What is Kasai-Hoken (Fire Insurance) and is it Necessary?
Tuesday, September 6, 2022
Property Insurance in Japan: kasai-hoken (fire insurance) and jishin-hoken (earthquake insurance) explained.
[Edited: May 28, 2024]
There are 2 kinds of property insurance in Japan, kasai-hoken (fire insurance) and jishin-hoken (earthquake insurance).
Kasai-hoken, directly translated as “fire insurance” actually refers to a more general form of property insurance that covers damage to the dwelling or to items in the home. On the other hand, Jishin-hoken, directly translated as “earthquake insurance” refers to property insurance specifically for certain kinds of natural disasters.
Let’s start with some definitions:
- Kasai-hoken/Fire insurance (火災保険): refers to property insurance that covers damage to dwellings and household goods due to fire, lightning, explosion, wind damage, snow damage, theft, etc.
- Jishin-hoken/Earthquake insurance (地震保険): refers to property insurance that covers damage to dwellings and household goods due to earthquakes, volcanic eruptions, or tsunamis.
What to know about kasai-hoken/fire insurance (火災保険)
A typical fire insurance policy covers accidental damage to dwellings and household goods for the following situations:
As stated above, kasai-hoken policies cover damage to dwellings and household goods, more specifically it covers damage to:
Dwellings: the building itself, gates, fences, garages, sheds, antennas, etc.
Household goods: furniture, appliances, clothing, precious metals, and money
While the scope of a kasai-hoken policy seems broad, one policy doesn't necessarily cover both the “dwelling” and “household goods.” Within individual policies, the policyholder can choose coverage between the following three options: dwelling only, household goods only, or dwelling and household goods.
Therefore, if a kasai-hoken policy only insures the dwelling then coverage will not extend to damaged household goods. In addition, if the intent is to insure expensive items or cash those details need to be included in the policy at the time of signing.
The conditions and costs for a policy vary according to the location of the property, the structure of the building, the age of the building, and the kind of activities that will take place in the building (e.g. part of the dwelling being used for commercial purposes).
Therefore it is extremely important to determine what exactly an individual kasai-hoken policy covers and how much the insurance payout will be in the event that it becomes necessary.
Note that kasai-hoken does not cover the following:
Fires and building collapses caused by earthquakes
Fires caused by volcanic eruptions
Damage caused by tsunamis resulting from earthquakes
Damage to buildings caused by war, conflict, or riots
Loss or damage to buildings caused by tsunamis
What to know about jishin-hoken/earthquake insurance (地震保険)
Earthquake insurance covers damage from earthquakes, eruptions, and tsunamis or any of the following caused by the aforementioned events: fire, damage, burial (under landslide or debris), or loss of property.
Signing up for a jishin-hoken policy:
Jishin-hoken is always an add-on to kasai-hoken. Jishin-hoken cannot be purchased on its own.
In principle, kasai-hoken and jishin-hoken should be contracted together but the policyholder can opt out of jishin-hoken.
Jishin-hoken can be added to an existing kasai-hoken policy at any time.
In the event of a major earthquake and insurance companies cannot bear the entire burden of the damages, government insurance for earthquakes may also become available.
Important Note: Fires that occur as a result of an earthquake or volcanic eruption and water damage caused by a tsunami from an earthquake are ONLY covered by jishin-hoken and not by kasai-hoken.
Also, the insurance amount for kasai-hoken policies is calculated based on the actual amount of damage, known as “actual loss.” In Japanese, this is referred to as 実損払い (jisson barai). In contrast, jishin-hoken payouts are not calculated in the same way, this is important to understand when selecting an insurance policy.
Is kasai-hoken necessary?
Technically, entering into a kasai-hoken policy when renting or buying a home is optional, however, it is often a condition of many rental contracts.
There are also three other vital points to consider when deciding whether or not to purchase a kasai-hoken policy:
Prevalence of fires in Japan
Act on Responsibility for Accidental Fire/失火責任法 (shikka sekinin ho)
Frequency of natural disasters in Japan
1. Prevalence of fires in JapanFirst, let's look at the prevalence of fires and their causes in Japan based on the Fire and Disaster Management Agency data.
The data from 2020 and 2021 shows that 4.5 fires occur in Japan every hour.
2. Act on Responsibility for Accidental Fire/失火責任法 (shikka sekinin ho)
Simply put, assuming there is no gross negligence at the origin of the fire, the responsible party is not liable for damage done to other people’s property. The reason for this is that Japan traditionally has many wooden houses and fires could spread quickly and widely. The law was enacted to protect people from excessive liability in such situations.
What this means is that if your residence is damaged by a fire caused by a neighbor their insurance likely only covers damage to their dwelling and not anyone else’s. But if you have your own kasai-hoken policy you would be covered.
3. Frequency of natural disasters in Japan
Finally, Japan has yearly typhoons, heavy rains, snow storms in the north, and frequent earthquakes. According to the General Insurance Rating Organization of Japan, approximately 707.9 billion yen was paid out from fire insurance in 2018 due to large-scale natural disasters such as typhoons and torrential rains.
Ultimately the choice to purchase a kasai-hoken or jishin-hoken policy is up to each individual but for the reasons laid out above it is always recommended to enter into a kasai-hoken and jishin-hoken policy when renting or buying a home. Remember, policies allow a great deal of flexibility for the policyholder to pick and choose what they want to be insured against and for how much. Therefore, with a little research, there will always be a policy that is suitable for everyone’s unique needs.
About the Author
I've been in Japan so long that I say my heart is Japanese. And still this country impresses me from time to time. In those moments I think, "That's why I love living in Japan."
