Background Paper – Japan Automobile Imports Association, Automobile Insurance in Japan

Automobile insurance includes" Compulsory automobile liability insurance (compulsory insurance)"required for all automobiles according to Automobile Liability Security Law and" Voluntary insurance "that covers damages caused by possessing and driving vehicles.

The compulsory automobile liability insurance covers damages for people such as a doctor's fee, compensation and expected profit lost by a death, injury and after-effect of an injury. The voluntary automobile insurance includes coverage for bodily injury liability, for property damage liability, for self-incurred personal accident and protection against uninsured automobiles, for passengers' personal accident, and for vehicle's own damage.

Automobile insurance was liberalized in July 1998. Following the revision of the Law Concerning Non-Life Insurance Rating Organizations, the Automobile Insurance Rating Organization of Japan shall estimate only the rate for reference that its member's insurance corporation has no duty to observe. Since the liberalization, non-life insurance companies sell various kinds of insurance.

In January 1999, vehicle insurance followed a system which a premium rate was set up by a model, regardless of the model year, for the purpose of simplifying the calculation of the premium rate for a new type of vehicle, which premium rate used to be set up based on its price.

The insurance premium classification system, which a specific premium rate is imposed on per vehicle type, has been in place since July 1988. 

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