How does car insurance work in Japan?

In Japan, car insurance is taken very seriously! Various services are offered by the insurance company, but there is mandatory insurance. And if the person refuses to take out this insurance, it is taxed as a crime. Everyone who owns vehicles must pay liability insurance against damage and indemnity for cars (Jidousha Songai Baishou Sekinin Hoken or Jibaiseki).

Insurers offer several options from mandatory to more complete. There are insurances that cover only physical damage, others only material and still others physical and material. Let's take a closer look at why the Japanese value car insurance so much.

Car insurance serves precisely to reduce losses in case of unforeseen events. Insurance payment is made when the license must be renewed (shaken). But it is only used in cases of injury (or death) caused to third parties and does not cover property damage. Car insurance is divided into 4 types: insurance against physical damage and third parties, insurance against material damage and third parties, insurance for physical damage and insurance to cover the car itself.

Car Insurance - How does car insurance work in japan?

mandatory car insurance (Jibaiseki hoken)

In Japan, car insurance is mandatory. Mandatory insurance (Jibaiseki hokenserve) serves to support the vehicle owner in case of accidents. Everyone who owns a car must take out this insurance as it is mandatory by law. This insurance helps with personal injury (and sometimes not cover all expenses), it does not cover property damage. This applies to third party physical damages.

Mandatory insurance is 30.8 thousand yen for passenger vehicles and must be paid every 2 years. The insurance payment record must be with the car documents, otherwise the driver is fined 300,000 yen. And if the person has not even taken out insurance, they will be sentenced to a year in prison, community work and a fine of 500,000 yen.

The indemnity paid for mandatory insurance is on average 1.2 million yen, this value applies in case of injuries, if the person goes days without work because of the accident. In case of death there are 30 million and for serious sequels 40 million.

Car Insurance - How does car insurance work in japan?

Optional vehicle insurance (Nin'i hoken)

If the vehicle owner wants to take out insurance in order to cover material damage as well, he must pay another insurance in addition to the mandatory one. Remembering that mandatory insurance is not enough, but doing this is optional. There is the Nin'i Hoken, which only covers material and physical damages of third parties, that is, it does not include their own losses. Insurers offer multiple coverage plans, up to unlimited amounts.

For third-party property damage insurance the average value is 10 million yen, the value only changes for luxury cars. A good option is to add an option, the Taibutsu Tyoka Tokuyaku, used when the other person's car is already very old and not worth the repair price, but the person still wants to fix it.


More complete car insurance (Sharyou Hoken)

Sharyou Hoken covers both third-party damages and the loss itself. Some plans provide coverage for theft and natural disaster. It pays a lot to overpay for extra insurance as Jibaiseki is very limited.

Other types are Taijin Baishou Hoken (third party insurance), Taibutsu Baishou Hoken (property damage insurance), Jison Jiko Hoken (self damage insurance), Mu-Hokensha Shougai Hoken (non-insured third-party car insurance) and Tojo-sha Hoken (passenger insurance).


In order to receive the indemnity, several factors are taken into account. In case of death, the calculation is made from the wages that the victim would receive if work until old age, in Japan, the average age is 70 years old. This calculation also includes retirement. As the value is very high, if the person does not have the optional insurance, they will have to work for a long time just to pay the indemnity.

Licensing and inspections (Shaken)

According to the portal Toyokawa City, in Japan, both licensing and inspection are mandatory. For new cars after the 3 year period, it must go through the procedure. Afterwards, it must be done every 2 years. Also before the licensing period expires and after re-licensing.


Renewal of the validity of the license and inspection of cars can be carried out from 1 month before the expiration date. If the driver doesn't go through Shaken's process, he can be jailed for 6 months. Or, shell out a fine of around 300,000 yen. Also, the wallet will get 6 points because of the infraction. And the work permit will also be suspended.

If the vehicle is transferred or sold, the procedures for legalization must be passed on to the car owner. In case of theft of a common car, a notification must be made to the Police. Afterwards, the owner of the car must go to the Higashi Mikawa Kenzei Jimusho, and take the document “Tonan Higai Todoke Juri Shomeisho” (attestation of notification of the occurrence of theft) issued by the Police and the personal stamp (Inkan).

Car Insurance - How does car insurance work in japan?