Home insurance policies to be shortened to 10 years
From late 2015, Japan’s major home insurance companies will reduce the maximum insurance policy term from 36 years to 10 years.
Home buyers looking to take out a mortgage will have fewer insurance companies to choose from as lenders require the borrower to obtain insurance coverage for the full term of the loan.
Major insurers Sompo Japan Nipponkoa Insurance and Mitsui Sumitomo Insurance will limit policies to 10 years from October 2015. They will continue to honour any policies in place before the deadline.
Home insurance, which is typically called fire insurance, covers against damage from fire, strong wind, snowfall, flood and landslides. While it is possible to obtain coverage on a yearly basis, many choose to take out insurance for the maximum term.
The reason for the shorter term is due to the recent increase in abnormal weather such as heavy rainfall and other natural disasters which have led to a rise in insurance payouts.
Insurance premiums for residential properties are also set to rise next year.
Sources:
47 News, September 14, 2014.
The Sankei Shimbun, September 14, 2014.