Report No. 85
Compulsory liability insurance in Japan.- No one is to operate a motor vehicle unless it is covered by insurance as required by Article 5 of the law. When a contract or liability insurance has been concluded, the insurance company issues a certificate to the insured; the document must be kept in the vehicle during operation and must be presented to the proper administrative officers upon request and when any interest in the vehicle is to be transferred. An insurance company may not refuse to write a contract of liability insurance. In order to make these provisions effective, violation of any of them is punishable by fine or imprisonment; for example, operating an uninsured vehicle may be punished by a fine of not more than 30,000 yen or imprisonment for not more than three months.
The law does not provide who shall procure the policy of liability insurance; in practice, the holder generally takes it out. Under the liability-insurance system, the insurer must indemnify the holder for any liability he has under Article 3, up to certain limits. The amounts of insurance payments are prescribed by Article 2 of the Enforcement order, implementing Article 13 of the law, as follows: for death, 5,00,000 yen; for serious injury, 1,00,000 yen; for slight injury, 30,000 yen. These are the maximum benefits payable under compulsory insurance; when actual damages are less than those amounts, payments equal to the actual damages are to be made.
The provisions on compulsory insurance do not apply to motor vehicles operated by the state, public corporations, prefectural governments, and the five major Japanese cities. These holders presumably have the means to pay damages and are willing to do so. For holders of large fleets of vehicles, the law provides a system of self-insurance instead of liability insurance. Such possessors must obtain the approval of the Minister of Transportation; the standards for the grant of approval are ownership of more than two hundred vehicles (a bus being treated as two vehicles), the ability to pay damages, and the absence of danger of frequent accidents. Regulations provide that the self-insurer must maintain a reserve fund and must manage the assets thereof in order to meet whatever motor-vehicle liability it might incur.