"What are rental car liability insurance and NOC? Should I get them?" "I don't really understand the difference between liability insurance and NOC in the first place..."This is a question many people ask themselves when renting a car.
NOC (Non-Operation Charge) ...A program that waives business compensation (20,000–50,000 yen) following an accident
Although these two may seem similar, they “cover different things,” so it’s best to have both types of coverage."Deductible Coverage = Repair Costs," "NOC = Business Interruption Coverage" It's easier to understand if you think of it that way.
Now, I’ll explain in as much detail as possible how these two types of coverage work, how they differ, and whether you should sign up for them.
What exactly is a “disclaimer” anyway?
Car Rental"Disclaimer"That is,A program that waives the costs the driver would otherwise be responsible for in the event of an accident involving a rental car. This system is also known as “liability waiver” or the “liability waiver system.”
Rental cars generally come with property damage coverage (for other people’s cars or buildings) and vehicle damage coverage (for repairs to the rental car), but,If you are involved in an accident, you will have to pay a portion of the repair costs out of pocket.That is the norm.
Benefits of the Liability Waiver Program
Points to Note Regarding the Liability Waiver Program
There are limitations on coverage!
Even if you have liability insurance, you will not be covered in cases of legal violations (such as drunk driving or speeding) or if the police cannot issue an accident report.
Even if you purchase collision damage waiver coverage, a NOC (non-operation charge) will still apply separately.
The liability waiver merely “reduces the deductible for repair costs to zero”; you must pay separately for the NOC, which compensates for the rental car company’s loss of business.
Liability coverage is "optional," but many rental car companies recommend it.
You can enroll in this coverage by paying an additional fee when renting a car (about 1,500 yen per day). Recently, there has been an increase in plans that include excess coverage.
Specific Examples of the Liability Waiver Program
Let’s consider a scenario where you are not enrolled in collision damage waiver coverage (and are only paying the rental car fee without coverage) and you hit a wall in a parking lot while driving the rental car.
Breakdown of Repair Costs
| Cost Items | Repair Costs | Deductible (Out-of-Pocket Expense) |
|---|---|---|
| Repair Costs for a Rented Car (Vehicle Coverage) | 300,000 yen | 50,000 yen |
| Repair costs for the other party's property (property damage coverage) | 500,000 yen | 50,000 yen |
Even if the total repair costs amount to 800,000 yen, you won’t have to pay the full 800,000 yen because insurance covers it. However, you will have to pay “50,000 yen + 50,000 yen = 100,000 yen” as your out-of-pocket expense (deductible).
If you have liability insurance
If you have excess coverage, this out-of-pocket expense (100,000 yen) will be waived. Even if you happen to be involved in an accident, thanks to the excess coverage, you won’t have to pay any out-of-pocket repair costs.
What is a NOC (Non-Operation Charge)?
NOC refers to the fee charged by a rental car company as compensation for lost revenue during the period when a rental car requires repairs due to an accident or breakdown.
NOC Amount
NOC fees vary by rental car company, but generally, the rates are set as follows.
| Vehicle Condition | NOC (Non-Operation Charge) Amount |
|---|---|
| The rental car is in good working order (can be returned) | 20,000 yen |
| The rental car cannot be driven (must be towed) | 50,000 yen |
Why is there a difference in the NOC amount?
"Why does a car that can drive on its own cost 20,000 yen, while one that can't costs 50,000 yen?"
This is because the “extent of the loss of revenue” differs while the rental car is being repaired.
The longer the repairs take, the greater the loss to the rental car company, so the NOC amount also increases.
What happens if I enroll in NOC coverage?
If you sign up for NOC Coverage (NOC Wide Coverage), your NOC payment will be waived. Please note that even if you purchase liability waiver coverage, the NOC is a separate charge. In other words, when renting a car, it’s best to sign up for both “liability waiver coverage” and “NOC coverage.”
"Liability Waiver + NOC Coverage" Is the Best Option
Both the liability waiver and the NOC coverage are optional. Since you have a choice, you don’t have to sign up for them if you don’t want to. However, I’ve been living in Okinawa for a while now, and I’ve seen several car accidents involving rental cars. I’ve seen both single-vehicle accidents and accidents involving property damage.
It’s not just a matter of thinking, “As long as I drive safely, I’ll be fine.” Since other drivers are involved too, accidents can still happen no matter how carefully you drive. Ever since I witnessed an accident involving a rental car, I’ve made it a point to always add “Liability Waiver + NOC Coverage” whenever I rent a car. I’ve never caused or been involved in an accident, but just having that coverage gives me a whole different sense of peace of mind!
