Best Insurance Option for Your Rental in Iceland
Updated: Dec 18, 2020
The majority of tourists planning their trip to Iceland decide to rent a camper for their trip. As you already know, that is the most convenient way of travelling around the island. The public buses are not that frequent here and do not go to most places. And you can not count on trains because we do not have them. For those who wish to see as much as possible and not only the most common attractions near Reykjavik, renting an RV or a car is a saviour.
Check out our tips on RV rental if you do not know where to begin. Hopefully our advice will help you out and clear up the subject a bit.
When deciding upon renting a car or an RV in Iceland, there is one important thing that many forget about or simply omit. I am talking about choosing the best insurance option for your camper rental. In this post we will explain different options you have for the extra insurance in Iceland, our personal recommendations, and some tips and advice.
Insurance in Iceland - Scam or something necessary?
This small country at the very edge of Europe has a lot to offer. The moon-like landscape, pristine nature, numerous geysers and waterfalls, and of course, the Northern Lights. Such attractions are worth seeing and I bet that you would like to see them all. In order to do so, you need to plan your trip to Iceland carefully. This is also the case of choosing the right insurance for your rental RV. Why is it so important?
Iceland is a very beautiful country but very specific as well. Especially because driving is not like anywhere else in the world. The different types of roads may be challenging even for an experienced driver. Remember F-roads, gravel roads which are bumpy, full of loose stones and very narrow. They are easy to damage for an inattentive driver. Make sure you have a look at our tips regarding driving on gravel roads.
We are sure that you would like to travel hassle-free and without worrying every time you hear a weird sound coming out from the car. Tourists used to think that the additional insurance was just a scam and an attempt to get more money out of your pocket. That it was something you did not need but you were always forced to purchase. This is definitely not the case in Iceland. You should be more worried when no one offers you extra insurance rather than when you are recommended a full package. It is extremely important that you are aware of that, and realize that you should not be saving money on the insurance.
Third Party Liability insurance in Iceland
As per the law, all car rental companies in Iceland need to include the Third Party Liability coverage. This is basic insurance coverage that guarantees the aggrieved party compensation for the damage suffered by the driver in the event of an accident. To explain it more specifically: the third party is anyone but you. It can be other drivers, pedestrians and passengers of the car you are renting. Liability means legally responsible for the cost of the damage or any injuries caused by the accident.
That means that in case of a damage caused by you, instead of paying all the costs from your own pocket, it comes out of the Third Party Liability insurance. It will be your rental company in Iceland who takes care of that in case of an accident. Note that this car insurance does not cover the damages to the rented car. Let’s show an example:
If you happen to hit the fence of property with your rental car, the Third Party Liability covers the costs of damage of the fence, not your car. All clear now, so we can move on to the optional insurance options offered in Iceland.
Insurance options and car hire excess in Iceland
Let’s have a look now at different insurance options and its hire excess in Iceland. It might give you a headache, especially for those who are planning to rent an RV in Iceland for the first time. We will try to put it as simply as possible.
Most of the car and RV rentals in Iceland offer basic insurance already included in the price of the vehicle you rent. It is called Collision Damage Waiver - CDW. You probably already seen this abbreviation many times on the rental sites and wondered what that was, right? In case of an accident caused by you, there is a certain amount of money which you are obliged to cover. It is called a self- risk fee or deductible. In most cases the standard amount is 350,000 ISK.
Super Collision Damage Waiver - SCDW is basically the same insurance and works in the same way. However, it gives you the possibility to lower your self-risk fee in case of an accident. You would think, why would I need to add insurance I already have? Well, the difference is huge. SCDW insurance in Iceland can lower the self-risk fee from 350,000 ISK to 175,000 ISK or even 50,000 ISK. See the difference now? The amount of the self-risk fee depends on the model of the vehicle you decide to go for.
Remember to always check the terms and conditions of your rental company to avoid any misunderstandings. If something seems unclear, just pop them in an email, it is better to have everything clear in this case.
Gravel Protection - GP is responsible for gravel damages made to the windshield, headlights and body of the rented camper or a car. It is highly recommended, especially when you are planning to go on gravel or F-roads. As already mentioned above, those roads are full of loose stones that hit the body of the car and cause chips or dents. In that case you will only pay the sum which was determined in advance in the terms and conditions of the rental, not more than that.
Sand And Ash Protection – SAAP is the insurance against the damages caused by sand and volcanic ash. Strong winds and sandstorms are very common in Iceland. As you know it is a small but volcanic island. In this case, unlike with gravel incidents, the risk of a damage is relatively low. That does not mean though that it is not necessary. Imagine that the car is damaged due to the sand storms or volcanic ash. There is a high risk that you will be forced to cover the total cost of damage. It of course depends as well on the scale of damages. Such damages though are not covered by your basic CDW issuance but only by SAAP.
Theft Protection - TP is simple. It is insurance against the theft. In most of the cases there is no self-risk fee to pay from your side. As you probably heard, Iceland is a relatively safe country and the crime level is low. Let’s hope than you will not need to make use of this insurance.
Full Package - Most of the RV rental companies in Iceland offer a package which includes all the optional types of insurance. It is usually cheaper to buy it in one bundle than adding them one by one. We need to clear something up in this case. The full package does not mean that there is no self-risk fee to pay in case of a damage unless the terms and conditions state differently. The full package means that you have all of the different types of insurance included but each one is responsible for a different kind of damage and has a different self-risk fee.
There are companies in Iceland who offer insurance with zero risk fee as well. That does mean that in case of a damage which comes under the insurance you bought, you do not pay the costs of the damage.
What car insurance do I need in Iceland?
We personally recommend to go for at least SCDW and GP insurance. Those are the most common damages in Iceland. Even a small issue with the car can cause you spend a fortune on repair. Remember that Iceland is a volcanic island, full of stones, dust, sand and gravel roads. It is really easy to damage your rental car and an additional insurance can save your budget.
Even if you are travelling around Iceland using the main road (the Ring Road), it’s not completely safe and does not guarantee you can avoid scratches or mud splatters. Make sure you ask for the list of all the damages which are not covered by your insurance. Upon pickup, ask the agent to carefully explain how your insurance works and what exactly is covered so there is no misunderstanding.
Iceland car rental insurance tips
When you decide on your rental company in Iceland, make sure you carefully read their terms and conditions regarding the insurance. Also be sure you know exactly what damages comes included in your rental.
In Iceland, there are some cases where some damages and parts of the car are not covered by any insurance. This is true especially for wheels, the underside of the car, and glass insurance. Many customers decide to go for additional travel insurance with their home insurance company to go on their trip with as much coverage as possible. If you have any doubts, do not be afraid to ask. It’s better to know every little detail as it deals with high sums of money.
Some of the rental companies, require a valid credit card imprint from you. Make sure that you have one on you when signing the rental agreement. If you have a credit card, check as well if perhaps you have some insurance included for rental cars. In that case you will need to ask your rental company if there is a possibility to decline the basic CDW insurance that is already a part of your rental.
Also check how it works with roadside assistance. In most of the cases, 24h road assistance is included and there are mechanics on site ready and willing to help you. It is good to have this number handy in case anything happens.