• The Ministry of Finance has an English guide to Japan’s earthquake insurance system here.
  • The General Insurance Rating Organization of Japan (GIROJ) also has a comprehensive English guide to Japan’s earthquake insurance system here.

Earthquake insurance is an additional option on top of fire insurance. You cannot just have earthquake insurance on its own – it must be added to your fire insurance plan. Fire insurance is optional to home and apartment owners, although if applying for a mortgage the bank will usually require the buyer to take out fire insurance.

Even if you are renting an apartment, you can also take out fire and earthquake insurance. Many real estate agents ask tenants to pay this when moving into a new apartment. The coverage is for the term of the lease.

In 2009, 46.5% of households had fire insurance while only 23% had the additional earthquake insurance.

In 2008, the percentage of households with fire and earthquake coverage were:

Fire Insurance Earthquake Insurance
Tokyo 43.4% 29.5%
Kanagawa 45.6% 27.9%
Aichi 67.3% 33.9%
Hyogo 36.8% 17.6%
Niigata 47.3% 15.7%
Fukuoka 48.5% 25.1%
Iwate 38.8% 11.6%
Hokkaido 42.9% 19.2%

As of September 14, 2011, the total amount of insurance claims paid out due to the tsunami and earthquakes from March 11 totaled 747 billion Yen in Tohoku. In Tokyo, the total amount of claims paid totaled 70.4 billion Yen.

Insurance for Apartments:

An apartment building is made up of the common areas (elevator hallways, lobby, car parking), exclusive ownership areas (the interior of the apartments themselves) and the land. Fire and earthquake insurance can be applied to the building itself but it is not possible to insure the land under the building.

Individual apartment owners can only insure their apartment’s exclusive ownership area and cannot take out earthquake insurance to cover the entire building. Insuring the building’s common areas can only be done by the building’s owners association.

Following the March 11 Tohoku Earthquake and Tsunami, many apartment buildings were not insured against earthquakes leaving many owners with large repair bills. Prior to buying an apartment you should check with the building’s management company to see if the building has fire and earthquake insurance.

Earthquake Insurance Premiums:

The insurance premium for an apartment will depend on the location and the building structure. The location is divided into four ranks, and the structure of the building (wooden or not wooden) is divided into two ranks. There are discounts based on the age of the building and its level of earthquake-resistance.

The areas in Japan with the highest earthquake insurance premiums are Tokyo City, Kanagawa and Shizuoka Prefectures. For 1 million Yen in coverage, the annual premium averages 1,690 Yen. In other areas in Japan the premium is lower.

Earthquake Insurance Premiums across Japan:
*Annual Premium is based on 10 million Yen in coverage

Area Wooden-construction Other construction
Tokyo ¥31,300 ¥16,900
Saitama 18,800 10,500
Chiba 30,600 16,900
Ibaraki 18,800 9,100
Fukushima 10,000 5,000
Iwate 10,000 5,000
Miyagi 12,700 6,500
Osaka 18,800 10,500
Wakayama 30,600 16,900
Okinawa 12,700 6,500

If the apartment or home is wooden-frame (for apartments this often refers to the 2-storey ‘apaato‘ accommodations) the premium is much higher. In Osaka, the annual premium for 10 million Yen in coverage on a wooden-structure is around 18,800 Yen.

Liquefaction:

Damage caused by liquefaction may also be included in earthquake insurance. The payout for damage caused by liquefaction is determined by the degree that your house is now leaning or has subsided.

While liquefaction usually occurs in coastal areas and along riverbanks, the March 11 Tohoku Earthquake also caused some liquefaction further inland in Saitama Prefecture.

The government has a relief system with a maximum payout of 3 million Yen per household for those affected by liquefaction. However, there are specific criteria which must be met before a household can be eligible for the government payout. For example, over 100 households in the administrative region must have been totally destroyed, or over 10 houses in the case of the cities, towns and villages.

Liquefaction in Nishisekiyado, Satte City, Saitama. The earthquake caused a partial collapse to the riverbank of Edogawa and road damage.

Coverage and payouts:

Earthquake insurance will only pay out up to a maximum of 50% of the value of the coverage.

  • For a house: 30 ~ 50% of the fire insurance coverage up to a maximum of 50 million Yen.
  • For household belongings: 30 ~ 50% of the fire insurance coverage up to a maximum of 10 million Yen.

Payouts are determined by the level of loss (total, half or partial). For a partial loss, the payout is capped at 5%, so with 10 million Yen in coverage the payout would be limited to 500,000 Yen.

Cases where you will receive compensation:

  • If an earthquake causes damage to the building and household belongings
  • If the earthquake cases a fire, landslide or river bank to burst which causes damage to the building and household belongings
  • If the earthquake causes a tsunami which causes damage to the building or household belongings

If you only have fire insurance, and an earthquake leads to a fire which destroys your home, the insurance will not cover your loss.

Discounts on premiums:

  • If you live in an apartment with base-isolation construction (menshin): 30% discount
  • If the building is built to the latest earthquake resistant codes (taishin): 10 ~ 30% discount
  • If the building is older but has passed an earthquake resistant assessment: 10% discount
  • If the building was built after June 1, 1981: 10% discount

Disclaimer:
The information contained on this page is intended as a guide only. Buyers are advised to contact an insurance company for accurate information.

Sources:
Tokio Marine Nichido Fire Insurance Co.
The General Insurance Association of Japan
All About, Inc.
Ministry of Finance Japan