Owning a Car in Japan

Now, you have a license, ready to drive. Whether your driver’s license is international or Japanese, you need to meet legal requirements as a car owner. Regardless of how you obtain a car---Getting a brand new car from a designated car dealer or getting a second hand used car from a friend---there are obligations for each and every car you own.

The responsibility starts the moment you have the key in your hand for driving, even if the name transfer of the ownership is not complete. Failure to bear the liability may affect your status of your driver's license. A Japanese license system operates on point deduction system, where accumulation of subtracted points may lead to penalties.
One requirement is to get the car inspection and another is to be insured. Let us look into both of them in the next section.

Car Inspection
Japanese law requires all cars to be inspected every one, two, or three years, depending on the type of vehicle. (Perhaps this is why foreigners say that we only have clean cars!) You are legally required to carry the vehicle inspection certificate “sha-ken-shō” on the vehicle at all times.

Compulsory Automobile Liability Insurance
Let us take this topic from the top, for those of you from the countries with different car insurance system. First of all, Japanese law requires all cars to be insured. This insurance is usually called Japanese Compulsory Automobile Insurance (JCI) or sometimes just Compulsory Automobile Liability Insurance (CALI). Do not be confused, both of them mean the same thing. We will call it JCI hereafter.

JCI is a must. Some of you may already have coverage before you even know. If you do, you may think that you are good to go. However, that is not true. Remember that coverage for JCI is the very minimum amount for the victim who you may hurt or kill in an accident and nothing else. JCI has no coverage for the victim’s property, your property, any other damaged property, and nothing for yourself even when you are injured or killed.

Even when the victim (NOT you!) does receive the indemnity, the maximum amount is 1.2 million JPY when a victim is hurt, 40 million JPY when a victim suffers residual disability, or 30 million JPY when a victim is killed, which is far from being sufficient. That is why you need “voluntary” insurance in addition to JCI.

Let’s say that you collided with another vehicle in front of you and killed a breadwinner of the family. Compensation you are paying may add up to 30 million JPY only by itself. Not only that, would you be able to pay for the lost earnings and all of the necessary medical expenses? What if the person survives, but stays in a deep coma? How much do you think you will need to be responsible for all of the medical and nursing expenses? That is why you need “voluntary” insurance in addition to JCI.

Voluntary Automobile Insurance
Voluntary insurance covers damage for your injury, property,　ｐassenger, or more, according to your request. The basic rule is that you select the basic coverage by “General Policy Conditions” and customize them with “Additional Clause” to cover what is necessary for yourself.

Take a look at the following table. We have gathered some data on high damage, which ACE Insurance has covered. The data below shows the coverage from 2009-2010, for our foreign policyholders. You can see that Bodily Injury Liability (BI), which is way over JCI, can reach an overwhelming amount.

Data on payment including outstanding by ACE Insurance (2009-2010)

Trend of Traffic Accidents
In recent days, the numbers of deaths caused by traffic accidents are decreasing in Japan. Thanks to advances of medical technology, many lives are saved, which could not have been a decade ago.
Unfortunately, this does not mean a decrease in traffic accidents. People who survive traffic accidents often spend a much longer time coping with their residual disability. This leads to the fact that you will require higher coverage to be responsible for the victims who may suffer for an extended period of time.
Take special care not only other drivers, but also for pedestrians and bicycles, especially for the elderly, who are the majority of the causes and victims of accidents.