:

1. Liability Insurance

Voluntary liability insurance covers damages beyond what CALI provides. It pays for medical expenses, lost wages, and property damage to third parties if the policyholder is at fault in an accident. Many policies offer coverage limits in the range of ¥100 million to ¥1 billion ($700,000–$7 million), ensuring adequate financial protection.

2. Collision and Comprehensive Insurance

This coverage helps pay for repairs or replacement of the policyholder’s vehicle in case of accidents, theft, fire, natural disasters, or vandalism. Premiums for this coverage depend on factors such as the car’s value, the driver’s history, and the level of coverage chosen. Typical costs range from ¥50,000 to ¥150,000 ($350–$1,050) per year.

3. Personal Injury Protection (PIP)

Personal injury protection covers medical expenses and compensation for injuries sustained by the driver and passengers, regardless of fault. Some policies also provide compensation for lost income due to injuries. This coverage is especially beneficial in cases where the driver does not have health insurance.

4. Uninsured/Underinsured Motorist Coverage

If the policyholder is involved in an accident with a driver who lacks adequate insurance, this coverage ensures they receive compensation for medical costs and vehicle repairs. This is particularly useful since some drivers in Japan may only carry CALI, which has limited payout amounts.

5. Roadside Assistance

Many voluntary insurance policies include roadside assistance services such as towing, emergency repairs, battery jumps, and lockout assistance. Some providers also offer hotel accommodations or rental car coverage if a breakdown occurs far from home.

Additional Coverage Options

Besides standard voluntary insurance plans, some companies offer specialized add-ons, including:

• New Car Replacement Coverage: Provides a full replacement value if the vehicle is totaled within a specified period.
• Legal Assistance Coverage: Helps cover legal fees in case of disputes arising from an accident.
• Natural Disaster Coverage: Essential for drivers in areas prone to earthquakes, floods, or typhoons.

Choosing the Right Insurance Plan

Drivers should compare different insurance plans and consider their driving habits, vehicle type, and budget when selecting coverage. Major insurance providers in Japan include Tokio Marine Nichido, Sompo Japan, Mitsui Sumitomo Insurance, and direct insurers such as Sony Assurance and SBI Insurance. Each provider offers various plans with different coverage levels and benefits.

By understanding the different types of car insurance available, drivers can make informed decisions to ensure financial security and peace of mind while driving in Japan.

3. Eligibility and Required Documents

When applying for car insurance in Japan, it is important to understand the eligibility criteria and the necessary documents required for enrollment. Insurance providers have specific requirements based on factors such as residency status, driving experience, and vehicle ownership.

Eligibility Criteria

To qualify for car insurance in Japan, applicants must meet the following conditions:

• Legal Driving License: The applicant must hold a valid Japanese driver’s license or an international driving permit (IDP) recognized in Japan. Some insurers may also accept foreign licenses if they are officially translated.
• Residency Status: Foreign residents must have a valid visa and residency card (Zairyu Card, 在留カード) to apply for car insurance. Tourists and short-term visitors may face restrictions on obtaining long-term insurance plans.
• Vehicle Ownership: The applicant must be the registered owner of the vehicle or have permission from the registered owner to purchase insurance on their behalf.
• Minimum Age Requirement: Most insurance companies require policyholders to be at least 18 years old, which is the legal driving age in Japan. However, insurance premiums are generally higher for young and inexperienced drivers.
• Driving History and Accident Record: Insurance providers consider an applicant’s driving record, including past accidents and traffic violations, to determine the premium amount. A clean driving record can lead to lower premiums and potential discounts.

Required Documents for Car Insurance Application

When applying for car insurance in Japan, the following documents are typically required:

1. Driver’s License

A valid Japanese driver’s license or an international driving permit (IDP) with an official Japanese translation is required. If using a foreign license, it must be converted to a Japanese license after one year of residency.

2. Vehicle Registration Certificate (Shaken Sho, 車検証)

This document serves as proof of vehicle registration and includes important details such as the vehicle’s make, model, year of manufacture, and registered owner. It is issued during the mandatory vehicle inspection (Shaken, 車検).

3. Proof of Residency

For foreign residents, a copy of the residency card (Zairyu Card, 在留カード) and proof of address (such as a utility bill or rental contract) may be required. Japanese citizens may need to provide a copy of their Juminhyo (住民票), a resident registration certificate.

4. Proof of Vehicle Inspection (Shaken, 車検)

Insurance providers require proof that the vehicle has passed the mandatory safety inspection (Shaken). This inspection is conducted every two years and ensures that the vehicle meets safety and environmental standards.

5. Previous Insurance Policy (if applicable)

If switching from another insurance provider, a copy of the previous insurance policy or proof of a no-claims history may be required. A good no-claims record can help reduce premium costs.

6. Payment Information

Most insurance companies accept payments via credit card, bank transfer, or automatic deductions from a Japanese bank account. Some insurers may also offer installment payment options.

Additional Considerations

• Insurance for Foreign Drivers: Expats and foreign residents should check with insurance providers about special policies tailored for non-Japanese speakers or those with international driving permits.
• Discounts and Benefits: Many insurers offer discounts for safe drivers, multi-policy holders, or those who install advanced safety features in their vehicles.
• Temporary Car Insurance: Short-term car insurance options are available for those who need coverage for a limited period, such as rental car users or those awaiting full insurance approval.

By ensuring that all eligibility requirements are met and the necessary documents are prepared, applicants can smoothly complete the car insurance application process in Japan.

4. How to Choose the Right Insurance Plan

Choosing the right car insurance plan in Japan is essential for ensuring adequate financial protection while keeping costs manageable. With various insurance options available, drivers must consider several key factors, such as coverage levels, premium costs, and additional benefits. This guide outlines the crucial steps to selecting the best insurance plan for your needs.

1. Assess Your Insurance Needs

Before comparing different policies, determine what type of coverage you require. Consider the following:

• Driving Frequency: If you drive daily, comprehensive coverage may be necessary. Occasional drivers may opt for a more basic plan.
• Vehicle Value: New or expensive cars benefit from full coverage, including collision and comprehensive insurance.
• Personal Financial Situation: Consider how much out-of-pocket expense you can afford in case of an accident.
• Risk Factors: Drivers in urban areas may need additional coverage for accidents, while those in disaster-prone regions might require natural disaster insurance.

2. Compare Different Types of Coverage

Japanese car insurance plans typically offer various types of coverage:

Compulsory Automobile Liability Insurance (CALI)

CALI is legally required but provides minimal coverage, only covering injuries or death of third parties. It does not pay for property damage or the driver’s medical expenses.

Voluntary Car Insurance

Most drivers purchase voluntary insurance to supplement CALI. The main types include:

• Third-Party Liability Insurance: Covers property damage and additional medical costs beyond CALI.
• Collision and Comprehensive Insurance: Pays for repairs or replacement of your own vehicle.
• Personal Injury Protection: Covers medical expenses for the driver and passengers.
• Uninsured/Underinsured Motorist Coverage: Provides compensation if the other driver lacks sufficient insurance.

3. Compare Premium Costs and Discounts

The cost of car insurance in Japan varies based on several factors:

• Driver’s Age and Experience: Younger and less experienced drivers generally face higher premiums.
• Driving History: A clean driving record results in lower premiums, while past accidents increase costs.
• Vehicle Type: Sports cars and luxury vehicles typically have higher insurance rates.
• Location: Insurance costs can be higher in cities due to increased accident risks.

Premiums for voluntary car insurance typically range from ¥50,000 to ¥150,000 ($350–$1,050) per year. However, many insurers offer discounts:

• No-Claims Discount: A percentage reduction for drivers with accident-free records.
• Multiple Policy Discount: Savings for bundling car insurance with home or life insurance.
• Eco-Car Discount: Lower premiums for hybrid and electric vehicles.
• Safe Driver Discount: Rewards for installing advanced safety features or using telematics devices.

4. Research Insurance Providers

Several major insurance companies offer car insurance in Japan, including:

• Tokio Marine Nichido
• Sompo Japan
• Mitsui Sumitomo Insurance
• AIU Insurance
• Direct insurers like Sony Assurance and SBI Insurance

Compare policies from different providers by checking their coverage options, claim processes, and customer reviews.

5. Check Policy Terms and Conditions

Before finalizing your insurance plan, carefully review the terms and conditions. Pay close attention to:

• Coverage Limits: Ensure the policy provides sufficient protection for medical expenses and property damage.
• Exclusions: Check for any exclusions, such as coverage limitations for certain accidents or natural disasters.
• Deductibles: Determine how much you will need to pay out-of-pocket before insurance coverage kicks in.
• Claim Process: A smooth and fast claims process is crucial in case of an accident.

6. Consider Additional Coverage and Benefits

Some insurers offer extra benefits, such as:

• Roadside Assistance: Coverage for towing, battery jump-starts, and emergency repairs.
• Rental Car Coverage: Compensation for a rental car while your vehicle is being repaired.
• Legal Assistance: Support in case of lawsuits related to accidents.

7. Get a Quote and Finalize Your Plan

Once you have compared different options, request a quote from your chosen insurance provider. Most companies allow online applications, but you may also visit an insurance agent for personalized assistance.

By carefully selecting the right insurance plan, you can drive with confidence, knowing that you are financially protected in case of an accident.

5. Application Process and Payment Methods

Applying for car insurance in Japan involves several steps, from selecting an insurance provider to submitting the required documents and making payments. Understanding the application process and available payment methods ensures a smooth and efficient experience.

1. Choose an Insurance Provider and Plan

Before starting the application, compare different insurance companies and select a plan that meets your needs. Consider factors such as coverage limits, premium costs, additional benefits, and customer reviews. Major insurance providers in Japan include:

• Tokio Marine Nichido
• Sompo Japan
• Mitsui Sumitomo Insurance
• AIU Insurance
• Direct insurers like Sony Assurance and SBI Insurance

2. Gather Required Documents

To apply for car insurance, prepare the following documents:

• Driver’s License: A valid Japanese driver’s license or an international driving permit (IDP) with an official Japanese translation.
• Vehicle Registration Certificate (Shaken Sho, 車検証): Proof of vehicle registration, including the make, model, and owner’s details.
• Proof of Residency: Foreign residents must provide a residency card (Zairyu Card, 在留カード) and proof of address.
• Vehicle Inspection Proof (Shaken, 車検): Certification that the vehicle has passed the mandatory inspection.
• Previous Insurance Policy (if applicable): If switching providers, proof of no-claims history can help lower premiums.
• Payment Information: Credit card, bank account details, or other accepted payment methods.

3. Submit the Application

Applications can be submitted through different channels:

• Online: Many insurers allow applications through their websites, offering quick and convenient processing.
• By Phone: Some insurance companies accept applications via customer service representatives.
• Through an Agent: Visiting a local insurance agent provides personalized assistance.

After submission, the insurer reviews the application and may request additional details if necessary.

4. Receive Policy Confirmation and Documents

Once approved, the insurer will send a policy confirmation via email or postal mail. The policy document includes details on:

• Coverage type and limits
• Premium amount and payment schedule
• Policy period (typically one year, but multi-year options may be available)
• Claims process and contact information

5. Payment Methods

Insurance premiums can be paid using various methods:

One-Time Payment

A single upfront payment for the entire policy period. This is often the cheapest option, as insurers may offer discounts for lump-sum payments.

Installment Payments

Some insurers allow payments in monthly, quarterly, or semi-annual installments. While convenient, this option may include additional fees.

Accepted Payment Methods

• Credit Card: Visa, MasterCard, JCB, and other major credit cards are commonly accepted.
• Bank Transfer: Direct transfers from a Japanese bank account.
• Convenience Store Payments: Some insurers allow payments at convenience stores (Konbini, コンビニ) for added accessibility.
• Automatic Bank Deduction: Monthly payments deducted automatically from a bank account.

Annual premiums for voluntary car insurance typically range from ¥50,000 to ¥150,000 ($350–$1,050), depending on coverage levels and the driver’s profile.

6. Start Coverage and Keep Policy Updated

Once payment is completed, the policy becomes active. Keep a copy of the policy document in your vehicle for reference. To maintain continuous coverage:

• Renew the policy before expiration.
• Update the insurer about any changes, such as address, vehicle modifications, or additional drivers.
• Consider adjusting coverage levels if your driving habits or vehicle value change.

Following these steps ensures a smooth application process and reliable coverage while driving in Japan.