Japan is known as a country of earthquakes, with frequent large-scale seismic events causing devastating damage. Major earthquakes remain fresh in memory, including the Noto Peninsula earthquake in Ishikawa Prefecture (maximum seismic intensity of 7) and the Great East Japan Earthquake.
This article provides a clear explanation of how earthquake insurance works, how to file a claim, and how to choose the right policy — all to help you prepare for an earthquake that could strike at any time. Even those living in rental properties stand to benefit greatly from coverage, so please use this as a helpful reference.
What Is Earthquake Insurance?
Earthquake insurance is a policy that covers damage to buildings and household contents caused by earthquakes, volcanic eruptions, and tsunamis. Even properties with seismic isolation or earthquake-resistant construction can suffer damage from fires triggered by earthquakes.
Since most fire insurance policies do not cover fires or structural damage caused by earthquakes, volcanic eruptions, or tsunamis, having earthquake insurance is critically important.
How Does Earthquake Insurance Differ from Fire Insurance?
Earthquake insurance and fire insurance differ in their premium structures, coverage content, and tax treatment.
Differences in Premiums
Fire insurance premiums are set freely by each insurer, whereas earthquake insurance premiums are standardized because the program is jointly operated by the government and private insurers. As a result, there is no need to compare rates across insurance companies.
Differences in Coverage
Fire insurance covers damage from fires and natural disasters in general, while earthquake insurance specifically covers damage caused by earthquakes, volcanic eruptions, and tsunamis. Earthquake insurance applies only to residential buildings and household contents — it does not cover theft or lightning strikes on their own, as fire insurance may.
Income Deduction Eligibility
Earthquake insurance premiums qualify for an income deduction, whereas fire insurance premiums have not been eligible since 2007.
How Are Earthquake Insurance Premiums Determined?
Earthquake insurance premiums are determined by four factors: building structure, seismic performance, location, and policy term.
Building Structure
Structures are classified as either "Type A" (concrete, steel-frame construction, etc.) or "Type B" (wood-frame construction, etc.), with Type A buildings carrying lower premiums.
Seismic Performance
Discount programs are available based on a building's seismic performance: seismic isolation discount (50%), seismic grade discount (10–50%), seismic assessment discount (10%), and construction year discount (10%). These discounts cannot be combined.
Building Location
Premium rates are set by prefecture based on data such as seismic hazard maps. Prefectures along the Pacific coast tend to have higher premium rates.
Policy Term
The maximum policy term for earthquake insurance is five years. Policies of two years or more qualify for discounts based on a long-term coefficient, and the longer the term, the lower the overall premium burden. Paying in a lump sum provides an even greater discount.
Should Renters Get Earthquake Insurance?
In short, earthquake insurance is strongly recommended even for those living in rental properties. Here are three reasons why.
Japan Has Frequent Earthquakes
Earthquakes with a maximum seismic intensity of 5 or higher carry a significant risk of total or partial building collapse. Even rental properties can sustain damage, and there is no guarantee that renting protects you from harm.
Replacing Household Contents Can Be Costly
Approximately half of those who applied for the Disaster Victim Support System after the Great East Japan Earthquake spent 500,000 yen or more on replacing furniture, appliances, and bedding.
Relocation Costs Can Be Substantial
If your current home becomes uninhabitable, expenses such as moving costs, initial costs for a new residence, and hotel fees can add up quickly. Those with limited financial reserves in particular should have earthquake insurance as a safety net.
How Can You Claim the Earthquake Insurance Premium Deduction?
If you are paying earthquake insurance premiums, you are eligible for an income deduction.
Eligibility Conditions
The deduction applies to earthquake insurance contracts covering residential buildings or household contents owned by the policyholder, their spouse, or a relative. Vacation homes and vacant properties are not eligible. However, a mixed-use property (residential and commercial) where the residential area accounts for 90% or more of the floor space qualifies for a full deduction.
Deduction Amounts
For income tax purposes, if the annual premium paid is 50,000 yen or less, the full amount is deductible; if it exceeds 50,000 yen, a flat 50,000 yen deduction applies. For resident tax, if the annual premium is 50,000 yen or less, half the amount paid is deductible; if it exceeds 50,000 yen, a flat 25,000 yen deduction applies.
How to Apply
Employees can apply through their year-end tax adjustment. Submit the earthquake insurance premium deduction certificate sent by your insurer to your employer and fill in the relevant section of the year-end adjustment form. Business owners and self-employed individuals must file a final tax return.
What Is the Process for Filing an Earthquake Insurance Claim?
Filing an earthquake insurance claim involves five steps, from assessing damage to receiving payment.
1. Assess the Damage
Survey the damage to your building and household contents. Do so only after confirming it is safe to enter, and be sure to photograph the damage from multiple angles before cleaning up.
2. Contact Your Insurance Company
Notify your insurer, providing the date and time of the earthquake and a description of the damage. If phone lines are congested, submit your claim online. The claim deadline is within three years.
3. On-Site Damage Assessment
An assessor commissioned by the insurance company will visit to evaluate the damage. Your presence is required, so arrange a mutually convenient time. Preparing a written summary of the damage in advance will help ensure nothing is overlooked.
4. Premium Calculation and Notification
Based on the assessment, you will be notified of the damage classification: "total loss," "major partial loss," "minor partial loss," or "partial damage." The corresponding payout rates are 100%, 60%, 30%, and 5%, respectively. If you disagree with the assessment, you may request a reassessment with supporting evidence.
5. Payment of Insurance Proceeds
Once the required documents and claim form have been submitted, payment is made in principle within 30 days. In the case of a large-scale disaster, processing may take longer.
Key Points to Keep in Mind When Filing an Earthquake Insurance Claim
To ensure you receive your insurance payout, keep the following points in mind.
Understand the Coverage Limits
Earthquake insurance is set at 30–50% of the fire insurance amount, with a maximum of 50 million yen for buildings and 10 million yen for household contents. As the purpose of this insurance is to support basic living stability, it does not provide full compensation.
Photograph Your Household Contents
Be sure to photograph damaged household items before cleaning or disposing of them. These photos serve as crucial evidence when filing your claim.
Do Not Dispose of or Disassemble Items on Your Own
Keep damaged household items in place until the assessment is complete, as assessors may need to inspect them in person.
Seek Assistance If You Are Unsatisfied with the Assessment
If you are not satisfied with the assessment result, you may request a reassessment. If the matter remains unresolved, you can also consult the General Insurance Association of Japan's "Sonpo ADR Center."
How to Choose Fire Insurance When Adding Earthquake Coverage
Earthquake insurance cannot be purchased as a standalone policy — it must be added as a rider to a fire insurance policy. Use the following criteria to select your fire insurance.
Always Add Earthquake Insurance as a Rider
You can obtain earthquake insurance by adding it as a rider when purchasing fire insurance. Because earthquake insurance is jointly operated with the government, coverage terms are identical regardless of which insurer you choose.
Review the Coverage Scope
While earthquake insurance coverage is the same across all insurers, fire insurance coverage varies by company. For rental properties, verify whether the policy covers incidents such as water damage.
Set the Coverage Amount Based on the Building's Assessed Value
Since compensation cannot exceed the actual amount of damage, set your coverage amount in line with the building's assessed value.
Optimize the Policy Term and Payment Method
A long-term policy with lump-sum payment offers the lowest overall premium cost. This approach is especially advantageous when fire insurance rates are rising.
Important Considerations When Taking Out Earthquake Insurance
Without a proper understanding of how earthquake insurance works, you may find yourself caught off guard when you need it most.
Understand the 72-Hour Rule
Any earthquake occurring within 72 hours of the initial quake is counted as a single loss event, regardless of its magnitude.
Your Policy Ends Upon a Total Loss Settlement
If a total loss is declared and the full insurance amount is paid out, the earthquake insurance policy terminates. If you rebuild, you will need to take out a new policy. For all other damage classifications, the coverage amount remains unchanged and the policy continues.
Total Loss Declarations Are Rare
Data from the Great East Japan Earthquake shows that only 3.3% of buildings were classified as a total loss, while partial damage accounted for the largest share at 54.6%. It is important to recognize that earthquake insurance alone may not be sufficient to cover all disaster-related costs.
Insurance is also an essential safeguard for rental property owners. Having a stress-free property management system in place will enable you to respond smoothly to tenant needs in the event of a disaster.
Frequently Asked Questions (FAQ)
Can I purchase earthquake insurance without fire insurance?
No, earthquake insurance can only be obtained as a rider attached to a fire insurance policy. You may add it when first purchasing fire insurance, or add it to an existing fire insurance policy at a later date.
As a renter, should I insure the building or my household contents?
For rental properties, the building belongs to the landlord, so tenants should purchase earthquake insurance covering household contents only. This provides coverage for furniture, appliances, clothing, and other personal belongings, giving you important peace of mind.
Do earthquake insurance premiums change every year?
Earthquake insurance premiums may be revised every few years. However, if you are on a long-term policy, your premium will not change during the policy term. In some cases, locking in a long-term policy before a rate revision can be advantageous.
Do I need to file a tax return after receiving an earthquake insurance payout?
Earthquake insurance payouts are generally tax-exempt, so no tax return is required. However, if the payout you receive exceeds the assessed loss of your assets, the tax treatment may differ — in that case, please consult your local tax office.
