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Insurance for Expats in Japan

Submitted: March 2014

Fundamentally, insurance is mainly a financial service which is designed to reduce risks. An insurance product transforms the cost of your potential large liabilities or expenses into regular premiums. An insurance product “ensures” that your situation is more stable/less risky than what it would otherwise be, but it is certainly not a way to evade the liabilities you are potentially responsible for.

Do not wait for problems to arise before reviewing your insurance arrangements. Once you have a problem, it is already too late. Being poorly insured is risky whereas being over-insured is expensive.

There is a wide range of competing insurance providers in Japan, and it is advisable to shop around and compare before taking out an insurance policy. It’s also good to check the financial strength and the reputation of your insurer.

If you are unclear about your cover or your needs whilst you are in Japan, you might wish to check your existing insurance arrangements in your country of origin. This is important if you want to avoid double coverage.

Insurance isn’t necessarily a country-specific issue, but how much insurance you need may vary from one country to another. This is because your potential liabilities, such as medical bills, are specific to a jurisdiction.

 

Home insurance

Your home insurance needs depend on whether you own your home, or if you rent it.

For homeowners, your home insurance policy protects you against damage to your building, and is generally required to secure a mortgage. This may cover the costs of rebuilding your property from scratch, legal fees or the costs of certain exceptional repairs. Home insurance may also cover you against third party liability if an accident happens in your home. Do also expect home insurance to be a requirement if you intend to apply for a mortgage.

As for all insurance policies, it is up to you to decide how generous you want your cover to be, what the excess amounts are, which unexpected expenses are covered (e.g. alternative accommodation), etc.

For tenants, home insurance can be much cheaper than home insurance, as tenants only need to be insured against their belongings and public liability if an accident happens in their home.

Going away from home

If you expect to be away from your home for more than one month, you should let your insurer know. Failure to do so may result in a claim being rejected if something happens to your home whilst you are away.

Home insurance exclusions/earthquakes

Check if something is excluded from your home insurance policy. If you live in a high risk area (e.g. with regard to floods), your insurer may require you to pay extra to be covered on some risks that your insurer would otherwise exclude.

Typically, earthquake insurance is sold in a separate policy. Premiums may range from ¥2,500 to ¥10,000 per year. If you choose to be insured against these risks, you should strongly check your insurer’s financial resilience for you don’t want your insurer to be bankrupt when you need to make a claim.

 

Car insurance

Car insurance is mandatory in Japan, and your policy must generally include at least third party cover. This should insure you against potential liabilities for third party death or bodily injury, but not damage or theft of your own car.

If you need your vehicle to have more than just third party cover, you might wish to take out a comprehensive vehicle insurance policy.

 

Health insurance

Private health insurance in Japan is good to have, especially if you are not registered in a social insurance scheme. Japanese private health insurance premiums may be much lower than their foreign counterparts in fully private systems, such as the US. Even if you have just no social insurance coverage, health insurance in Japan is still affordable as healthcare costs are quite low.

Expatriates may consider an international cover in order to ensure coverage both in Japan and in their home country. International covers tend to be more expensive, but they are straightforward and very helpful if you need to “bridge the gap” between Japan and your home country. Expats who frequently move across borders are more likely to need an international cover to achieve peace of mind.

 

Life insurance

Life insurance can be particularly helpful if your family is financially very dependent on you, as it may guarantee a lump sum payment to your family if you die.

Do assess carefully the burden of retaining foreign life insurance while you are resident in Japan. Do also check the geographical extent of your existing life insurance policy when you move across borders.

 

Business insurance

If you run a business in Japan, you probably need personnel insurance and public liability insurance.

Personnel insurance protects you in case one of your employees has an accident or an illness in connection with his/her employment duties.

Public liability insurance covers you against certain third party claims against your business. This may also include legal costs.

 

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