When signing a rental agreement, tenants are often told, “Fire insurance is mandatory.”
At first, this may seem unnecessary—“Why would I need fire coverage just to rent a home?”—but in reality, fire insurance covers much more than just fire. It typically includes protection against water damage, lightning strikes, theft, and other unexpected incidents, making it a crucial safeguard in case of emergencies.

That said, coverage terms vary significantly depending on the insurance provider and plan, leading many tenants to ask: “How much coverage do I really need?” or “Is it truly mandatory?”

This article clarifies the requirements for fire insurance in rental housing and explains how to assess and choose the right coverage based on your specific needs.

Fire Insurance Is Not Legally Mandatory—But Practically Required

While there is no legal obligation to purchase fire insurance when renting a property in Japan, most lease agreements include a clause requiring the tenant to enroll in such coverage.

In practice, this means:

• • The lease cannot be finalized without proof of insurance

  • Tenants are often introduced to a specific insurance provider recommended by the landlord or property management company

Thus, while not mandated by law, fire insurance is effectively a contractual requirement in the vast majority of rental agreements.

Why Is Fire Insurance Required for Tenants?

There are two primary reasons:

✅ 1. To protect the tenant’s personal belongings (Household Contents Insurance)

→ Provides compensation in case of damage to personal property caused by fire, water leaks, lightning, or theft.

✅ 2. To cover damages caused to others (Tenant Liability and Personal Liability Coverage)

→ Covers compensation if, for example, a tenant accidentally starts a fire by leaving a pot on the stove or causes water damage to a lower-floor unit due to a leaking washing machine.

Breakdown of Typical Fire Insurance Coverage

Typical Premiums and Payment Methods for Fire Insurance

In most cases, the full two-year premium is paid upfront at the time of signing the lease, and the policy is either renewed or re-enrolled upon expiration. Submission of a certificate of fire insurance enrollment is typically required for the lease agreement to be finalized.

Is It Mandatory to Use the “Designated Insurance” Provider?

In short, as long as the insurance coverage meets the required conditions, tenants are generally free to choose a provider other than the one designated.

However:

• Property management companies often strongly recommend or encourage the use of their designated insurer.

• If applying independently through another insurance company, it is essential to ensure that coverage details and limits meet the lease requirements.

→ In many cases, prior approval from the property management company is required, so early consultation is recommended.

Key Points When Comparing Fire Insurance Plans

1. Are the Coverage Limits Sufficient?

→ Aim for at least ¥1,000,000 in household contents coverage and ¥10,000,000 in tenant liability coverage.

2. Does It Cover Natural Disasters (e.g., wind, flood damage)?

→ Confirm whether the policy goes beyond fire to include broader risks.

3. Are Additional Riders Included (e.g., legal expenses, disaster relief benefits)?

→ Many modern plans now offer coverage for common everyday issues.

4. Is the Premium Already Included in the Rent?

→ If the lease specifies that insurance is included (e.g., “Rent + ¥X includes fire insurance”), be cautious not to enroll in an overlapping policy.

Five Key Questions to Ask at the Time of Lease Signing

1. Is fire insurance mandatory for this lease?

2. Can I use an insurance provider of my choice, or must I use the designated one?

3. If I select my own policy, what coverage types and amounts are required?

4. Am I required to maintain fire insurance coverage through the end of the lease?

5. What is the procedure for renewing the insurance policy?

When and How to Use Your Fire Insurance Coverage

• The washing machine hose detached, causing water damage to the unit below → Covered under Personal Liability Insurance

• Accidental fire damaged the walls and flooring → Covered under Tenant Liability Insurance (compensation to the landlord)

• A typhoon shattered the window and damaged furniture → Covered under Household Contents Insurance

→ In the event of any incident, it is essential to promptly contact both the property management company and your insurance provider.

Fire insurance is less a legal obligation and more a prudent safeguard for one’s peace of mind.

While fire insurance is not legally mandated, it serves as a prudent safeguard against unexpected incidents that could otherwise result in financial losses amounting to hundreds of thousands—or even millions—of yen.

Some may perceive the upfront payment at the time of move-in as cumbersome or assume they are limited to a specific insurance provider. However, by carefully comparing options and selecting coverage tailored to one’s lifestyle, it is entirely possible to achieve a balance between cost efficiency and comprehensive protection.

For tenants, understanding the terms of the lease agreement and the scope of insurance coverage is essential. Taking ownership of one’s responsibilities and risks is the foundation of a secure and comfortable rental experience.