1. What is car insurance?

Auto insurance is a type of insurance that pays for losses resulting from car accidents. Drivers obtain insurance to pay for losses incurred when another person is killed or seriously injured in a car accident while driving, as well as when the other person’s vehicle is damaged. There are two main categories of auto insurance: mandatory vehicle liability insurance and optional insurance. Auto insurance that is mandated by law provides coverage in the event that another person is killed or seriously injured in an automobile accident. Three categories of compensation can be broadly applied to optional insurance:

 1) damages to the other party involved in an automobile accident

 2) injury or death to you or your passengers; and

 3) damage to your own vehicle.

The only mandatory insurance is vehicle liability insurance, however it only covers a certain amount of damage. Only having required auto liability insurance won’t be enough to compensate you in the event of a major accident. It is therefore customary to further enroll in optional insurance. With optional insurance, the policyholder can adjust the coverage and insurance amount based on how the vehicle is used; however, the premium increases with increased coverage. It is crucial that you get the auto insurance that best fits your needs because of this.

Let’s first examine the distinction between mandatory and optional motor liability insurance.

What is the difference between compulsory insurance and voluntary insurance?

Under the terms of the automotive Liability Security Law, car owners must obtain compulsory automotive liability insurance.

Driving without the required minimum level of motor liability insurance carries a fine of up to 500,000 yen or a year in jail, in addition to having your license suspended.

When you injure or kill someone else, compulsory auto liability insurance pays for the resulting damages (also known as third-party compensation), which includes pain and suffering damages and medical costs. The highest amount that can be paid out per victim is 30 million yen for damages resulting from death, 40 million yen for damages resulting from permanent handicap, and 1.2 million yen for damages resulting from injury.

Do you wonder how much auto insurance will cost as a maintenance expense when buying a new car? If you currently have auto insurance, you might wonder if your rates are greater than those of other people. It can be challenging to use average insurance rates with conditions that are different from your own as a guide because insurance rates are determined by taking into account a number of variables, including the accident history of each car model and type, the policyholder’s “grade”—a measure of the number of accidents and years without accidents—the driver’s age, mileage, and coverage.

Using examples of insurance rates for common car models, we will explain how insurance premiums operate in this section.

automobile insurance rates often increase with the “rate class,” which represents each automobile model’s accident risk. The shape, equipment, and performance of the car, as well as the user’s demographics, all affect the likelihood of an accident. However, the rate class is determined by evaluating this data and illustrating the variation in accident risk for each car type.

Insurance rates for light vehicles are less expensive than those for compact automobiles and minivans because they are in a lower rate class.

Additionally, the difference in insurance costs between different vehicle types is less likely to be noticed because there are three rates for light cars, with the difference defined as roughly 1.2 times.

There will be an addition of two classes, one with lower risk and insurance rates than the present class 1 and the other with higher risk and insurance premiums than the current class 3. The models will be positioned to be more suited for the risk in January 2025, and the difference in insurance costs between vehicle types will fluctuate from previous years as the classes are evaluated every January.

Minivan and compact car insurance rates are likewise determined by a “rate class.” The difference in insurance premiums between vehicle types is more likely to be significant than for light cars since, in contrast to light vehicles, there are 17 levels and a rate class difference that is roughly 4.3 times greater.

There are several factors to consider while selecting an insurance provider. Let’s examine the things you should be aware of, considering the unique qualities of every business.

We advise choosing the direct option if you wish to maintain cheap insurance prices. “Limiting the driver” or “changing the vehicle insurance type” will lower your direct insurance prices even further, but the coverage will be less, so make sure you weigh your options carefully.

-Road service and accident response are essentially the same.

More specific details about the features of both plans are available in the table that follows.

It is challenging to determine which plan is superior because each offers unique features, but we advise comparing the two to identify which one best fits your needs. 

We advise using an agency type if you would prefer to speak with the same individual in person and are not particularly familiar with auto insurance.

It’s comforting to know that they will also show you how to get ready paperwork for accidents and renewals.

On the other hand, we advise the direct type (mail order type) if you wish to minimize expenses without sacrificing sufficient coverage. You may be confident that they will address any questions you may have over the phone, even on holidays or late at night. It is also appropriate for those who wish to alter the coverage of their own auto insurance. 

The premiums for direct insurance are allegedly less than those for agency insurance. You might be able to lower your premiums by changing your coverage if you don’t think the rates are that low.

Although it is hard to alter your age or grade, which have a big impact on your insurance rates, you might be able to lower them by looking at other factors. To have your premiums lowered right away, consider the following strategies.

Although we have provided some advice on how to lower insurance premiums thus far, other insurance providers provide even more extensive savings programs.

For instance, you might be able to get more affordable auto insurance from an insurance provider with finer distance classifications if you only drive a little distance each year.

Additionally, you might be able to receive lower premiums—that is, insurance for drivers over 35—from an insurance provider that offers “coverage for those 35 and over” as opposed to one that only offers “coverage for those 26 and over.”

We will outline the factors to take into account when selecting an insurance provider from the standpoint of accident response, with a particular emphasis on whether agency-type and direct-type insurance providers differ in their approaches to accidents.

Some people are concerned that direct insurance companies won’t react appropriately in the case of an accident because you don’t meet the person in control there. Some may believe that direct insurance companies are less likely to attend accident scenes, that they lack the expertise to resolve disputes out of court, which puts them at a disadvantage in talks, or that larger insurance companies have the upper hand. We’ll examine how insurance providers

Accident response personnel won’t arrive at the scene of the accident since the police will verify the facts and initiate compensation negotiations once they have a thorough understanding of the case.

As an exception, certain agency sales representatives would arrive at the accident scene right away to help ease the tension of the people who were hurt. The general guideline in the event of an accident is that you should handle everything at the scene of the accident yourself, regardless of whether you are the victim or the offender. The steps you should take in the event of an accident and the time it will take for your auto insurance to reimburse you are outlined below.