Three standards for calculating compensation

Calculation of compensation

If you confirm no further payment arises any more, claim damages to the at-fault driver. If you got injured in a car accident, the best timing is when you end the treatment. If only your property is damaged in the accident, you can claim damages soon after the accident. When calculating the total cost for compensation, you can refer to three standards. If you are a car accident victim, use them to calculate the total cost of compensation. If you are an at-fault driver, use them to check if the amount of compensation the victim claim is adequate or not. In this article, we take a closer look at these standards. We explain what they are, when and how to use them.

Three standards for calculating compensation

There are three following standards for compensation in automobile accident cases:

  • CALI's standard
  • Voluntary insurance companies' standard
  • Attorney's standard

Those are for prompt and efficient settlement between victims and at-fault drivers. The victim refers to these standards when calculating the compensation or checking if the offered compensation from the at-fault party is adequate or not. The at-fault party also refers to it usually for the same purpose. The following you can see the main features of each standard.

CALI's standard

It is a standard GIROJ (General Insurance Rating Organization Japan) refers to when determining the amount of payout of CALI (Compulsory Automobile Liability Insurance). CALI has a limit for a payout like the following table:

A victim died  Maximum JPY30,000,000
A victim got injured and left with residual disability Maximum JPY40,000,000
A victim got injured  Maximum JPY1,200,000

Since CALI is legally compulsory insurance, most of the car accident victims in Japan can be compensated by CALI. However, its coverage is minimum. CALI's payout is not sufficient in most cases. So, over 70% of Japanese people additionally purchase voluntary insurance so that they can cover all the compensation that arose from the accident.

Voluntary insurance company's standard

Each insurance company has their own standard for payout. The amount of compensation for each cost item is depending on insurance companies, but generally, it is lower than the standard of attorneys below. In general, traffic accident victims are recommended to start a negotiation by using the attorney's standard which secures the highest amount of compensation. However, insurance companies, which is a negotiation partner, always use their own standard. So, one of the reasons why negotiation goes through difficulties is in the difference between voluntary insurance company's standard and attorney's standard.

Standard of attorneys (court)

It is a standard set by the official association of attorneys, the so-called Japan Federation of Bar Association. This is the highest standard of all. So, if you are a car accident victim, we recommend using this standard for the first calculation of the compensation before starting a settlement.

The standard of attorneys is legally based on past precedents. So, if you file a suit with your claim based on standard of attorneys, it might be possible to win. However, since filing a suit needs some additional costs like the cost of filing a suit and fee for attorneys, it might be sometimes reasonable to compromise with the insurance company's offer. If the difference between the insurance company's offer and your calculation is big, consult with professionals trying car accident cases in Japan. They will tell you what the most economically reasonable option is for you.

Which cost can you claim compensation?

The following is the table showing which cost the victim can claim compensation. This is based on the attorney's standard:

CASE 1: The victim is injured

Expenses for treatment

It includes medical expenses and a fee for hospitalization. In the case where the victim is admitted to have left with a residual disability, it also includes a fee for making a medical certificate for residual disability.
Nursing Fee

Nursing fee for hospitalization: If close relatives accompany the victim's hospitalization, JPY6,500 per day is for compensation.
If someone accompanies the victim go to hospitals, JPY3,300 per day is for compensation.

Miscellaneous expenses for hospitalization Miscellaneous expenses include the cost of buying various goods when hospitalized. JPY1,500 per day is for compensation.
Transportation fee to go to hospitals  -
Lost wage It is compensation for damages due to taking leave of absence from work. It is calculated based on a certificate of damages due to taking leave of absence from work.
Consolation money for pain and suffering It is calculated based on the term you go to hospitals.
Lost profit They are the compensation that you can claim if you're admitted to having left with residual disability.
Consolation money for residual disability

CASE 2: The victim was dead

Expenses for treatment These cost is covered samely as the case where the victim is injured. 
Nursing Fee
Miscellaneous expenses for hospitalization
Lost wage
Consolation money for pain and suffering
Funeral Expenses JPY1,500,000  (If it is lower than JPY1,500,000, the actual cost will be covered. )
Consolation money for death

It depends on who is dead.

Head of household: JPY28,000,000

His/her mother or partner: JPY24,000,000

Others: JPY20,000,000-JPY22,000,000

Lost profit The profit obtained if the victim was not dead

You can find more detailed cost items for compensation in the following article: