What are insured? Check this before hiring a car in Japan

photo by Pictures of Money

Rental car is a handy method to tour around Japan. More foreign tourists choose rental cars to travel from city center to sightseeing spots in suburban area. Accordingly, the number of automobile accidents involving non-Japanese drivers is rapidly increasing in recent years. Generally speaking, car insurance is included in rental car charges. However, the majority of people drive rental cars without knowing details of insurance coverage on the vehicle. This column will explain coverage of car insurance in Japan and other tips you should know when you drive a rental car.

Insurance limits for rental car

Rental car agents have both compulsory car insurance and ordinary car insurance for all their vehicles. The cost for car insurance is included in the price to cover any damages or injuries occurred during a car rental contract period. Details of insurance coverage may vary depending on rental car agents. The car insurance limits provided by leading 5 agents ranges as follows to compensate major damages and injuries.

Injury/death of third party: No limit
Property damage: 20million yen to no limit (50000yen excess)
Vehicle’s physical damage: Actual cost (5000 – 100000yen excess)
Personal injury: 30million yen
Roadside service

*Car insurance for a rental car only covers injuries and damages of the first accident where multiple number of incident occurred during the same car rental contract.

Out-of-pocket expenses

Rental cars are well insured, however, that doesn’t mean you can walk off without any payment after a car accident in a rental car. If you cause any damage to properties of third party or the rental car you hired, you may be charged for insurance excess or loss-of-use.

Insurance excess

Car insurance of rental cars compensate most of damages and injuries occurred during a rental agreement period, however, there normally is 50000 to 100000yen excess. That means, you will have to pay the excess and insurance benefit will be paid out for the cost of damage that exceeds the excess amount.

Loss-of-use charge

If you have an automobile accident in a rental car and the car you hired need repairing, you will be charged for loss-of-use. Normally, loss-of-use charge costs 50000yen in addition to actual cost of towing if the car is non-drivable, and 20000yen if the car is drivable.

*Most rental car agents provide waiver options for excess and loss-of-use charge. Each option generally costs 1080yen.

Car insurance exclusion for rental cars

Although a car insurance is included in the car rental plan, insurance and compensation is not applicable in the following cases.

The case has not reported to the police and rental car agent

To make a car insurance claim, an accident report issued by police must be submitted to the insurer. In addition, you are obliged to notify the rental car agent of the accident under the contract. Insurance or compensation will not be approved if you fail to complete either of these.

There is breach of rental agreement

Drink-driving, reckless driving, driving under effect of drug, extension of use without prior notice, not-returning a rental car, driving by unauthorized driver and sublease of a rental vehicle is prohibited under a rental car agreement. If there have been a breach of agreement in any way, insurance and compensation will not be available.

The case applies to the disclaimer on the conditions of insurance

Intentional damages, detriments caused due to driving under influence of alcohol or drug, loss or damages to contractor or driver’s personal belongings, flat or damages tire, loss of wheel cover is excluded from the insurance coverage.

There was a violation of security commitment

Insurance cover is not applicable if the car is stolen due to unlocking, damages occurred during illegal parking, damages caused due to poor preparation for the weather or poor management of the vehicle is excluded under insurance agreement.

Damage amount that exceeds maximum amount of compensation

Compensation payout is normally adequate to cover all damages and injuries occurred in a car accident. However, if amount of detriment exceeds the compensation, the borrower must pay the surplus.

Happy driving!

Remember, even though a rental car contract normally includes car insurance in its price, there still is excess and loss-of-use charge that you have to pay out-of-pocket in case of a car accident. That means, it is more than likely that you end up paying a certain amount of money after an accident. One good news is, there is optional waiver plans for these costs by adding extra fees. Considering a possible outcome of car accident, it is worth paying a small amount of money to avoid payment of excess or loss-of-use charge.