Car Insurance in Japan: A Guide to the Top Providers

If you're a foreigner in Japan and wish to enroll in car insurance, there are specific conditions and legal requirements to be aware of, which may slightly vary depending on the insurance company. The primary requirement is to possess a valid driver's license.

This article will discuss the legal requirements for car insurance, the types of car insurance in Japan, and the top automobile insurance providers for car drivers and owners.

We'll also cover what foreigners ought to know about applying for car insurance in Japan, good deals, how to enroll, and what to look out for.

Types of car insurance in Japan

There are two types of car insurance in Japan: compulsory car liability insurance (自賠責 jibaiseki) and optional car insurance (任意保険 ninihoken).

1. Compulsory car liability insurance—jibaiseki

Compulsory car liability insurance is a mandatory insurance for all car owners. Agencies handle these payments for you most of the time when you purchase a new car, a used car, or take the car in for inspection. 

For brand new cars, you do not have to renew jibaiseki/shaken for the first three years, after which you must take the car in for inspection every two years, and consequently pay for jibaiseki.

The premiums for personal use vehicles (自家用乗用車) and K-vehicles (軽自動車) per 2 years are 17650 yen and 17540 yen respectively. The premiums were lowered from April 2023 due to improved car safety and fewer car accidents in general. This link lists all the premiums for the various types of cars out there.

Compulsory automobile liability insurance does not cover property damage or personal injury, and the compensation amount for victims is set relatively low, which may lead to insufficient coverage in actual accidents. Therefore, many people opt for "voluntary insurance" to cover the gaps left by compulsory insurance.

Failure to enroll in compulsory vehicle liability insurance while driving can result in imprisonment for up to one year or a fine of up to 500,000 yen. Merely not possessing the insurance certificate can lead to a fine of up to 300,000 yen. Driving without insurance will also result in six demerit points and a license suspension.

2. Optional car insurance—ninnihoken

When it comes to optional car insurance, there are two methods: purchasing from agents or buying directly online (direct type or mail-order type).

• Agent-purchased insurance offers detailed explanations, assistance with paperwork, but higher premiums.

• Direct-type insurance (Internet-based) allows you to choose coverage and handle claims independently, with lower premiums.

Some direct-type providers offer call centers for 24-hour accident support and detailed explanations over the phone. Opting for direct-type insurance can save on premiums, but understanding coverage details is crucial.

Internet-based insurance advantages include reduced intermediate costs, resulting in lower premiums and enhanced customer support. In contrast, agency-based insurances tend to have higher premiums due to intermediate costs.

What are the requirements for car insurance in Japan for foreigners?

Car insurance companies in Japan accept three types of driver's licenses from foreigners: a Japanese driver's license obtained while residing in the country, an international driver's license issued by Geneva Convention member countries (excluding Taiwan, Switzerland, Germany, France, Belgium, Slovenia, and Monaco), and certain driver's licenses from particular countries, including Taiwan, South Korea, the United States (limited to Ohio, Virginia, Hawaii, Maryland, and Washington), and various European countries, which allow for easy conversion to a Japanese driver's license without skill and knowledge tests.

Foreign residents in Japan who have a limited understanding of Japanese can still obtain voluntary car insurance. However, to be eligible for insurance, they must be able to comprehend the application and policy documents in Japanese or have a family member or relative who understands Japanese become the policyholder or named insured on their behalf.

Even if the car owner and the insurance policyholder are different individuals, coverage is still possible. In such cases, accurate disclosure during the contract process is crucial. Typically, the named insured is considered the primary driver. Spouses can self-name, but for other relatives, the rules may vary depending on the insurance company.

It's essential to note that insurance contract procedures and accident-related interactions are primarily conducted in Japanese, requiring a certain level of Japanese language proficiency. As such, foreigners seeking car insurance should have a basic understanding of Japanese reading and Japanese writing or typing to avoid potential issues.

When applying for car insurance, foreigners generally need to provide the same documents as Japanese citizens, including vehicle registration (車検証), driver's license, and insurance certificate (if currently insured and considering a revision). Some insurers may require additional identification documents, and having a Japanese bank account for premium payments might be necessary.

Regarding the driver's license, three types are accepted for foreigners applying for car insurance in Japan:

1. a Japanese driver's license obtained during their stay,

2. an international driver's license, or

3. a converted foreign driver's license to a Japanese one.

Prospective policyholders should have one of these license types if they wish to apply for car insurance in Japan.

What does car insurance in Japan cover?

The main pillars of coverage for car insurance are as follows:

1. Third-party liability insurance—Covers compensation for injury or damage caused to others in a traffic accident. Recommended coverage amount: Unlimited.

2. Property damage liability insurance—Covers compensation for damage caused to others' vehicles, utility poles, shops, etc. in a traffic accident. Recommended coverage amount: Unlimited.

3. Passenger injury insurance—Provides compensation to passengers in the insured vehicle for injuries or death resulting from a traffic accident, regardless of fault. Coverage amount: 10 million yen (recommended).

4. Personal injury insurance—Covers the actual damages for injuries or death to passengers in the insured vehicle due to a traffic accident. It can also cover accidents involving other vehicles if specified in the policy. Coverage amount: 30 million yen (recommended), but 50 million yen for better protection.

5. Self-damage insurance—Compensates for injuries or death of the driver in a single-vehicle accident (e.g., collision with obstacles). Coverage amount: 15 million yen (recommended).

6. Uninsured motorist insurance—This insurance provides compensation in cases of death or permanent disability resulting from a traffic accident where the other party is uninsured or has insufficient coverage.

When selecting coverage, it is essential to consider your needs, combining various types of coverage to ensure comprehensive protection and potentially saving on insurance premiums.

Additionally, some insurance companies offer roadside assistance services, which can be helpful in emergencies and should be evaluated based on usage frequency and convenience.

Additional services that car insurance options

The following are services often available as optional or additional services.

• Vehicle insurance—covers damage to your own vehicle due to accidents, theft, vandalism, natural disasters, etc.

• Roadside assistance coverage—Some auto insurance policies may include roadside assistance coverage for free. However, in the case of a paid option, it is necessary to consider factors such as the frequency of car usage and the extent of coverage.

• Legal fee coverage—In some auto insurance policies, legal fee coverage may be included at no additional cost. This coverage can be considered beneficial in relation to the insurance premium.

Top car insurance providers in Japan

The top car insurance providers in the following section are picked from Hoken Kakaku, a site that compares and ranks car insurance providers based on customer satisfaction rankings across Japan.

Additional information on the top-ranking companies was referenced from Japan Life Support and Hoken Select.

1. Saison Car & Fire Insurance

セゾン自動車火災保険 home page

Saison Car & Fire Insurance (セゾン自動車火災保険 = sezon jidousha kasai hoken) achieved the top rank for overall satisfaction, maintaining its first-place position from the previous year. It secured first place in both premium and coverage categories.

Users praised the affordable premiums for individuals in their 40s and 50s, making it highly popular for people in these age groups. The ability to choose suitable coverage and compensation amounts was noted in reviews as a primary reason for its high approval rankings.

The premium system is based on the age of the main driver.

The website is in Japanese. However, once you purchase a plan, Saison Insurance supports 21 languages for their call service in response to car accidents. So if you're looking for English language support in case of an accident, this might be a good option for you.

Pros:

• Affordable premiums for people in their 40s and 50s.

• High user satisfaction in premium and coverage categories.

• Supports 21 languages for call service in case of accidents, making it convenient for non-Japanese speakers.

Cons:

• Premiums are based on the age of the driver, which might be less favorable for younger drivers.

• The website is only available in Japanese, which limits accessibility for those who do not speak the language.

2. Sony Damages Insurance

ソニー損害保険 home page

The top-selling online car insurance for 15 consecutive years, Sony Insurance (ソニー損害保険 = sonii songai hoken) excells in various categories, ranking first in customer service, second in coverage, and third in support during accidents, based on customer reviews.

Notably, it maintained its top position in customer, significantly contributing to overall satisfaction. Customers praised the operators for their exceptionally polite and helpful assistance, going beyond their expectations in resolving issues.

Premiums are based on estimated annual mileage, rewarding users with lower mileage with reduced costs. Unused premiums due to lower actual mileage than estimated can be carried over to the next year.

Sony Insurance provides 24/7 accident support and free roadside assistance with dedicated teams for each accident. Policyholders also get a free upgrade to "VIP member" status in the "Club Off" discount service from the second year.

While their website is only available in English, Sony Insurance stands out for its competitive premiums and comprehensive emergency call service support that is available in 18 languages, making it an appealing option for foreigners seeking reliable and affordable car insurance.

Pros:

• Top-ranking customer service for many consecutive years.

• Offers 24/7 accident support and free roadside assistance.

• Free upgrade to VIP member status in the "Club Off" discount service after the first year.

• Accident support is available in 18 languages.

Cons:

• Premiums depend on estimated annual mileage, which might be unpredictable for some users, leading to higher or lower actual costs.

3. Mitsui Direct General Insurance

三井ダイレクト損害保険 home page

Mitsui Direct General Insurance (三井ダイレクト損害保険 = mitui dairekuto songai hoken) offers clear options for coverage, allowing users to compare and consider different coverage and premiums before applying.

Ranked first in Rakuten's "Car Insurance Satisfaction Ranking 2018," Mitsui Direct General Insurance stands out for its excellent accident support, available 24/7 with dedicated staff handling each case. They also offer a pioneering "Multilingual Accident Support Service" in various languages (e.g., English, Chinese, Korean, French) for smoother communication during accidents, benefiting foreign customers.

With cost-cutting measures, competitive premiums, and attractive discounts, Mitsui Direct Insurance is a recommended option for foreigners seeking affordable coverage and reliable support.

The website is in Japanese. However, they answer calls in 17 different languages in case of an accident.

Pros:

• Provides a "Multilingual Accident Support Service," great for all nationalities.

• Excellent 24/7 dedicated accident support.

• Ranked highly in customer satisfaction surveys.

Cons:

• The website and application are primarily in Japanese.

• While providing multilingual support, the full range of services might still be in Japanese.

4. E-Design Car Insurance

イーデザイン　イーデザイン 損保 自動車保険 home page

E-Design Insurance (イーデザイン　イーデザイン 損保 自動車保険) is a net-based car insurance company affiliated with Japan's largest non-life insurance group, the "Tokio Marine Group."

It has achieved high customer satisfaction by ranking first in the "Accident Response Satisfaction" category in the 2018 Oricon Customer Satisfaction Survey and maintaining the top spot for four consecutive years in the "Expert-Selected Car Insurance Ranking" by Bessatsu Takarajima.

Notably, E-Design Insurance offers rational premiums calculated based on driving distance, with shorter distances leading to lower premiums. Customers can also avail a 10,000 yen discount by applying online or a 500 yen discount for early applications. Additionally, they provide the "Accident-Free Discount" for those who remain accident-free for a year, receiving a discount on the subsequent year's premium.

Since September 1, 2018, E-Design Insurance has introduced the "Foreign Language Accident Response Service," enabling contract holders to communicate in 15 languages including English, Chinese, Korean, and French during accidents. This three-way conversation between the contract holder, the accident receptionist, and an interpreter-operator is particularly appealing to foreigners, ensuring smooth communication in their native languages during incidents. 

Foreign individuals seeking affordable premiums and comprehensive accident response services should consider E-Design Insurance's car insurance. Keep in mind, however, that the application process is in Japanese. 

Pros:

• Premiums are based on driving distance, which can benefit those who drive less.

• Offers discounts for online applications and accident-free applications.

• "Foreign Language Accident Response Service" to help non-Japanese speakers navigate through accidents smoothly.

Cons:

• The application process is in Japanese.

• May not be the best choice for frequent drivers as premiums rise with increased mileage.

Bonus: Rakuten Drive Assistance Car Insurance

If you’re actively using Rakuten’s credit card or its point services, Rakuten's Drive Assistance Car Insurance (ドライブアシスタンス　自動車保険) might be the perfect plan for you. 

Not only can you pay the premiums with Rakuten points, but paying with a Rakuten credit card will get you points. Rakuten also has an attractive insurance service for pets as one of the optional services as well.

Suppose your insured vehicle becomes inoperable due to an accident, breakdown, or theft, and you use the Temporary Accommodation Cost Service while your pet is in the insured car. In that case, Rakuten insurance will reimburse up to 10,000 yen per case for pet hotel accommodation expenses incurred.

Pros:

• You can pay premiums with Rakuten points and earn points using your credit card.

• Covers pet hotel costs if your car becomes inoperable due to accidents, breakdowns, or theft, which benefits pet owners.

Cons:

• Best benefits are only for those already using Rakuten's services, so it’s less appealing to non-users.

• Unique services like pet accommodation might lead to higher premiums, especially for those without pets.

Frequently asked questions

What are the types of car insurance in Japan?

There are 2 types of automobile insurance in Japan: The first is mandatory car liability insurance, which must be purchased by law. The second type is voluntary insurance, which is optional and provides additional coverage.

Is car insurance mandatory in Japan?

Under Japanese law, all registered vehicles must be covered by Compulsory Automobile Liability Insurance. This insurance is designed to cover damages and injuries caused to others in an accident.

Can foreigners get car insurance in Japan?

Foreigners can get car insurance in Japan if you have one of the following drivers' licenses for Japan: a Japanese driver's license obtained during their stay, an international driver's license, or a converted foreign driver's license to a Japanese one.

What does car insurance in Japan cover?

The mandatory car liability insurance covers damages and injuries caused to others in an accident. Voluntary insurance, on the other hand, can provide additional coverage such as damage to your own vehicle, theft, natural disasters, and personal injury.

In closing

If you are planning to drive a car in Japan, getting an insurance policy that can provide additional coverage in the case of a traffic accident can give you peace of mind.