Car Insurance In Japan
Steve Burson from Relo Japan answers some questions about car insurance in Japan…
• What were your first impressions of car insurance in Japan?
The agent’s lack of English speaking ability, and documents presented only in Japanese made it very hard to grasp the particulars of it. When documents were presented in English, they were often simple summaries, while the official documents to be signed were in Japanese. I did not feel I understood everything fully, and this left me with a less than positive impression.
Pricing, or premiums, seemed similar; filing a claim will raise your rates, while not filing will lower them over time. In Japan they use a number system between 1 and 12 to determine how much you will pay for insurance. People usually start at “level 6;” filing a claim may drop you in points to 5, and cost you more money. Beginning from level 3, coverage becomes hard to find or very expensive. Rising to a higher level will lower your rates significantly.
• How do I choose the right car insurance for me?
The “right insurance” for you depends on your circumstances; such as age, driving record, what type of car, and how often it is driven, among other things. This should be familiar to most people. The key to getting the right insurance is to understand the options available so you can get what you really need.
There are low cost providers of insurance available that offer generic policies and online applications. These policies may suit your needs if you know what you are doing, and are comfortable in Japanese, but if not you may end up with a deficient policy, and no one to help you in English if you have an accident or other issue going forward.
They key is to completely understand your own needs, and how the policy in front of you meets them. This requires a level of English ability that has been missing from the Japanese insurance market generally, and has put some consumers at risk.
• Buying car insurance seems tricky in Japan. What is your advice?
Learn about the system before you buy, not after you need to file a claim. Basic, “compulsory insurance” is placed on your vehicle when it is first registered, or re-registered in the “shaken” process. You can choose from different levels of additional voluntary insurance that adds to this basic coverage. Compulsory insurance alone is almost never sufficient protection and choosing the right level of additional protection is important. Choosing the right level of additional coverage, and when filing a claim you may really appreciate getting service in English.
• What common mistakes do foreigners make when buying insurance?
There are few common mistakes foreign consumers make, the biggest being not having sufficient insurance coverage. In Japan accidents are almost never decided to be 100% the fault of one party over the other; unless one car is not moving. If your car is moving, you can expect in nearly all cases that you will be held liable to some extent. Negotiating the extent of their client’s liability is what insurance companies do, and voluntary coverage is designed to protect you from that liability.
The second mistake would be using your insurance to cover even small bumps and damage to your car, which ultimately raises your premium and lowers your “point level” within their system. Reporting too many incidents may result in significantly higher rates, and make the consumer uninsurable in some cases. Sometimes paying out of your own pocket to ensure a good insurance record is your best bet.
Another common mistake is insuring a used vehicle for full replacement value unnecessarily. Once a car reaches roughly 6 years old it has virtually no value left in Japan. Insuring such a vehicle for replacement value often means you are paying premiums that are way too high.
If you have any questions regarding car insurance in Japan please contact us at InfoRequest@LeaseJapan.com