A Japanese rental contract will usually stipulate that the lessee is to enroll in an insurance policy. Despite being one of the world’s biggest markets for insurance, the selection and range of insurance products available in Japan is actually quite limited. Home insurance policies tend to include a degree of coverage for a wide variety of eventualities, but often lack the ability to customize often found in other countries. The cost of a policy is typically in the region of JPY 20,000 to JPY 40,000 for two years, but can be higher depending on the value of home contents to be insured.
Home Contents Insurance
The cost of an insurance policy is primarily determined by the amount of coverage that is required for home contents. Rather than setting the amount based on your own estimate of the value of your belongings, it is necessary to choose from a range of predetermined values. As a default this type of insurance only includes a limited amount of coverage for valuables such as jewelry, artwork and collectibles (usually up to JPY 300,000 per item), but it can be possible to register such items when making the policy in order to be eligible for greater coverage. Portable items such as mobile phones, cameras and bicycles are usually exempt from coverage.
If you opt to include earthquake insurance, this will cover between 30% and 50% of the amount that was set for the home contents. Therefore if you have selected JPY 5,000,000 as the amount of coverage for your home contents, the amount of coverage for damage to your belongings sustained in an earthquake will a maximum of JPY 2,500,000. The reason for this difference is that earthquake insurance is guaranteed by the government, which has calculated that this is all that can realistically be covered in the event of a major earthquake.
Tenant Liability Insurance
This covers liability incurred towards the landlord for damage caused to the property either deliberately or through negligence on the part of the tenant or a person related to the tenant. An example would be a fire caused by an unattended pan on the stove. Depending on the policy this is either a fixed amount or can be adjusted in line with the perceived value of the property.
Personal Liability Insurance
This covers losses and injury caused unintentionally to third parties both in and outside the rental premises (with the exception of accidents involving a motor vehicle). This could be used if you are required to pay compensation in the event of an accident while riding a bicycle, or if a child causes injury to another person or their property while playing. Having insurance which includes this type of coverage is highly recommended. If you are involved in an accident whereby someone is injured and there is a suggestion that you were at fault, you will very likely need to pay some compensation to help cover medical costs.
While companies will often take out insurance to cover their own potential liabilities as the lessee (in cases where the contract is signed by the company), this will not always include adequate coverage for home contents, nor will it necessarily include any personal liability coverage. In such a case you are advised to take out some insurance separately to cover your own needs. Relo Japan can help you with this.