Rental car cover in Iceland: what you need and what's worth it

What every rental already includes

Every price on this website includes BASIC + SCDW:

• The insurance Icelandic law requires: third-party liability insurance, up to the amount set by law, and personal accident insurance for the driver and owner.
• CDW, the Collision Damage Waiver (part of BASIC): limits what you pay for collision damage to the car to €3,000 per incident.
• SCDW (Super CDW): lowers that excess to €1,000; €1,000 is held on your card at pickup.
• The Theft Waiver: you pay €0 if the car is stolen while locked with the windows closed, you return the keys and you report the theft without delay. Not covered: belongings, parts, or a theft made possible by keys left in the car.
• Breakdowns you didn't cause: help is free, including a tow and a replacement car as soon as reasonably possible; call +354 779 9499 first, day or night.

Travelers often call all of this “insurance”. Only the two parts the law requires are insurance; CDW, SCDW, the Theft Waiver and the extras below are our own waivers under the rental agreement, which limit what you owe us if the car is damaged or stolen (rental terms, clauses 33–38).

Your excess and card hold, option by option

The excess is the most you pay per incident for damage your cover includes. The card hold reserves that amount on your card at pickup: a hold, not a charge or a deposit, released after the return as fast as your card issuer allows. With every option, MAX included, a €150 damage administration fee is added each time damage is charged.

A debit card works for the hold too (Renting with a debit card).

Gravel and windshields: Tire and Windshield Protection (TWP)

Route 1, the Ring Road, has been fully paved since 2019 (Vegagerðin), but gravel roads are common off the most popular roads. The speed limit on gravel is 80 km/h, and stones kicked up on it can damage a windshield, especially when two cars meet at speed (Vegagerðin); slow down before the asphalt ends (Safetravel). Paved roads can throw stones too: Vegagerðin's “Steinkast” (flying stones) sign marks new or repaired surface with loose stones (Vegagerðin).

Tire and Windshield Protection (TWP), €20 a day, gives you the cover of PLUS: at no excess, a new tire when only the tire is damaged, or a new front windshield when gravel from another vehicle damages it; not rims, fitting or labor (clause 38). Without TWP or MAX, that damage is yours to pay at the actual cost, up to our price list: €550–850 per windshield, €115–280 per tire, plus the damage administration fee.

• Worth it: gravel routes such as the Westfjords, the east and side roads to sights, F-roads in an approved car, and long driving days. Seven days cost €140.
• Less needed: paved main roads such as the Golden Circle and the South Coast; the risk is lower there, but not zero.

Sand and ash: Sand and Ash Protection (SAP)

The Ring Road crosses glacial rivers and volcanic sands (Vegagerðin), and strong wind can blast sand and ash against a car. The Icelandic Met Office issues yellow, orange and red warnings; those for the next one to two days cover smaller forecast areas (vedur.is). Check them before every drive (vedur.is).

Sand and Ash Protection (SAP), €15 a day and included in MAX, covers damage from sandstorms, erosion and ash at no excess, except in an area under an orange or red wind warning from the Icelandic Met Office (clause 38). Without SAP or MAX, that damage is charged in full, and after the return inspection we may hold up to €10,000 on your card for it (clause 7).

• Worth it: the South Coast and the east when strong wind is forecast, in any season.
• Less needed: calm weather, and routes away from those areas.
• Under an orange or red wind warning, SAP doesn't apply in that area: wait it out if you can, and in strong wind park facing into the wind and hold the door with both hands (Wind & car doors).

What no cover option pays for

Every option, MAX included, has the same exclusions (rental terms, clause 36). In short, no option pays for damage:

• from rivers, fords or water getting into the car: crossings are entirely at your own risk, even on a permitted F-road (clause 17);
• to the undercarriage, drivetrain, engine or chassis from rough roads or stones;
• from driving where it isn't allowed: off-road (illegal in Iceland), closed roads, glaciers, beaches, or F-roads in a car your booking doesn't confirm as F-road approved;
• only to wheels, tires, suspension, batteries, the windshield, roof or radios, except what TWP covers and, with MAX, wheels and tires;
• from windblown sand, gravel, ash, pumice or earth, except the sand and ash damage SAP or MAX covers;
• to the interior, or involving animals;
• caused on purpose or by gross negligence, by a driver under the influence or not named on the rental agreement, or in racing;
• on ferries, to the clutch or gearbox, or from the wrong fuel.

Such damage is charged in full; for undercarriage or water damage we may hold up to €10,000 on your card after the return inspection (clause 7). Safetravel warns that river-crossing damage can cost thousands (Safetravel), and off-road driving is prohibited by law (Ísland.is).

Counting on your credit card or travel insurance

Some credit cards and travel insurance policies cover rental cars, on differing terms. We can't tell you whether yours applies, so ask your card issuer or insurer before you travel:

• Does it cover rental cars in Iceland, and your type of car (an SUV, a 4×4 or a 9-seat van)?
• Which damage does it exclude: windshields, tires, gravel, sand and ash, the undercarriage, F-roads?
• Must you decline the rental company's CDW, and does it pay directly or reimburse you later?
• Which documents will it need if you claim?

With us you may decline CDW at booking or, after our decline notice, at the desk. The price stays the same, your liability becomes unlimited, up to the value of the car and extras, and €3,000 is held on your card; the Theft Waiver and the insurance the law requires still apply. Our rental terms advise declining only if your own card or travel insurance covers rental cars in Iceland (clause 35). Keeping the included cover costs nothing extra.

Your trip: what we suggest

A rough guide, not a rule: any option works for any trip, and your quote shows every price before you book.

Every option in detail, with worked examples: Cover & extras.

Questions about rental car cover in Iceland