Unlocking Peace of Mind: A Guide to Property Insurance in Japan
Securing your dream home or investment property in Japan is not just about finding the perfect space; it’s also about safeguarding your investment and ensuring a worry-free living experience. We here at MSK Property understand the importance of informed decision-making, and in light of the tragic recent events of the Japanese Earthquake (read more here), let’s explore the landscape of property insurance in Japan to empower you with knowledge and confidence.
Side note: Although the recent disasters that affected the areas near Niigata, Ishikawa, and through the main land to Tokyo, most of the southern and northern areas of Japan, and especially the northern island of Hokkaido were and have typically always been less affected if not at all.
Understanding the Basics: Fire, Earthquake, and Life Insurance
In Japan, there are 2 kinds of property insurance, kasai-hoken (fire insurance) and jishin-hoken (earthquake insurance).
Kasai-hoken, directly translated as “fire insurance” actually refers to a more general form of property insurance that covers damage to the dwelling or to items in the home. It covers damages due to fire, lightning, explosion, wind damage, snow damage, theft, etc.
On the other hand, Jishin-hoken, directly translated as “earthquake insurance” refers to property insurance specifically for certain kinds of natural disasters. It covers damage to dwellings and household goods due to earthquakes, volcanic eruptions, or tsunamis.
Property insurance in Japan is generally optional, but if you’re financing your purchase through a loan from a Japanese bank, they may require both fire and life insurance. In 2009, 46.5% of households in Japan opted for fire insurance, with an additional 23% securing earthquake insurance. These statistics underscore the recognition of the importance of protection in the face of unforeseen events. In 2022, the ownership ratio of earthquake insurance on dwelling risks among households in Japan stood at 35 percent, up from 34.6 percent in 2021. In Japan, earthquake insurance can be added as an optional rider to fire insurance and covers homes and household goods against damage caused by earthquakes.
The following are the types of property insurance available in Japan.
Fire Insurance (Kasai-Hoken):
- Mandatory for both renters and property owners, often stipulated in leasing contracts.
- Covers damages from fire, smoke, and various accidents like breakages or appliance malfunctions due to fire, lightning, explosion, wind damage, snow damage, theft, etc.
- Costs typically range from ¥20,000 – ¥40,000 for a two-year period, offering comprehensive coverage for your home.
Coverage Breakdown: - Home Contents:
Safeguards your possessions with coverage determined by broad groupings and limits. - Tenant Liability:
Protects against accidents within your home affecting neighboring units. - Personal Liability:
Ensures coverage for damages and injuries resulting from accidents involving the insured person. Note: Some companies may extend insurance to international employees on temporary contracts, but it’s advisable to check details and consider adding a Japanese fire insurance policy for household emergencies.
Earthquake Insurance (Jishin-Hoken):
- Essential for residents in earthquake-prone Japan, as regular fire insurance does not cover earthquake-related damages.
- Costs vary by prefecture, with fees ranging from around 6,500 yen to 32,600 yen per year, as per the Ministry of Finance.
Coverage Overview: - Exclusively for Earthquake Disasters:
Covers personal items, property damage, and related issues caused by earthquakes, volcanic eruptions, and tsunamis. - Exclusions:
Certain high-value items, like precious metals and jewels exceeding 300,000 yen, currency, securities, deposits, savings certificates, revenue stamps, postage stamps, and automobiles.
In 2022, households in Japan spent an average of around 12,300 Japanese yen on fire and earthquake insurance premiums.
Landlord Insurance:
- If you’re a landlord, you have the option to protect against financial loss caused by the unfortunate event of a tenant’s death.
- Stigmatized properties may pose challenges in renting, potentially resulting in income loss for the landlord.
Navigating property insurance in a foreign country may seem daunting, especially considering the unique challenges faced by expatriates. At MSK Property, while we focus on helping you find your ideal home, we recognize the importance of comprehensive protection.
As you embark on your property ownership journey in Japan, consider this guide as a starting point for understanding property insurance. We may not directly assist in insurance matters, but we are committed to providing you with the knowledge and support you need to make well-informed decisions. Building trust isn’t just about houses; it’s about empowering you to create a secure and enduring home.
The information contained on this page is intended as a guide only. Buyers and property owners are strongly advised to contact an insurance company for accurate information.