Iceland Car Rental Insurances
Driving in Iceland is an unforgettable experience, but Iceland’s weather, gravel roads, wind, sand, and volcanic terrain make proper insurance absolutely essential.
At Icerental4x4, we believe insurance should be simple, transparent, and fair. This page explains every coverage option in detail, what is included, what is not, and which coverage is best for your trip.
If you want to travel stress-free, avoid unexpected costs, and protect yourself against Iceland’s unique risks, this guide is for you.
Why Iceland Car Rental Insurance Matters
Iceland is not a typical driving destination:
- Gravel roads are common, even outside the Highlands
- Strong winds can damage doors, paint, and windows
- Sand and ash storms can cause severe paint and glass damage
- F-roads and remote areas increase recovery and towing costs
Without proper coverage, a single incident can cost hundreds or even thousands of euros.
That’s why choosing the right insurance package is just as important as choosing the right car.
Insurance Included in Every Rental
All Icerental4x4 vehicles automatically include the following mandatory and basic protections:
Third Party Liability (TPL)
Required by law. Covers damage or injury caused to third parties.
Collision Damage Waiver (CDW)
Covers damage to the bodywork of the vehicle.
- Standard vehicles:
Excess (self-risk): 350,000 ISK - Motorhomes:
Excess (self-risk): 480,000 ISK
This means you are responsible for damages up to the excess amount.
Theft Protection (TP)
Covers the vehicle in case of theft.
- Excess: 0 ISK
- Does not cover personal belongings inside the vehicle
- Void in cases of gross negligence
Our Protection Packages made simple
| Standard Cars, 4x4 and Roof Tents | Basic | Premium | Platinum |
| Insurance deductible | 350.000 ISK | 110.000 ISK | 0 ISK |
| Collision Damage Waiver | Yes | Yes | Yes |
| Theft Protection | Yes | Yes | Yes |
| No Security Deposit | No | Yes | Yes |
| Super Collision Damage Waiver | No | Yes | Yes |
| Gravel Protection | No | Yes | Yes |
| Sand and Ash Protection | No | Yes | Yes |
| Tire Protection | No | No | Yes |
| Damages Caused by Animals | No | No | Yes |
| Debit Card | No | No | Yes |
| Motorhome | Basic | Premium | Platinum |
| Insurance deductible | 480.000 ISK | 150.000 ISK | 0 ISK |
| Collision Damage Waiver | Yes | Yes | Yes |
| Theft Protection | Yes | Yes | Yes |
| No Security Deposit | No | Yes | Yes |
| Super Collision Damage Waiver | No | Yes | Yes |
| Gravel Protection | No | Yes | Yes |
| Sand and Ash Protection | No | Yes | Yes |
| Tire Protection | No | No | Yes |
| Damages Caused by Animals | No | No | Yes |
| Debit Card | No | No | Yes |
Roadside Assistance Waiver
Our Roadside Assistance Waiver helps keep unexpected situations stress-free by significantly reducing the cost of roadside help when you need it most.
The waiver covers:
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Towing assistance
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Help with flat or damaged tyres
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Rescue from snow or Icelandic F-roads
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Lost keys? Key replacement assistance at no extra cost
With the Roadside Assistance Waiver, you can drive with confidence - knowing help is always within reach.
Explaining Iceland Insurances
We understand it can be confusing to compare different car rental insurance options in Iceland. You will find unique Iceland insurances such as Sand and Ash Protection. Below is a detailed explanation.
ABOUT INSURANCES
Super Collision Damage Waiver (SCDW):
CDW insurance is included in the price; the driver liability is in excess of 350.000 ISK For all cars. The Renter can purchase SCDW insurance, and by doing so, he lowers the self-risk of CDW down to 150.000 ISK. If there is any dent/scratch on the vehicle, the maximum amount to pay is 150.000 ISK, depending on the vehicle model. If it is under the excess, we only charge for the amount to repair the vehicle.
Excess with Premium Protection is 110.000 ISK / 150.000 ISK (Motorhomes)
Excess with Platinum Protection is 0.
Gravel Protection (GP):
In Iceland, many gravel roads may lead to small rocks that can go loose while driving and hit the vehicle. This loose gravel can lead to chips on the painting at the front of the car, windscreen, headlights, or fog lights. We recommend having Gravel Protection while renting a car in Iceland.
This protection includes damage to the front windscreen, headlights, and the front of the car when gravel or rocks get thrown on the vehicle by another vehicle, with no self-risk.
With Premium Protection, the excess is 25.000 ISK / 50.000 ISK (Motorhomes)
With Platinum Protection, the excess is 0.
Sand and Ash Protection (SAAP):
Sand and Ash Protection can be essential while driving in Iceland. The weather conditions can be extreme as the wind can be so strong it can reach 30-40 mph or 45-60 km/h. With these strong winds, loose gravel can be blown around, causing damage to the vehicle's paint. It is common on Iceland's south coast and can occur year-round.
Regular insurance does not cover damage from ash or sandstorms. Damage to paint, glass, and plastic parts can be costly for the lessee, up to 10.000 EUR.
With Premium Protection, the excess is 90.000 ISK.
With Platinum Protection, the excess is 0.
Theft Protection (TP):
Iceland is known for being one of the most peaceful countries globally. However, dishonest people will always exist, so if your car were to be stolen, you would never pay more than 100.000 ISK. for the loss of your vehicle. Please note that this does not ensure missing items or other things inside the car.
This protection covers the lessee from liability should the vehicle be stolen.
Self Risk for Theft Protection is 0
In case of gross negligence on behalf of the lessee that leads to theft of the vehicle, the TP is void.
Tire Protection
The tire insurance covers the tires and the wheels. In the case of a flat tire, the renter is responsible for changing the tire and putting on a spare wheel. In case of the renter not being able to do so the renter is responsible for transporting the vehicle to the nearest tire shop to have the tire replaced or fixed.
The risk for Tire Protection is 0.
What is not covered in our insurances
Driving while intoxicated
If a person is driving under the influence, all insurance policies are immediately voided.
Damages to the chassis of the vehicle and the undercarriage of the vehicle
Damage caused by driving on rough roads, for example, to the transmission, the driveshaft, other parts in or on the chassis of the vehicle, damage to the chassis of the vehicle caused by the vehicle bumping against uneven roads, for example, road shoulders caused by motor graders, rocks lodged in gravel roads or by the edges of roads. The same applies to damage caused by loose rocks hitting the bottom of the vehicle while being driven.
Water damage to the vehicle
Water damage is not covered by any insurance. This does mean that crossing rivers is always the responsibility of the driver; water damage can cost up to and over 10.000 EUR.
Damages to the door structure caused by wind gusts
In Iceland we can have very strong winds, this is more during the winter period while it can also happen over the summertime. If the door is opened in high winds which causes the door structure, including the frame and hinges to be damaged. We strongly recommend to park into the wind at all times, hold the doors firmly while opening and assisting toddlers to avoid this to happen.
Damages to the motorhomes when driving with windspeed exceeds 15 m/sec (54 km/h – 33 mph)
If a motorhome has damage due to wind or windgusts being over 15 m/sec (54 km/h – 33 mph) will result in the driver to be fully responsible for the damages. We recommend looking at the weather forecast each morning to ensure wind and weather conditions.
Towing and recovery costs
Standard insurance does not cover towing or recovery costs, including incidents where the vehicle becomes stuck in snow, mud, or sand. These expenses are the renter’s responsibility.
General conditions and further exclusions
For any situations not listed here, please consult the general terms and conditions for complete insurance information.
Frequently Asked Questions
Do I really need extra insurance when renting a car in Iceland?
Yes. Iceland’s driving conditions are very different from most countries. Gravel roads, strong winds, sand and ash storms, and remote areas make damage more likely than in typical city driving. While basic insurance is included, it comes with high excess amounts. Additional coverage—especially Platinum Protection—greatly reduces or completely removes your financial risk.
What is the difference between Premium and Platinum insurance?
Premium insurance reduces your excess but does not eliminate it. You may still need to pay out of pocket if damage occurs.
Platinum insurance offers zero excess, meaning you don’t pay anything for covered damage. It also includes protection for tires, animal damage, and allows rentals with no security deposit, making it the most complete and stress-free option.
Is Sand and Ash Protection really necessary?
Yes, especially if you plan to drive the South Coast or travel outside Reykjavík. Sand and ash damage is not covered by standard insurance, and repair costs can reach several thousand euros. Iceland experiences sudden windstorms that can cause serious damage in minutes. Platinum coverage includes Sand and Ash Protection with zero excess.
Are gravel roads covered by insurance in Iceland?
Gravel roads are common in Iceland, and damage from loose stones is one of the most frequent claims. Gravel Protection covers damage to the windshield, headlights, and front of the vehicle caused by flying stones. This is included in both Premium and Platinum packages, but only Platinum has zero excess.
Can I rely on my credit card insurance instead?
You can, but it’s important to understand how it works. If damage occurs, you must pay Icerental4x4 first, then apply for reimbursement from your credit card provider. This process can take weeks or months and may not cover all types of damage common in Iceland. Many travelers choose Platinum insurance to avoid upfront costs and paperwork entirely.
What insurance option do you recommend?
For most travelers, Platinum Coverage is the best and safest choice. It eliminates excess, covers Iceland-specific risks, requires no security deposit, and lets you focus on enjoying your trip instead of worrying about potential damage costs.
All rentals are subject to the entire rental agreement terms and conditions at the time of rental.