Last updated: October 2025
Driving in Japan really resolves a lot inconveniences and does become a massive lifeline especially those living in the rural areas. As such like anywhere else in the world, it does however come with its downsides, notably getting your car damaged and/or getting into an accident. This is why it is highly advised to get car insurance no matter how good or safe you are as a driver, as it’s not a matter of ‘if’ but ‘when’ you get into that situation, insurance really does help cover a lot of the headaches that comes with it. There are three kinds of car insurance in Japan to consider.
Types of Car Insurance
- Compulsory (自賠責保険) (jibaiseki-hoken): The purpose of this insurance is to compensate third-parties for bodily injuries (including death) suffered due to a traffic accident. This insurance however doesn’t cover damage to property that did not result in injury nor injuries sustained by the driver. The fee is included in shaken charges, and goes directly to the government.
- Optional (任意保険) (nini-hoken):
This is insurance that although not required, is highly recommended. Be aware of how much the monthly/annual costs along with the excess/deductible limits and what/who it covers. Cost varies with the age of the driver and the type of car. Those over the age of 25 usually gets a big discount. If you have an accident-free year and continue this streak, insurance costs also gets slightly cheaper year by year. Average costs range from ¥40,000 – ¥90,000 per year depending on the company or type of coverage. Can be paid monthly, or the whole year up front. Usually rural JETs insure with the insurance department of their local bank or one recommended by a car dealership.
Often this insurance gets discussed when renting a car so be thorough with your questions such that you understand what you are and are not covered from. Below are the two common types of optional insurance.
- Limited Coverage/Third Party Insurance: This covers damage to people, buildings, objects, power poles, etc. and also covers any vehicle you collide with. There are many names for this but mainly policies that contain the words 賠償 baisho or 補償 hosho, meaning ‘compensation’ is a good indication. It is good to check that your coverage for people and objects is unlimited, which is normally the case. If it’s not, you could end up paying a year’s worth of wages if you ever hit a power pole, etc.
- Full Coverage/Comprehensive: This is the ultimate peace-of-mind coverage, where along with injury coverage, covers damages to your car, and increases your coverage for damage to an opponent’s car. It’s expensive. Recommended if you buy a car worth anything, and highly recommended if you’re leasing a car. If your car is not worth much, it is probably cheaper to not take full cover, and throw your car away if you have an accident, as the full cover premiums probably cost more than the car’s worth. The full insurance cost can be more than one year’s shaken.
- Limited Coverage/Third Party Insurance: This covers damage to people, buildings, objects, power poles, etc. and also covers any vehicle you collide with. There are many names for this but mainly policies that contain the words 賠償 baisho or 補償 hosho, meaning ‘compensation’ is a good indication. It is good to check that your coverage for people and objects is unlimited, which is normally the case. If it’s not, you could end up paying a year’s worth of wages if you ever hit a power pole, etc.
Unfortunately there is no insurance policy that covers damage from major natural disaster events (i.e. earthquake, tsunami and volcanic eruptions) as this is simply beyond the capacity of insurance companies to cover.
Japan Automobile Federation (JAF)
You may have heard about JAF before as it handles the official license translations that you require when converting to a Japanese drivers license. Although not an insurance company, they are also the peak body that handles automobile related matters in Japan. Similar to the various automobile associations across the world, they provide roadside services (i.e. car has broken down, ran out of fuel etc.) for anyone, anytime, right across Japan. If you need assistance, first make sure you have moved to a safe place before calling 0507-00-8139 to speak to JAF (English interpretation available at request).
Extra resources
About Japanese Car Insurance – Japan Insurance.net
Getting a car and the related costs – National AJET
What should you do first if you are in a traffic accident – MLIT
