Preparation

Rental Car Insurance in Iceland

Camuflaje by Andrés Nieto Porras is licensed under CC BY 2.0

Update December 2017: Worldwide Insure, my favorite excess rental car insurance company, no longer offers excess car rental insurance in Iceland. I recommend them for coverage in other countries, but you’ll have to go with Roamright or someone else for Iceland. See all of the details below.

Car rental insurance is baffling, and it seems to be even more baffling in Iceland. CDW. Super CDW. Grand CDW? Premium CDW? Sand and Ash? Gravel?

Note that, while the information below is customized for Iceland, much of the information can apply to other countries as well. Especially the credit card insurance options.

Almost all rental car companies in Iceland include CDW

CDW stands for “Collision Damage Waiver.” So it’s not really insurance at all- it’s a liability waiver. The rental car company agrees to not charge you more than a certain amount of money for any damage to the car when you return it. How much can they still charge you? A lot. I took some of the more promising companies from our post about rental car companies, and compared their CDW limits:

cdw

All four companies include CDW coverage with the rental; there is no extra fee. Notes on each of the four:

  • Icerental 4X4 sets your liability limit at $2,800, the highest amount here; all values have been converted to dollars and rounded to the nearest $50.
  • Blue is not far behind at $2,700. But note that Blue also gives you Super CDW for free too, so this number isn’t very meaningful.
  • Saga has different limits for 2-wheel-drive cars ($1,750) vs. 4-wheel-drive ($2,500).
  • Geysir limits liability to $2,200, so they are the “cheapest” for damage for 4-wheel-drive cars.

But if you return the car with damage, I don’t think that the difference between $2,800 and $2,200 is going to be meaningful. Either way, you’re leaving Iceland with a bitter taste in your mouth.

You are more likely to have a problem with damage to your rental car in Iceland.

I don’t have anything more than anecdotal evidence. But there are dozens and dozens of stories online about minor damage turning into charges for hundreds or thousands of dollars. For just a few examples, see this post, entitled Are the horror stories about car rental in Iceland true?

In my opinion, very few of these cases are deliberate attempts to take advantage of tourists. (Let me know if you disagree!) A careful inspection for scratches or dents just seems to be much more likely in Iceland than it is in the United States. Make sure you take pictures, or a video, of the car when you receive it to make sure you aren’t charged for damage you didn’t cause.

Your credit card insurance probably will NOT cover damage

I am hoping someone can prove me wrong on this. But, it seems pretty clear: Visa and Mastercard will NOT cover damage unless you waive all rental car insurance. And, you can’t waive the basic CDW included with the rental. Therefore, no coverage from your credit card.

Visa says: “To activate coverage, complete the entire rental transaction with your eligible Visa card and decline the collision damage waiver (CDW) coverage if offered by the rental company.”

And MasterCard says something similar: “How to get coverage … Decline the Collision/Damage Waiver offered by the car rental company”

American Express SHOULD work. Their policy implies some wiggle room: “Coverage for theft of or damage to a Rental Auto is activated when the Cardmember declines the full Collision Damage Waiver or similar option (CDW), or pays for a partial collision damage waiver, offered by the Rental Company.” But note that there are some exclusions that could impact you: Cars must cost under $50,000 new, so they won’t cover a Toyota Land Cruiser or Range Rover. And, the terms say: “Compact sport/utility vehicles, including but not limited to Ford Explorer, Jeep Grand Cherokee, Nissan Pathfinder, Toyota Four Runner, Chevrolet Blazer and Isuzu Trooper and Rodeo are covered when driven on paved roads.” There are lots of gravel roads in Iceland; will they not cover your SUV when driven on a gravel road, or especially an F road?

Some people have called their credit card companies and been told that they will cover Iceland, though you may need a note from the rental car company saying that the coverage is included.

You can decline CDW coverage from the rental company, but …

Your Visa or Mastercard insurance WILL most likely cover you if you decline the CDW provided by the rental car company. Several commenters online have said they were able to do this with Sixt (not a recommendation!) But when I imagine myself in this situation, it’s just not something I want to do. Imagine it yourself: You decline CDW coverage, which the rental car company was willing to give you FOR FREE. Then, something happens to your car, and it causes $15,000 worth of damage. You probably won’t have to pay the money up front, but just submit a claim to the credit card insurance. But you’ll worry the entire flight home, and maybe for many weeks after that, if you credit card will reimburse you or not.

Instead, you could have paid the maximum out of pocket with CDW, which is around $1,000 for a 4WD car from my recommended company, Blue Car Rental. (We’ve partnered with Blue to get you a 5% discount on your rental!) Then you can hope that the rest is covered by your excess insurance company (see below). The excess insurance costs about $4 a day. So for under $30 for a week’s rental, you avoid the $15,000 out-of-pocket hassle.

One more strike against the credit card insurance: Some cards offer secondary coverage, which will only kick in after your personal auto insurance gets involved. I’d rather not have my insurance company involved.

Super CDW (SCDW) in Iceland is better, but still could cost you.

SCDW

Some of these are becoming more tolerable. If you damage your 2-wheel-drive rental from Geysir, you’re only out $250. But you’re paying about $10 a day for the privilege of paying $250 at the end. Blue’s limits don’t look very good here, but they provide you this coverage for free, and these limits are lower than any of the free CDW coverage listed above.

Note that Saga offers two more expensive levels: Grand CDW ($16 a day, adds windshield and gravel protection, limits liability to $200 / $250) and Premium CDW ($38 a day, $0 liability, adds Sand and Ash protection). So at least at $38 a day, you have no worries.

Gravel insurance may be a nice add-on

Gravel insurance protects you against damage on the front of your car caused by gravel (usually kicked up by other cars.) All of the companies here charge about $5 a day for it. Blue includes it for free, which is nice, and Saga only sells it as part of the Grand CDW or Premium CDW packages. For a few extra dollars, this seems like a good option. But if you opt for third-party insurance (see below) this may be redundant.

Sand and Ash insurance is probably not necessary

Besides a total loss of the car, sand and ash damage seems like the most expensive damage you can do to a car. In effect, the car is “sandblasted” by the small particles, which are driven into the car by high winds. Costs can be $5,000 or more, and are NOT covered by CDW or SCDW.

But here’s the important part about sand and ash: It is predictable. If you check the weather conditions and avoid high winds and storms, you should never have a problem with sand and ash. I guess you need to avoid erupting volcanoes too.

Many third party rental insurance policies also will not work in Iceland.

One option is to purchase insurance from the third-party company. But many of these still will not work. For example, Insure My Rental Car has language similar to the credit card companies, though only for some states. The travel policy document may say, “… the Covered Person must have rejected at the time of the rental any waiver of liability for Loss Damage available from the rental agency.”

TravelGuard from AIG looks like it could work. As far as I can tell, the policy does not mention anything about need to decline other coverage. But. the Travelguard coverage is not obviously much better than the SCDW coverage from most of the rental car companies– there is still a $250 deductible. And, TravelGuard never responded to my e-mailed questions, so I cannot recommend them.

The answer for Iceland: Excess car rental insurance from a few select companies.

Until June of 2017, my recommendation was to buy excess insurance from Worldwide Insure. They are incredibly responsive, they understand Iceland, and I’ve heard nothing but positive feedback about them. (See Richard’s experience with Worldwide Insure in this comment below. Be sure to take pictures of your damage!)

Sadly, Worldwide Insure no longer offers coverage in Iceland. For other countries, I highly recommend it.

Otherwise, for citizens and permanent residents of the United States, my new recommendation is Roamright. The have been reasonably responsive via e-mail and Facebook, and their policy doesn’t require you to decline other coverage. The cost is $7.99 per day; choose “Car Rental Insurance” (the last option) from the drop down box under “Coverage for”.

Allianz could also work for people in the United States, but they haven’t responded to my e-mails.

Recommendations for car rental insurance in Iceland

If the maximum out of pocket is reasonable for your car company (say under $500 or so) you may consider just paying for SCDW and gravel insurance, for about $15 a day.  If the liability limit is closer to $1,000 or more, you should consider Roamright to insure the out of pocket amount. You can also just decide to self-insure up to the CDW limit, especially since paying for SCDW and Roamright can cost $20 a day or more.

The big downside of insurance from Roamright or another excess insurance company is that you have to pay the full price for any damage, and then wait to get reimbursed. It won’t be much fun to have to put $1,000 on your credit card (or possibly more for sand and ash) and then hope to get a check in the mail. Besides that, the excess insurance seems like a good option.

Many people still opt to go with their credit card insurance by declining the CDW. If you do this, which I don’t recommend, make sure you understand your credit card insurance policy clearly. Is it primary or secondary coverage? Does it cover the type of car you are renting? (Many exclude cars over a certain value.) How do you prove you declined the CDW?

And no matter which way you go, if you do ave any damage, make sure to take pictures of it!

How was your rental car insurance experience in Iceland? Do you have any experience with these third-party companies, good or bad? Let me know! And if you haven’t booked your rental car yet, take a look at our recommendation for Blue Car Rental.


I don't like subscribing to e-mail lists. Usually I just end up with a bunch of clutter in my inbox.

So I'm trying to change that. Here's what you'll get in exchange for your e-mail address:

  • AT LEAST 50 subscribers will receive a totally free review copy of our book, Iceland With Kids, when it is released later in 2016.
  • ALL other subscribers will receive an exclusive discount coupon to purchase the book.
  • You will receive occasional, curated content about Iceland- news stories you may not have seen.
  • We will not sell your address, or send out spam advertising e-mails.
We'll work hard to make this a valuable use of your valuable e-mail address. Thanks!

                        

Rental Car Insurance in Iceland was last modified: December 6th, 2017 by Eric