Car Insurance in Iceland
Car insurance in Iceland is a legal requirement but also a crucial safeguard for drivers. This guide explains everything you need to know about car insurance in Iceland, covering the different types of coverage, costs, and considerations.
Legal Requirements for Car Insurance in Iceland
Third-party liability insurance (ábyrgðartrygging) is mandatory for all registered vehicles in Iceland. This insurance is required by law to ensure that all drivers can cover the costs associated with accidents involving other people or their property. Specifically, third-party liability insurance covers:
- Personal injury to others: This includes medical expenses and compensation for injuries caused to passengers, pedestrians, or other drivers involved in an accident.
- Property damage to third parties: Any damage caused by your vehicle to other vehicles, buildings, or other types of property is covered.
- Legal costs related to covered accidents: This includes expenses for legal representation and any court costs if there is a dispute following an accident.
Types of Car Insurance in Iceland
Mandatory Coverage (Lögboðin trygging)
In Iceland, Mandatory Coverage (Lögboðin trygging) is a legal requirement for all registered vehicles. This compulsory insurance consists of two main components:
- Third-Party Liability Insurance (Ábyrgðartrygging)
- This insurance protects against damages your vehicle may cause to others, including personal injuries to other individuals and damage to others’ property, such as vehicles, buildings, or other assets. It does however not cover damages to your own vehicle or personal injuries you, as the driver, may sustain. This insurance is a legal requirement for owning a car in Iceland. Driving without will result in fines and other legal consequences.
- Driver and Owner Accident Insurance (Slysatrygging ökumanns og eiganda)
- This insurance provides compensation for personal injuries sustained by the driver of the vehicle during its operation or the owner of the vehicle if they are a passenger at the time of the accident. It does however not cover injuries resulting from gross negligence or intentional acts by the driver.
It’s important to note that while these mandatory insurances cover third-party damages and certain personal injuries, they do not extend to damages to your own vehicle. For protection against damages to your vehicle, additional optional coverages, such as Comprehensive Insurance (Kaskótrygging), are available.
Optional Coverage
- Comprehensive Insurance (Kaskótrygging)
- Covers damage to your own vehicle, protection against theft, weather-related damage, vandalism and other aspects.
- Glass Coverage (Bílrúðutrygging)
- Specifically covers windshield and window damage
In summary, car insurance in Iceland consists of both mandatory and optional types of coverage. The mandatory coverage includes Third-Party Liability Insurance and Driver and Owner Accident Insurance, both required by law to cover damages to other people and certain personal injuries. Optional coverage, such as Comprehensive Insurance and Glass Coverage, offers additional protection for your own vehicle, including theft, weather-related damage, and vandalism.
Cost Factors
Car insurance premiums in Iceland are influenced by several factors, including:
- Vehicle type and age
- Driver’s age and experience
- Claim history
- Vehicle usage (personal/commercial)
- Geographic location within Iceland
Examples of Insurance Costs
The cost of car insurance in Iceland can vary significantly based on the coverage and the above factors. For example:
- Third-Party Liability Insurance
- For a standard passenger vehicle, premiums can range from ISK 120,000 to ISK 160,000 per year, depending on the driver’s age and experience.
- Comprehensive Insurance
- Comprehensive coverage can add between ISK 50,000 and ISK 100,000 annually, depending on the value of the vehicle and additional coverages chosen.
- Glass Coverage
- Glass coverage typically adds an extra ISK 10,000 to ISK 20,000 per year to your premium.
In summary, you can expect to pay between ISK 120,000 to 260,000 per year for car insurance in Iceland. Usually, the insurance companies offer to distribute this payment to a monthly payment plan. These estimates are intended to provide a general idea, but actual costs will depend on individual circumstances and the insurance provider. It’s good practice to ask for quotes from many insurance companies before deciding on which one suits you best.
Major Car Insurance Providers in Iceland
These are the companies that offer car insurance in Iceland:
To sum up, car insurance in Iceland includes mandatory coverage, such as third-party liability and driver accident insurance, required by law to protect others from damages you may cause. Optional coverages, like comprehensive insurance and glass coverage, provide extra protection for your vehicle against theft, weather-related damage, and accidents. You can expect to pay between ISK 120,000 and 260,000 annually, depending on your chosen coverage and other factors. It’s a good idea to request new quotes from different insurance companies each year to ensure you’re getting the best deal.
