International Student Support

Compulsory Automobile Liability Insurance and Optional Automobile Insurance

When driving a car or a motorcycle (two-wheeled motorized vehicle) in Japan, you should be aware of liability insurance (liability automobile insurance) and optional insurance (car/motorcycle insurance). Especially as optional insurance is not compulsory, it is not uncommon to find out how important it is after an accident. If you drive a car or a motorcycle, make sure you purchase optional automobile insurance.

What is Compulsory Automobile Liability Insurance?

This insurance is designed to provide minimum compensation for the third party in the case of an accident. It only covers bodily injuries and does not apply to property damage (accidents in which there is no damage to a person's body or life, but objects (such as vehicles) are damaged). It is also known as Compulsory Insurance, and all automobiles are required by law to have it.
For example, if the other party is injured, the maximum compensation for medical expenses and lost work time is 1.2 million yen, and the liability insurance alone may not be enough to compensate. This insurance is only intended to provide minimum compensation to the victim. Furthermore, as this insurance only applies to the party who has suffered damage, it does not provide compensation for the injuries of the person who caused the accident.

Coverage: Limited to compensation for the party who is a victim of the accident. It does not include compensation for the other party's property damage (car, etc.). Moreover, the person who caused the accident will not receive any compensation regardless of the injuries/damaged sustained.

Insurance Premium: Set according to the type of car, insurance period (vehicle inspection period), etc. Insurance premiums do not vary greatly depending on the insurance company or agency handling the insurance.

Change of Name: Even if your car is still in someone else's name, death or injury of a third party in a traffic accident will still be covered by your insurance. However, when you sell or give away your car, or when you purchase a car from someone else, make sure to change the name in your liability insurance. If you do not change the name, you may not receive the notice of insurance renewal, etc., which may cause problems. If you call your Compulsory Automobile Liability Insurance company they will be able to give you more information on how to update your information, as well as other useful information such as the nearest office.

What is Optional Automobile Insurance? 
Purchasing this type of insurance is not compulsory, but it is strongly recommended as liability insurance alone is not enough to compensate you in the event of an accident.

Coverage: In addition to coverage for a third party, coverage may also apply to you, depending on the coverage option, even if you cause the accident. There are various types of optional insurance, such as bodily injury insurance, property damage insurance, personal injury insurance, uninsured vehicle insurance, self-inflicted accident insurance, passenger injury insurance, vehicle insurance and expense insurance, etc. Optional insurance can be applied to both bodily injury and property damage, and you can choose the coverage you want, which means you can customize your coverage to suit your needs.

Insurance Premiums: Vary greatly depending on the coverage, age of the policyholder, vehicle type, accident risk, etc. Some companies offer online quotes.

Change of Name: You may be able to change the name to a family member or spouse living with you, but you cannot change it to anyone else.
Unlike liability insurance, which insures vehicles, optional insurance provides compensation to those who are insured, so it is important to understand the contents of the insurance and its terms and conditions. It is also important to know the contact information of the insurance company so that you can contact them in case of an accident.