Renting a car in Japan: Insurances
Before renting a car, it is essential to understand who is liable for the various substantial costs that may arise in the event of an accident. What types of coverage do rental car insurances consist of? What is included in rental plans by default? What is the purpose of collision damage waivers (CDW) and non-operation charge (NOC) coverage? This guide is aimed at answering all these questions and more in a straightforward matter-of-fact fashion!
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Rental car insurance
In accordance with Japanese law, all rental car plans sold in Japan must include insurance coverage in their list prices. Accordingly, accidents are guaranteed to be insured up to certain fixed amounts. Note though, that the specific amounts may differ between rental car companies. To illustrate how insurance is generally broken down in Japan, insurance as offered by Nissan Rent-a-car is listed as an example below:
| Insurance type | Insurance coverage | Deductibles |
|---|---|---|
| Personal injury liability insurance (other parties) per person | Unlimited(30,000,000 yen through vehicle insurance + remainder borne by Nissan Rent-a-car) | None |
| Property damage liability insurance (other parties) per accident | 20,000,000 yen | 50,000 yen |
| Vehicle insurance (your rental vehicle) per accident | The value of your vehicle at market price |
50,000 yen (100,000 yen for minibuses and certain trucks) （Does not include towing charges) |
| Personal injury insurance per person | 30,000,000 yen | None |
Collision damage waiver (CDW)
When choosing what Japanese rental plan to reserve, you are likely to encounter such phrases as "CDW included!". So what exactly is a Collision Damage Waiver? It is a waiver that waives the deductibles listed above in red, amounts that you would otherwise be billed for in the event of an accident.
* Inexperienced drivers will in certain cases not be able enter the Collision Damage Waiver program. For more information please refer to: Even beginners can rent a car! Read here about the conditions and restrictions that apply
Deductibles refer to the portion of the costs incurred in the event of an accident that are not covered by the insurance provided by rental car companies, and must instead be borne by the customer. In the above case of Nissan Rent-a-car, the sums listed in red for property damage liability insurance and vehicle insurance are not covered by insurance, and therefore are listed instead as deductibles.
That's where collision damage waivers come in: if you enter the CDW program when renting a car from Nissan Rent-a-car, and happen to have an accident, you will not be required to pay the deductibles corresponding to damage liability insurance and vehicle insurance. (What deductibles apply depends on the rental car company).
You may be wondering how customary it is to get a CDW. On our site about 70% of customers apply for CDW when making their reservations. When including the number of renters who get a CDW at the rental office before picking up their vehicle, that proportion rises to above 90%. So why are CDW so popular?
① Driving on unfamiliar roads.
② Driving an unfamiliar vehicle.
③ The peace of mind that no deductibles will have to be paid in the event of an accident (some exceptions exist)
* If costs resulting from an accident exceed the coverage limit provided by the rental car companies' insurance, the portion of the costs exceeding that limit must be borne by the customer.
Non-Operation Charge (NOC)
NOC is another often encountered abbreviation.
There is one thing in particular that you need to know about NOC:
non-operation charges are actually treated as being completely separate from insurances and collision damage waivers! In other words, NOC applies even if you have opted into the CDW program! A non-operation charge is a charge that the customer is liable for when damage occurs to the vehicle, in order to cover a portion of the costs the rental company incurs while the vehicle requiring repairs is out of service.
Nissan Rent-a-car Non-operation Charge
| If the vehicle is dropped off at the scheduled rental office (in a safely drivable state) | 20,000 yen |
|---|---|
| In any other cases | 50,000 yen |
* Compensation fees and details depend on the rental car company.
Depending on the rental car company, plans may be offered in which non-operation charges are waived. E.g., Nissan Rent-a-car NOC Support Plan. However, in other cases such a plan may not be available. In the event that an accident causes damage to the vehicle, and NOC has not been waived; you will be required to pay compensation to the rental car company.
Opt-in choices and their monetary consequences: a case study
Finally, let's have a look at an example case of an accident, and see how (not) opting into CDW or NOC coverage affects the outcome monetarily. Specifically, we will look at the following 3 common cases:
[Example] You had an accident with a compact car rented from Nissan Rent-a-car. The vehicle can no longer be driven.
Case 1: you only have the default insurance
You will be charged 50,000 yen for the deductible on the property damage liability insurance, and 50,000 yen for the deductible on the vehicle insurance, as well as 50,000 yen in the form of a non-operation charge. Accordingly, you will be billed a total of 150,000 yen.
Case 2: you opted in to the CDW program
Both the property damage liability insurance and vehicle insurances deductibles are waived, but you will still incur a 50,000 yen non-operation charge. Accordingly, you will be billed a total of 50,000 yen.
Case 3: you opted in to both CDW and coverage for NOC
Both the 50,000 yen property damage liability insurance and vehicle insurances deductibles are waived, as well as the 50,000 yen non-operation charge. Accordingly, you will not be billed.
I hope we have given you a good idea of how rental car insurance is structured in Japan. Please choose whether opting in to CDW and/or NOC coverage makes sense in your particular situation, based on a correct understanding of the assurances they provide. (Note though that there are also rental companies that include the collision damage waiver by default.)
