When buying a home in Japan you may want to consider earthquake insurance. As at the end of 2016, approximately 30% of Japanese households had earthquake insurance. Insurance premiums will vary depending on (1) the location of the property and (2) the type of construction, while payouts will vary depending on the level of damage.
Payouts are between 30 ~ 50% of the insured value of the fire insurance policy, and cannot exceed 50 million Yen (approx. 440,000 USD) for the property and 10 million Yen (approx. 88,000 USD) for contents. For example, if the fire insurance coverage is 20 million Yen, the earthquake insurance coverage will be between 6 ~ 10 million Yen.
Note that the insurance payout is not based on the market value of a property, so an apartment with a market price of 500 million Yen cannot be insured for any more than the limit of 50 million Yen.
An earthquake insurance policy cannot be taken out on its own – it must be added onto a fire insurance policy. If the property is damaged by fire or tsunami caused by an earthquake, the damage is only covered if the policy holder has the additional earthquake insurance option – it is not covered by the standard fire insurance. The maximum term of an insurance contract is 5 years, renewed at the end of each term.
Annual earthquake insurance premiums for a 10 million Yen policy:
|PREFECTURE||TYPE 1 CONSTRUCTION||TYPE 2 CONSTRUCTION|
|Tokyo, Chiba, Kanagawa, Shizuoka||22,500 Yen||36,300 Yen|
|Osaka||13,200 Yen||23,800 Yen|
|Kyoto, Hokkaido||8,100 Yen||15,300 Yen|
|Okinawa||9,500 Yen||18,400 Yen|
* Type 1 Construction: generally steel frame or reinforced concrete.
* Type 2 Construction: generally wood-frame buildings, although they may sometimes be classed at Type 1 Construction.
* There are discounts for newer buildings and buildings that are constructed to higher earthquake resistant standards.
Payouts will vary depending on the level of damage sustained to the property:
- Total loss: 100% payout
- Majority loss: 60%
- Minor loss: 30%
- Partial damage: 5%
Premiums may be different for each property. Please contact an insurance company for a quote.