If you own real estate in Japan, you may with to obtain optional earthquake insurance to provide some coverage against earthquake damage. Earthquake insurance payouts from the 2011 Tohoku disaster totalled 1.3 trillion Yen. Not only were homes lost or damaged from the shaking, but fires and the devastating tsunami caused significant damage.
If you are a property owner, the main type of insurance is fire insurance. However, ordinary fire insurance does not provide coverage against tsunamis or fires caused by an earthquake. For coverage against earthquakes, a property owner must obtain an additional earthquake insurance policy on top of their fire insurance.
Earthquake insurance premiums are generally the same regardless of the insurance company. Fees will vary, however, depending on the type of construction, size of the property, and where the property is located, as some areas have been assigned higher risk levels than others.
Approximately 28.8% of households in Japan have taken out earthquake insurance.
Earthquake insurance has three characteristics:
 It is not possible to obtain earthquake insurance on its own. It must be obtained in addition to a fire insurance policy.
 Compensation is for the house and contents.
 The maximum coverage for earthquake insurance is between 30 ~ 50% of the coverage provided under the fire insurance policy. The coverage cannot exceed 50 million Yen for the building, and 10 million Yen for the contents. The market value of the property is irrelevant. This means that the maximum payout for an apartment with a market value of 500 million Yen will could be capped at 50 million Yen or less in the event of complete loss in an earthquake.
The typical coverage for fire insurance on a family home is around 10 million Yen, which means the earthquake insurance coverage will be between 3 ~ 5 million Yen.
Earthquake insurance premiums to rise
From January 2017, earthquake insurance premiums are set to rise by an average of 5.1% nationwide. They will increase a further two times, with the final premiums to be an average of 19% higher than current levels. The timing of the second and third stage of increases has yet to be announced, but many expect them to be at two year intervals.
The earthquake risk levels were revised in 2014 resulting in higher premiums in some locations and lower premiums in others. In July 2014, premiums increased by an average of 15.5% across Japan. Saitama, Ibaraki, Tokushima and Kochi Prefectures will see the biggest hike in premiums with an average increase of 14.5% in 2017, with eventual premiums increasing by as much as 50% after the final stage of increases.
How much are premiums?
To obtain a quote on fire and earthquake insurance, you will need to talk to an insurance company.
As an example, the annual premium for 10 million Yen coverage on a fireproof building in the Tokyo metropolitan area, may currently be around 20,200 Yen. But the same level of coverage will cost 22,500 Yen per year for someone who signs up for insurance from January 2017. After the third premium hike, a new policy holder would have to pay annual premiums of 28,100 Yen, which are about 39.1% higher than the current premium.
How are payouts calculated?
Insurance payouts will vary depending on the level of damage:
 Total loss = 100% payout of coverage amount
 Half loss = 50% payout of coverage amount
 Partial loss = 5% payout of coverage amount
From January 2017,  Half loss will be split into a ‘majority loss’ (60% payout) and a ‘less than majority loss’ (30% payout).
For non-residents (property owners who live overseas):
It is possible for non-residents to obtain fire and earthquake insurance coverage from Japanese insurance companies to cover their properties in Japan.
The Yomiuri Shimbun, January 17, 2016.
The Nikkei Shimbun
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