By Law, all drivers of automobiles and motorcycles are obligated to buy Automobile Third Party Liability Insurance (compulsory insurance)/ Jidosha Songai Baisho Sekinin Hoken, also known as “Jibaiseki Hoken”.
Jibaiseki Hoken (compulsory insurance) was created to ensure victims of vehicle accidents are given basic compensation for the damage caused by the driver at fault. Based on the Automobile Liability Security Law, all drivers of automobiles and motorbikes or any motor driven vehicle, are required to buy Jibaiseki Hoken, and it is against the law to drive without it.
When you have a traffic accident causing injury or death without Jibaiseki Hoken, you are responsible for paying the entire amount of the compensation which could have been covered by the Jibaiseki Hoken ( ¥1,200,000 ).
Jibaiseki Hoken does not cover damage to physical objects, such as bicycles, fences, watches, etc so if the vehicle operators does not have voluntary insurance ( Nini-hoken ), they are usually personally liable for those cost.
Even if you have a voluntary insurance ( Nini-hoken ), it only covers the maximum compensation for damage offered by the insurance minus what could have been paid by the Jibaiseki Hoken ( ¥1,200,000 ).
If you drive an automobile or motorbike without Jibaiseki Hoken, you are subject to imprisonment up to one year or a fine of up to JPY500,000. Also, if you fail to carry the Jibaiseki Hoken policy, you are subject to a fine of up to JPY150,000. It will also deduct 6.0 points from your driver’s license, resulting in an immediate suspension.
To pass a Shaken (vehicle inspection), you have to have a valid Jibaiseki Hoken that covers the period until the next Shaken, most people will buy 1 month extra, for safety. Motorbikes less than 250cc don’t have Shaken, the owner should be careful to renew their Jibaiseki Hoken upon expiration.