What is Kasai-Hoken (Fire Insurance) and is it Necessary?

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. 

1. Prevalence of fires in Japan

First, 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.