Car Insurance in Japan: A Guide for Foreigners

Two types of car insurance in Japan 2種類の自動車保険

Japan's car insurance system is built on two layers. Understanding the difference between them is the single most important thing you need to know about driving in Japan:

自賠責保険 — mandatory liability insurance じばいせきほけん

自賠責保険 (jibaiseki hoken), formally known as 自動車損害賠償責任保険, is Japan's compulsory motor vehicle liability insurance. Every vehicle registered in Japan — cars, motorcycles, scooters, even mopeds — must carry this insurance. Driving without it is a criminal offense punishable by up to 1 year in prison or a fine of up to ¥500,000, plus a 6-point license penalty (resulting in immediate suspension).

What it covers

自賠責保険 covers bodily injury to other people only — passengers in the other vehicle, pedestrians, cyclists, and passengers in your car (but NOT the driver). It has strict maximum payouts:

What it does NOT cover:

• ● Property damage to the other person's vehicle, building, or belongings
• ● Damage to your own vehicle
• ● Your own injuries (the driver)
• ● Any amount exceeding the caps above (e.g., a death claim exceeding ¥30M)

How you get it

You do not need to shop for 自賠責保険 separately. It is automatically renewed as part of your 車検 (shaken) — the mandatory vehicle inspection that occurs every 2 years (every year for vehicles over 13 years old, or every year for the first inspection of new vehicles after the initial 3-year period). When you take your car for 車検, the 自賠責保険 premium is included in the total cost. The premium is set by the government and is the same regardless of which company issues it.

For new vehicles, the dealer arranges 自賠責保険 at the time of purchase.

任意保険 — voluntary car insurance にんいほけん

任意保険 (nini hoken) is the "voluntary" car insurance that fills all the massive gaps left by 自賠責保険. Despite the name "voluntary," it is considered essential by insurance professionals, legal experts, and anyone who has ever been in a car accident in Japan. About 74% of drivers carry it — and the 26% who do not are taking an enormous financial risk.

Unlike 自賠責保険, 任意保険 is sold by private insurance companies in a competitive market. This means premiums, coverage details, and service quality vary between companies. You can and should compare options.

Coverage types in 任意保険 任意保険の補償内容

任意保険 is a modular system — you choose which types of coverage to include. Here are the main components:

How much car insurance costs 保険料の目安

任意保険 premiums in Japan depend on several factors. Here is a breakdown of what affects your cost:

Key cost factors

• ●
  等級 (No-claims rating): 1-20 — this is the biggest factor. New policies start at 等級6. Each claim-free year moves you up one grade (lower premium). Each at-fault claim drops you 3 grades (higher premium). Grade 20 (best) gives a 63% discount. Grade 1 (worst) adds a 64% surcharge.
• ●
  Driver's age: Younger drivers pay significantly more. Under 21: most expensive. 21-25: expensive. 26-34: moderate. 35+: lowest rates. Most policies allow you to set an age restriction (年齢条件) to reduce premiums — if you are 30 and no one under 26 drives your car, set the minimum age to 26.
• ●
  Car type and model: Sports cars and luxury vehicles cost more. Each car model has a 料率クラス (rate class) ranging from 1-17 for liability and 1-17 for collision, determined by historical claims data for that model.
• ●
  Annual mileage: Lower mileage = lower premiums. Many direct insurers (ダイレクト型) offer mileage-based discounts.
• ●
  Deductible (免責金額): Choosing a higher deductible (e.g., ¥50,000 or ¥100,000 for 車両保険) reduces your premium. The first accident deductible can differ from subsequent accident deductibles.
• ●
  Coverage scope: Adding 車両保険 (collision/comprehensive for your own car) significantly increases the premium — often by 50-100% or more. Dropping 車両保険 is the easiest way to reduce cost, but leaves your own car unprotected.

Typical annual premiums

Cost-saving tip: 軽自動車 (kei cars, yellow plates) are generally the cheapest to insure because they have lower rate classes and lower repair costs. If you are budget-conscious and mainly driving locally, a kei car is the most economical choice for both insurance and running costs.

No-claims discount system (等級制度) とうきゅうせいど

Japan's no-claims discount system, called 等級制度 (toukyu seido) or ノンフリート等級, is a 20-grade scale that rewards safe driving with progressively lower premiums. It is the most impactful factor on your insurance cost over time, and it follows you when you switch insurance companies.

How it works

Key rules:

• ● New policies start at 等級6 — everyone begins at the same level, regardless of driving experience.
• ● Claim-free year: +1 grade — each year without an at-fault claim, you move up one grade (lower premium).
• ● At-fault claim: -3 grades — each at-fault accident claim drops you 3 grades. If you are at 等級10 and make a claim, you drop to 等級7.
• ● Some claims are "no-count" (ノーカウント事故) — claims that do not affect your grade, such as roadside assistance, lawyer cost coverage, or 人身傷害 claims where you were not at fault.
• ● 1-grade-down claims (1等級ダウン事故) — certain incidents like theft, natural disaster damage, or animal strikes only drop you 1 grade instead of 3.
• ● The grade transfers between companies — if you switch insurers, your current grade transfers. You cannot "reset" your grade by changing companies.

中断証明書 — preserving your grade

If you sell your car or leave Japan, you can request a 中断証明書 (chyuudan shoumeisho) — a suspension certificate — from your insurance company. This document preserves your 等級 for up to 10 years. When you return to Japan and buy a new car, you can resume your insurance at the grade you left off. Without this certificate, you would restart at 等級6.

This is especially valuable for foreigners who may leave Japan temporarily. If you have built your grade up to 等級15 or higher over many years, losing it would mean significantly higher premiums when you come back. Always request the 中断証明書 before canceling your policy.

Getting insured as a foreigner 外国人が保険に入るには

Getting car insurance as a foreigner in Japan is generally straightforward, but there are a few things to be aware of:

Requirements

• ● Valid driver's license: A Japanese driver's license (日本の運転免許証) or a valid International Driving Permit (IDP). Note: an IDP is only valid for 1 year from entry — you cannot renew it.
• ● Registered address in Japan: You need a 住民票 (resident registration) or at least a Japanese address for the policy.
• ● Vehicle registration: The car must be registered (車検証 in your name or showing you as the primary user).
• ● Japanese bank account: For premium payments (most companies require a Japanese bank account for auto-debit).

English-friendly insurance options

Most Japanese car insurance companies operate entirely in Japanese. However, several options exist for English-speaking foreigners:

• ●
  ダイレクト型 (Direct/online) insurers with English support: Companies like Sony Assurance (ソニー損保) and SBI Insurance (SBI損保) offer online applications with some English support. Their premiums tend to be 20-40% cheaper than traditional 代理店型 (agent-based) insurers because they operate online without agent commissions.
• ●
  English-speaking insurance agents: Independent insurance agents (保険代理店) who speak English can help you navigate the application process and explain coverage in detail. They work with multiple insurance companies and can compare options for you. Search for "English insurance agent" + your city name.
• ●
  Car dealership insurance: If you buy a car from a dealer, they almost always offer to arrange 任意保険 on the spot. This is convenient but tends to be more expensive than shopping around. It can be a good starting point that you switch away from at renewal time.
• ●
  Comparison sites: Websites like 価格.com (kakaku.com) and 保険の窓口インズウェブ (ins-web.com) allow you to compare quotes from multiple insurers. These are in Japanese but can be navigated with browser translation tools.

International driving permit rules 国際運転免許証のルール

If you are driving in Japan on an International Driving Permit (IDP, 国際運転免許証), there are important rules that affect both your legal right to drive and your insurance coverage:

IDP validity in Japan

• ● Valid for 1 year from date of entry into Japan — not from the date the IDP was issued. If your IDP was issued 6 months ago and you enter Japan today, it is valid for 1 year from today (as long as the IDP itself has not expired).
• ● Must be based on the 1949 Geneva Convention — Japan only recognizes IDPs issued under the 1949 Geneva Convention on Road Traffic. If your country signed the 1968 Vienna Convention instead (many European countries), your IDP may not be valid in Japan. Check before you arrive.
• ● Cannot be renewed in Japan — you cannot extend or renew an IDP from within Japan. The "reset trick" (leaving Japan briefly and re-entering to restart the 1-year clock) was explicitly closed by a 2002 law revision — you must be outside Japan for at least 3 months for a new entry to count.
• ● Some countries have special arrangements: Drivers from Switzerland, Germany, France, Belgium, Slovenia, Monaco, and Taiwan can drive in Japan with their domestic license + an official Japanese translation (from JAF or their embassy). No IDP needed. This privilege has no 1-year time limit but only lasts until you obtain a Japanese license.

Insurance implications

Your car insurance is void if you drive with an expired IDP or without a valid license. If your IDP expires and you get into an accident, your 任意保険 will not pay out. This is treated the same as driving without a license. Before your IDP expires, you must either:

1. Convert your foreign license to a Japanese license (外国免許切替) — requires a written test (in English for some countries), a practical driving test, and a vision test. The difficulty varies by country due to bilateral agreements. Some countries (US, UK, Canada, Australia, etc.) have simplified processes; others require the full test.
2. Take the Japanese driving test from scratch (一発試験) — if your country does not qualify for simplified conversion, you may need to take both written and practical tests at a licensing center. This is notoriously difficult and most people take multiple attempts.
3. Attend driving school (教習所) — guarantees you a license upon completion but costs ¥200,000-300,000 and takes several weeks. Most driving schools operate in Japanese only.

Frequently asked questions よくある質問