Photo/Illutration A home in Nanao, Ishikawa Prefecture, damaged by the New Year's Day earthquake (Chinami Tajika)

Only 64.7 percent of households in Ishikawa Prefecture had earthquake insurance before the New Year’s Day earthquake, or less than the national average.

That may reflect a general lack of understanding about the earthquake-insurance system and what such coverage entails.

Such insurance cannot be purchased alone, for example, but must be acquired as a supplementary item from nonlife insurance companies selling fire insurance.

Fire insurance will also not cover damage triggered by earthquakes, volcanic eruptions or tsunami, even if such natural disasters should lead to a fire.

Earthquake insurance can provide the support policyholders need to rebuild their homes.

The insurance makes maximum payouts of 50 million yen ($333,000) for buildings and 10 million yen for furniture.

There are four levels of insurance payments depending on the degree of damage.

If a home is damaged by a natural disaster, the central government provides a support payment for rebuilding, but the maximum amount is only 3 million yen.

While the government has decided to double that amount for the households of senior citizens affected by the New Year’s Day earthquake in Ishikawa Prefecture, the amount is still far from adequate to cover the entire cost of rebuilding.

The General Insurance Association of Japan conducted a survey in August 2023 in which 49.8 percent of respondents said they did not know that fires caused by an earthquake were not covered by only fire insurance.

About 70 percent of those who did not purchase earthquake insurance were also not aware it could be used to cover expenses for moving and daily necessities.

Nonlife insurance companies and the central government jointly operate the earthquake insurance program in such a way to prevent those companies from profiting from the program.

Insurance premiums are the same regardless of which nonlife insurance company is used.

The premiums are determined by the risk of earthquake damage depending on the prefecture as well as the structure of the building being insured.

The premium for 10 million yen in earthquake insurance for a building ranges from 7,300 yen to 41,100 yen.

For example, the owner of a wooden home in Tokyo would have to pay the maximum amount while a steel-frame structure in Kyoto would be covered by the minimum premium.

The 2011 Great East Japan Earthquake and the 2016 Kumamoto Earthquakes led to more households deciding to purchase earthquake insurance.

The national average in fiscal 2022 was 69.4 percent of households with earthquake insurance, according to the General Insurance Rating Organization of Japan.

But there were vast regional differences.

Miyagi Prefecture, which was heavily damaged in the 2011 earthquake, has the highest percentage of 89.3 percent, while Kochi in Shikoku has 87.5-percent coverage and Kumamoto has 85.9-percent coverage.

In contrast, only 61.9 percent of households in Tokyo are covered. Other prefectures with low percentages are Nagasaki at 54.8 percent and Okinawa at 57.6 percent.

After the 2011 and 2016 earthquakes, the percentages increased by about 10 points in the three Tohoku prefectures of Iwate, Miyagi and Fukushima, as well as Kumamoto.

A nonlife insurance company source said residents of other prefectures might find it more difficult to decide to buy such insurance when comparing the possibility of earthquakes hitting there with a cost-benefit analysis.

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