No one wants to think about all the bad things that can happen when renting your “adventure wagon” whilst on holiday. But if anything should happen, and you’re not prepared, your dream holiday can quickly turn into your worst nightmare. Just like certain rules of the road, Iceland car rental insurance might also not be the same as in your home country.
Worried about missing out or finding rental car insurance confusing? Here's what you need to know about car rental insurance in Iceland.
What Insurance Do I Need for an Iceland Car Rental?
There are various types of insurance available when renting a vehicle. The first thing you need to know is that, in Iceland, certain car rental insurance is mandatory. These are Third-Party Liability Insurance (TPL) and Collision Damage Waiver (CDW).
Because CDW Insurance and 3rd Party Rental Car Insurance are required by law when renting a car, these are often included in the costs of the rental. But then there are certain other insurance cover add-ons that come at an extra cost. In certain cases (depending on your planned routes, etc.) it will be wise to have them. Just ask your rental agency for assistance as they are locals and experts on the subject.
Below is a lowdown on the various Iceland car rental insurance plans and options and exactly what they’re supposed to cover you for:
Third-Party Rental Car Insurance
This, of course, is one of those mandatory insurance covers we spoke about earlier. Third-Party Rental Car Insurance will essentially pay for the damage to the other driver’s (the third party’s) vehicle. It will also cover any medical expenses the incident might have caused.
Collision Damage Waiver (CDW)
Yet another mandatory Iceland car rental insurance we already briefly touched on. CDW insurance covers any damage that your rental vehicle’s body may have had due to an incident. With this cover, there will always be a certain amount (called an excess) that you will need to pay out of pocket.
If the cost of the repairs is less than the excess amount, you will just need to pay the cost of the repairs (this is a good deal since it’s less than the excess, remember?). If the cost of the repairs is more than the excess amount, you will only be liable for the excess amount and the insurance company will pay the rest.
Although you are legally allowed to decline this cover in Iceland, know that the rental price won't vary. This insurance is prepaid by the company to comply with the Icelandic law.
Super Collision Damage Waiver (CDW)
This Iceland car rental insurance add-on shouldn’t be confused with some kind of super-charged Collision Damage Waiver. By getting this add-on, you’ll basically be lessening the excess amount. That means that the insurance company will drastically lower the costs of liability on your part in case anything should happen.
Whether you get this add-on is completely up to you and will need some honest risk assessment and budget math from yourself.
This type of personal insurance is generally associated with things such as a leaky roof or a burst pipe. But when it comes to driving in Iceland, it has to do with any potential water damage caused by storms or the crossing of rivers.
Often this insurance is also called Catastrophe Insurance, or it’s included in some of the other insurance packages offered. So, just double-check with your rental agency to see if they have it. This is definitely one we’d recommend if you’re planning on visiting during some of the wet and stormy seasons or are going adventure driving with a 4x4.
Sand and Ash Protection
Sand and Ash Protection is almost like a specialized extension of DCW. This will cover any damage to the vehicle’s body that’s specifically caused by sand or ash.
Similar to Sand and Ash Protection, this is yet another specialized extension of DCW. But, with the difference that this covers any damage to the vehicle’s body and windshield that is specifically caused by gravel.
This Iceland car rental insurance will cover if the tires need any repairs or replacing. Whether you opt for this add-on cover will rely heavily on the season as well as the routes you’re planning on driving.
As you already suspect, theft protection will cover you if your rental vehicle ever gets stolen. This is also an Iceland car rental insurance that depends on personal preference. Iceland is probably one of the safest places on earth, but there’s nowhere on this planet you can go that will completely safeguard you from crime.
Car theft might not be that common, but it does happen. And if Murphy’s law strikes, and you’re part of the 12% vehicle theft crime statistic of Iceland, without insurance. Well, then it’s going to be the most expensive vacation you’ve ever been on.
Why Should I Get Iceland Car Rental Insurance?
Certain Iceland car rental insurance is a legal requirement, so you won’t have much choice in the matter (but more on this later). The insurance options we’ll discuss are available worldwide as add-ons, but some may be essential for your visit to Iceland.
There are many reasons why Iceland might be a little more risky driving terrain than some other places:
- The Iceland weather is unpredictable. There’s a reason why the local saying says that “you can experience all four seasons in a day”. And if you’re ever caught off-guard, you don’t want to be caught uninsured.
- Certain Iceland seasons bring more risk than others. The winter months bring with them wind, snow, and ice, whilst other months are more prone to rain. These all affect the conditions on the road and have a higher risk of causing damage to a vehicle.
- There are many designated roads and routes all across the island, but in the more remote regions, such as certain Iceland mountain roads, these paths are often unmarked and not so easily distinguishable from the rest of the surroundings. Many visitors end up damaging their rental cars by taking the “road less traveled” completely by accident.
- Whilst many roads and routes are paved, there are some that not only consist of gravel but are so rough that they can only be accessed via 4x4. This includes the F-roads in Iceland. These routes can be uneven, extremely rocky, and often have various river crossings.
Iceland Car Rental Insurance Tips
For those who don’t consider themselves Iceland car rental insurance pros and don’t want to get caught in the fine print, here are a few helpful tips:
- Do not let anyone else drive a rental car that you have taken out as the driver. If anything should happen whilst you’re not the one behind the wheel, the insurance company can refuse to pay out.
- Insurance isn’t a get-out-of-jail-free card that allows you to be reckless. Carelessness and negligence on your part can result in the insurance company denying coverage. It will leave you to pay for all expenses related to the incident. Additionally, you may also face legal action.
- Because the term Collision Damage is so general, many assume that the insurance simply covers any damage to the car due to an accident. But the following are things that leave you to pay out of pocket if you don’t have any add-on insurance coverage:
- If it can be proved that you were intoxicated during the incident.
- Any damage to the wheels/tires.
- Damage caused by strong winds, such as damage to the door structure (hinges, frames, etc.)
- Any damage caused by an animal.
- Damage to the car’s chassis or undercarriage.
- Any water damage.
- Sand and Ash, as well as Gravel Protection, is a definite must if you are planning on driving a lot of gravel roads. Or if you visit the highlands or the south coast.
- The Icelandic winds are legendary (they can range between 45-60 km/h!) and if you add Iceland gravel roads with loose gravel, the sand storms of the highlands, and the sandy beaches of the coast into the mix, a new paintjob is just one hectic breeze away.
- Theft Protection does not include all theft, and this often leads to very rude awakenings after an incident. Theft protection only covers you against the actual theft of the vehicle itself and not any contents within the vehicle.
The importance of car insurance: Prevention is Better Than Cure
Iceland car rental insurance will not safeguard you from the mishaps of life. Yet, it can definitely soften the blow and protect you against the aftermath of some of these incidents. By using this article as a guideline, you’ll be able to navigate the various options and choose the ones that are the right fit for you.
And if you’re still a bit unsure, remember to have a chat with your rental agency when renting a car in Reykjavík. They’ll certainly point you in the right insurance direction.