- October 22, 2025
- BELONGING JAPAN
If you’ve bought a car, have you already arranged car insurance in Japan? For those living away from home, it’s especially important to be protected in case of an unexpected accident.
In this article, financial planner Masako Otake breaks down Japan’s car insurance system in simple terms. You’ll learn the difference between the Compulsory Automobile Liability Insurance (CALI)—which is legally required—and voluntary car insurance, along with practical tips for foreign residents looking to get coverage.
Table of Contents
About the Supervisor & Writer
Masako Otake
Certified Financial Planner® / 1st Grade Certified Skilled Professional of Financial Planning / Certified Inheritance Consultant
Founder of Yume Planning (est. 2015)
After gaining experience working at various financial institutions, including securities firms, banks, and insurance companies, Masako became an independent financial planner in 2015. She provides consultations, writing, and lectures based on the belief that understanding your finances is key to living a richer, more authentic life.
Chapter 1: Basics of Car Insurance in Japan
Car insurance in Japan is divided into two main types: Compulsory Automobile Liability Insurance (CALI), known in Japanese as Jibaiseki Hoken (自賠責保険), and voluntary car insurance (Nin’i Hoken).
What Is Compulsory Automobile Liability Insurance (CALI)?
In Japan, all car owners are legally required to enroll in CALI (Jibaiseki Hoken). Its official name is Automobile Liability Security Insurance (Jidōsha Songai Baishō Sekinin Hoken), and it is mandated under Article 5 of the Automobile Liability Security Act.
Driving a vehicle without this insurance—even if you don’t cause an accident—is a serious offense. You may face up to one year in prison or a fine of up to 500,000 yen, and driving without insurance counts as a traffic violation that can lead to license suspension.
Once you purchase a car, you must obtain CALI and renew it at each vehicle inspection, called Shaken (every three years for new cars, then every two years afterward).
What Does CALI Cover?
CALI only covers injury or death of third parties in a traffic accident. It does not cover:
Property damage (such as buildings or other vehicles)
Injuries to yourself or your passengers
Repairs to your own vehicle
CALI Coverage Limits
Death: up to 30 million yen
Permanent disability: between 750,000 yen and 40 million yen (depending on the severity; higher if constant care is required)
Injury: up to 1.2 million yen
(Source: Japan Automobile Federation, JAF)
CALI Premiums (As of 2025, by Vehicle Type)
The cost of CALI depends on the type of vehicle and contract period.
Foreign residents who own or drive a car in Japan must also pay this insurance fee.
The table below shows standard premium rates by vehicle type as of 2025.
You can choose the contract duration—typically 12, 24, or 36 months—and it’s common to renew the policy at the same time as your vehicle inspection.
Because CALI is a government-mandated insurance system, premium rates are standardized and identical across all insurance companies.
(Source: Ministry of Land, Infrastructure, Transport and Tourism)
| Vehicle Types | 60 months | 48 months | 36 months | 24 months | 12 months |
|---|---|---|---|---|---|
|
Private car |
– |
– |
23,690 yen |
17,650 yen |
11,500 yen |
|
Kei car |
– |
– |
23,520 yen |
17,540 yen |
11,440 yen |
|
Small motorcycle (over 250cc) |
– |
– |
10,490 yen |
8,760 yen |
7,010 yen |
|
Light motorcycle (over 125cc up to 250cc) |
14,200 yen |
12,470 yen |
10,710 yen |
8,920 yen |
7,100 yen |
|
Moped |
13,310 yen |
11,760 yen |
10,170 yen |
8,560 yen |
6,910 yen |
|
Specified small moped |
12,040 yen |
10,730 yen |
9,400 yen |
8,040 yen |
6,650 yen |
Chapter 2: What Is Voluntary Car Insurance in Japan?
While Compulsory Automobile Liability Insurance (CALI) provides only the minimum coverage for injuries or death caused to others in an accident, it does not cover:
Injuries to yourself or passengers
Damage to other people’s vehicles or property
Damage to your own car
For this reason, it’s important to consider voluntary car insurance in Japan.
Main Coverage Options
Voluntary car insurance allows you to customize coverage according to your needs. The main types of coverage include:
Bodily Injury Liability – Covers injuries or death caused to others.
Property Damage Liability – Covers damage to other people’s cars or property.
Personal Injury / Passenger Injury – Covers injuries to yourself or passengers.
Comprehensive / Collision Coverage – Covers damage to your own vehicle due to accidents, natural disasters, or theft.
Coverage types 1–3 (bodily injury, property damage, and personal/passenger injury) are automatically included in basic voluntary car insurance. While coverage for your own vehicle (type 4) is optional, it is highly recommended, as it provides protection against significant repair or replacement costs in the event of an accident or disaster.
Key Points
Coverage Limits of CALI: Compulsory Automobile Liability Insurance has coverage limits per victim: death or permanent disability up to 30 million yen (40 million yen if constant care is required) and injury up to 1.2 million yen. Any costs exceeding these limits must be covered by voluntary car insurance in Japan.
Legal Requirement: Driving without CALI is illegal and can result in license suspension or a fine of up to 500,000 yen.
Importance of Voluntary Insurance: Voluntary car insurance allows you to customize coverage and insured amounts based on your needs and lifestyle. For safe and worry-free driving in Japan, enrolling in voluntary car insurance is essentially essential.
(Source: Japan Automobile Federation, JAF)
Chapter 3: Comparison of CALI and Voluntary Car Insurance Coverage
When driving in Japan, it’s crucial to understand the difference between Compulsory Automobile Liability Insurance (CALI) and voluntary car insurance in Japan. The table below provides a simple comparison of their coverage:
| Coverage | CALI (Compulsory Insurance) | Voluntary Car Insurance |
|---|---|---|
|
Bodily Injury Liability |
Death/permanent disability: up to 30 million yen (40 million yen if constant care is required)
Injury: up to 1.2 million yen |
No limit – coverage can be set freely in the policy |
|
Property Damage Liability |
Not covered |
Covers damage to other vehicles or property (up to policy limit) |
|
Injury to Self/Passengers |
Not covered |
Covered under Personal Injury / Passenger Injury insurance |
|
Damage to Own Vehicle |
Not covered |
Covered under Comprehensive / Collision insurance (accidents, natural disasters, theft, etc.) |
|
Optional Add-ons |
None |
Additional options available, e.g., earthquake/tsunami/eruption coverage, legal support, coverage for belongings inside the car. |
Chapter 4: Understanding the No-Claim Discount System in Car Insurance in Japan
In Japan, car insurance in Japan uses a grading system called the No-Claim Discount (NCD) system, which rewards safe drivers with lower premiums. The longer you drive without making a claim, the more your insurance costs decrease. Conversely, if you make a claim, your premiums increase the following year.
How the Grading System Works
First-time policyholders: Start at Grade 6.
No claims for one year: Move up one grade, and enjoy a discounted premium the next year (e.g., Grade 6 → Grade 7).
Claim filed: Each claim reduces your grade by three levels, resulting in a higher premium the following year (e.g., Grade 7 → Grade 4).
Key Points
Safe driving leads to gradual, year-by-year premium reductions, providing financial benefits.
Driving history from abroad generally cannot be transferred, but your accident-free period in Japan is recognized.
The system ranges from Grade 1 to Grade 20. It is standardized across all insurance companies, so your grade is usually maintained even if you switch insurers.
By understanding the No-Claim Discount system, drivers can maximize savings on car insurance in Japan while staying protected.
(Source: General Insurance Association of Japan)
Chapter 5: Optional Coverage (“Tokuyaku”) in Car Insurance in Japan
In addition to the basic coverage in car insurance in Japan—bodily injury, property damage, and personal/passenger injury—you can add optional coverage, called “Tokuyaku” in Japanese. In English, this is similar to riders or optional coverage that customize your policy based on lifestyle and needs.
Common Optional Coverages
Excess Property Damage Coverage
Covers costs exceeding the actual value of the other party’s car or property.
→ Reduces out-of-pocket expenses when hitting a luxury or older vehicle.Personal Belongings Coverage
Covers items inside your car, such as cameras, laptops, and bags.
→ Useful if belongings are damaged in theft or an accident.Hospitalization Expenses Coverage
Covers costs for housekeeping, caregiving, or pet care during hospital stays after an accident.
→ Particularly helpful for foreign families living in Japan with small children or pets.Earthquake/Tsunami Coverage
Provides a lump-sum payment if your car is totally damaged by natural disasters like earthquakes, volcanic eruptions, or tsunamis.
→ Recommended for long-term residents due to Japan’s high natural disaster risk.Legal Fees Coverage
Covers legal consultations and litigation costs related to accidents.
→ Gives peace of mind for foreigners unfamiliar with Japan’s traffic accident procedures or court system.
Key Points
Optional coverages are not mandatory, but adding them can provide significant peace of mind depending on your lifestyle and car usage.
While premiums increase with optional coverage, it greatly expands your protection and helps manage risk.
It’s advisable to check if the policy details can be confirmed in English when signing up.
(Source: Sompo Japan, Zurich Japan)
Chapter 6: How to Get Car Insurance in Japan
There are three main ways to purchase car insurance in Japan. Understanding the features, advantages, and disadvantages of each method can help foreign residents navigate the process smoothly.
1. Through a Car Dealer
Overview: When buying a new or used car, you can often sign up for insurance directly through the dealership.
Advantages:
Convenient, as insurance can be arranged alongside the car purchase.
Vehicle information, including registration and license plate details, is automatically sent to the insurance company.
In-person explanation of insurance plans in Japanese.
Disadvantages:
Limited plan options and discount conditions.
English support may be insufficient.
2. Through an Insurance Agent
Overview: Specialized agents can compare plans from multiple insurance companies and recommend the best option for you.
Advantages:
Compare quotes from different companies.
Customize coverage and policy conditions.
Many agents now offer English support, making it easier for foreigners.
Disadvantages:
Process may take longer to finalize the contract.
For in-person consultations, you may need to travel to the agency, which can add time and cost.
3. Online or by Phone
Overview: You can purchase insurance directly from a company using a smartphone, computer, or phone.
Advantages:
Available 24/7 for convenience.
Many insurance companies offer English support, making it easier for foreign residents.
Comparison websites make it simple to review prices and coverage.
Disadvantages:
Careful attention is needed to understand policy details (contracts and terms are often in Japanese).
Without direct consultation, answers to questions may take longer.
Chapter 7: What You Need to Enroll in Car Insurance in Japan?
When signing up for car insurance in Japan, having the following documents and information ready will make the process much smoother:
Driver’s License
If you have a Japanese driver’s license, you can use it for the application.
If you hold a foreign license, you will need either an International Driving Permit or a translated Japanese version of your license.
Vehicle Registration Certificate (Shaken-sho)
Required to verify vehicle and ownership details.
When purchasing a new car, dealerships often handle this on your behalf.
Seal or Signature
Needed to sign the insurance contract.
For online contracts, electronic signatures may also be accepted.
Payment Method
A credit card or bank account is required for paying premiums, either as a lump sum or in installments.
Automatic payment (direct debit) is usually available.
Chapter 8: How to Choose an Insurance Company and Plan?
For foreign drivers in Japan, selecting the right insurance company and plan requires careful consideration of language support, procedures, and accident response systems unique to Japan.
1. Japanese and English Support
If support is only available in Japanese, understanding documents during the contract process or when reporting an accident can take time.
Always check whether English support is available. Contracts, accident reports, and roadside assistance requests may all be in Japanese.
Many insurance companies now have staff specifically for foreign customers. Confirm whether phone, email, or chat support in English is available.
2. Ease of Procedures
When contracting through a car dealer or agent, staff often handle document preparation, making the process smoother for foreign drivers.
For online contracts, check for English-language pages, translated contracts, and identification methods accessible to foreigners.
Foreign residents may need to submit Japanese-language documents for bank accounts or address changes. Understanding this in advance will make enrollment smoother.
3. Coverage Scope
In addition to basic coverage (bodily injury, property damage, personal/passenger injury), check whether natural disasters such as earthquakes, tsunamis, or typhoons are covered.
For driving with an International Driving Permit, see if overseas-compatible plans are available.
4. No-Claim Discounts and Renewal Conditions
Japan uses a grading system that reduces premiums for accident-free drivers.
Foreign residents should check whether their driving history abroad or previous grades in Japan can be recognized.
Also, understand renewal requirements, such as address changes or the expiration of an International Driving Permit, before signing a contract.
5. Balance Between Premiums and Services
Premiums vary greatly depending on the plan and coverage. Low-cost plans with limited coverage can lead to high out-of-pocket costs after an accident.
Consider accident response speed and roadside assistance services. For foreigners, it is especially important to check if explanations are available in English and whether rental cars or replacement vehicles are easily arranged.
Key Points
Prioritize insurance companies offering foreigners-only plans or English support for peace of mind.
Before contracting, confirm the accident reporting flow and document submission methods to avoid confusion in emergencies.
For long-term residents, check how to update your contract if your home or workplace address changes to prevent future issues.
Chapter 9: FAQ: Car Insurance in Japan
Based on my experience, here are some frequently asked questions from clients about car insurance in Japan:
Q1. Can I get car insurance in Japan with a foreign driver’s license?
A1. Yes, but there are conditions.
If you have a Japanese driver’s license, there is no problem.
If you only hold a foreign license, you need either an International Driving Permit (IDP) or a Japanese-translated version of your foreign license.
Some insurance companies may also require proof of residence, such as a residence card or utility bill.
Q2. Can short-term visitors get car insurance in Japan?
A2. Generally, no. Most insurance plans are offered for one-year periods.
Q3. Can I handle accidents or inquiries in English?
A3. Some insurance companies offer English support.
Major insurers like Sompo Japan, Zurich, and Aioi Nissay Dowa provide English support.
You can report accidents, confirm contracts, submit documents, and request roadside assistance in English.
Check before signing the contract whether English support is available, including hours and contact methods.
Q4. If an accident occurs with only CALI, can foreigners receive coverage?
A4. Legally, yes.
CALI provides minimum coverage for injuries or death caused to others, and it applies to foreigners.
However, coverage has limits and does not cover your injuries, passenger injuries, property damage, or the other party’s deductible.
Therefore, voluntary car insurance is strongly recommended for foreigners.
Q5. How much does car insurance cost? Are there discounts for foreigners?
A5. Premiums vary depending on vehicle type, coverage, and grade (No-Claim Discount).
First-time contracts usually start at Grade 6, with a grade increase and discount after one year of accident-free driving.
Foreign drivers may have different conditions for discounts depending on past driving or accident history.
Always confirm discount eligibility and grade transfer policies with the insurance company before signing.
Q6. I don’t speak much Japanese. Can I handle contracts and renewals?
A6. Yes.
Choosing a company that offers English online or phone contracts makes the process easier.
Many companies allow online or email-based renewals.
Some insurers provide English translations of contracts and accident documents, so check this in advance.
Q7. Are natural disasters like earthquakes or tsunamis covered?
A7. Standard voluntary insurance does not cover natural disasters.
Damage from earthquakes, tsunamis, or volcanic eruptions can be covered by adding an optional coverage (“Tokuyaku”) for total loss due to natural disasters.
Given Japan’s high natural disaster risk, it is recommended for foreign drivers to consider this option.
(Source: Sompo Japan, Tokuyaku descriptions)
Chapter 10: Summary
When driving in Japan, it’s essential to understand the difference between Compulsory Automobile Liability Insurance (CALI) and voluntary car insurance in Japan.
CALI is legally required and provides minimum coverage if you cause injury or death to others in an accident. However, it does not cover property damage, injuries to yourself or passengers, or damage to your own vehicle.
By adding voluntary car insurance, you can customize your coverage, including optional protections for natural disasters, legal fees, and more.
Japan’s grading system (No-Claim Discount) rewards accident-free driving with lower premiums.
From a financial planning perspective, foreign drivers should choose insurance companies or agents offering English support for smoother communication. Even residents driving with an International Driving Permit can secure appropriate coverage by selecting the right plan.
Relying on CALI alone is not enough—combining CALI with voluntary car insurance ensures comprehensive protection, giving you peace of mind and safety while driving in Japan. Choose a plan that fits your lifestyle, driving habits, and risk tolerance to drive confidently and securely.
* This article is provided for general informational purposes only and does not constitute individual financial, tax, or legal advice. While reviewed by a certified financial planner, readers are encouraged to consult their own advisors before making decisions. Belonging JAPAN is not affiliated with or endorsed by any financial institution mentioned. Information such as fees and regulations is accurate as of October 2025 but may change; please verify details with official sources.
