Having the right insurance is important whenever you rent a car, but rental car insurance in Iceland deserves some extra attention.
Iceland has driving conditions that many travelers may not encounter at home, including gravel roads, strong winds, loose sand and volcanic ash. That means you may see protection options such as Sand and Ash Protection (SAAP) and Windshield Protection (WSP) when renting a car in Iceland.
So, what car rental insurance do you need in Iceland?
In this guide, we explain the main types of Iceland rental car insurance, what is already included when you rent with Firefly Iceland, what additional protection you can choose and what isn’t covered.
Quick Guide to Rental Car Insurance in Iceland
When renting a car with Firefly Iceland, Collision Damage Waiver (CDW) is included in the online rental rate.
You can also choose additional protection depending on how much financial liability you are comfortable with and where you plan to drive.
Firefly’s main protection options include:
- CDW – Collision Damage Waiver: Included in the online rate and reduces your financial liability for covered damage to the rental vehicle.
- SCDW – Super Collision Damage Waiver: Further reduces the non-waivable excess associated with CDW.
- TP – Theft Protection: Reduces your financial liability in the event of theft or attempted theft.
- WSP – Windshield Protection: Covers gravel-related damage to the front windscreen and headlights with zero self-risk.
- SAAP – Sand and Ash Protection: Reduces your financial liability for damage caused by blowing sand, ash and other earth materials.
- MAX / Zero Excess Coverage: Firefly’s most comprehensive protection package, providing zero self-excess for damage covered by the protections included in the package.
You can find the latest details, prices and excess amounts on Firefly Iceland’s protection information page.
Collision Damage Waiver (CDW) in Iceland
Collision Damage Waiver, or CDW, is one of the most important terms to understand when researching car rental insurance in Iceland.
With Firefly Iceland, CDW is already included in the online rental rate.
CDW reduces your financial liability for covered damage to the Firefly rental vehicle, its parts and accessories, provided the vehicle is being used according to the rental agreement.
However, CDW doesn’t necessarily mean you pay nothing if the vehicle is damaged. A non-waivable excess, sometimes called self-risk or a deductible, applies. The amount depends on the vehicle category.
This is where additional protection such as SCDW can become useful.
What is Super Collision Damage Waiver (SCDW)?
Super Collision Damage Waiver (SCDW) can be purchased in addition to CDW.
Its main purpose is to reduce the non-waivable excess associated with CDW. In other words, if covered damage occurs, your financial liability under the CDW is lower when you have SCDW.
Keep in mind that SCDW reduces the excess relating to CDW. It doesn’t automatically reduce the excess associated with every other type of protection.
Travelers who would prefer broader protection can also consider Firefly’s MAX / Zero Excess coverage package.
What is Third Party Liability Insurance in Iceland?
Third Party Liability protection and accident protection for the owner and driver are provided according to the amounts stipulated by Icelandic law at any given time.
Do You Need Sand and Ash Protection (SAAP) in Iceland?
Sand and Ash Protection (SAAP) is a type of rental car protection that travelers may be less familiar with before visiting Iceland.
Iceland has volcanic landscapes, sandy areas and strong winds. In certain conditions, loose sand, ash and other earth materials can be blown against a vehicle and damage its paint, windows or headlights.
This risk is particularly relevant in exposed parts of the country, including areas of South Iceland.
Firefly’s Sand and Ash Protection reduces your financial liability for damage caused by ash, sand or other earth materials being blown against the vehicle.
Without SAAP, this type of damage isn’t covered by Firefly’s other protection options, and the renter can be liable for the full cost of the damage.
Because significant sand and ash damage can involve windows, headlights and vehicle paintwork, SAAP is worth considering when planning an Iceland road trip.
What is Gravel Protection in Iceland?
Gravel Protection (GP) is particularly relevant when renting a car in Iceland because gravel and loose stones are common on roads throughout the country. Although the Ring Road (Route 1) and most major routes are paved, you may still encounter gravel roads when visiting rural areas, accommodation, viewpoints and attractions away from the main road. Loose gravel can also collect along the edges of paved roads. Driving carefully and reducing your speed on gravel can help lower the risk of damage, but other vehicles can also throw stones towards your rental car when passing or overtaking. Gravel can cause chips and damage to parts of the vehicle, including the bodywork, windscreen and headlights. For this reason, gravel protection in Iceland is worth considering even if most of your road trip will be on paved roads. Gravel Damage (GP) is included in Firefly Iceland’s MAX / Zero Excess coverage package. Firefly also offers Windshield Protection (WSP), which specifically covers gravel-related damage to the front windscreen and headlights.
Windshield Protection (WSP)
Firefly offers Windshield Protection (WSP), which eliminates the renter’s financial liability for damage caused by gravel to the front windscreen and headlights.
However, WSP doesn’t cover damage caused by sand or ash storms. That is what SAAP is designed for.
If you choose Firefly’s MAX / Zero Excess package, Gravel Damage (GP) and windshield protection are included in the package.
What is Theft Protection (TP)?
Iceland is generally considered a safe destination, but vehicle theft, attempted theft and vandalism can still happen.
Theft Protection (TP) reduces your financial liability for the loss or theft of the Firefly rental vehicle, its parts and accessories, provided the vehicle is used according to the rental agreement.
Without TP, you will be responsible for the cost of repairing or replacing the Firefly vehicle following theft, attempted theft or vandalism, up to the full value of the vehicle.
Regardless of your protection package, always lock your rental car when leaving it unattended and don’t leave valuable belongings visible inside.
What Is Firefly’s MAX / Zero Excess Coverage?
Travelers looking for more comprehensive Iceland rental car coverage can choose Firefly Iceland’s MAX / Zero Excess coverage package.
The package includes Firefly’s available protection items and provides zero self-excess for damage covered by the protections included in the package.
The package includes:
- Collision Damage Waiver (CDW)
- Super Collision Damage Waiver (SCDW)
- Third Party Liability / PAI
- Theft Protection (TP)
- Windshield Protection (WSP)
- Side-window, glass and headlight protection
- Gravel Protection (GP)
- Sand and Ash Protection (SAAP)
- Tyre and wheel protection
This can be a useful option for travelers who prefer to reduce their financial exposure to many of the common types of rental car damage encountered in Iceland.
However, zero excess doesn’t mean every possible type of damage is covered.
What Isn’t Covered by Firefly’s Zero Excess Protection?
Some types of damage aren’t covered, even when you purchase Firefly’s MAX / Zero Excess package.
These include:
Underbody damage: Damage to the underside of the rental vehicle isn’t covered.
River and water crossings: Damage caused by driving through rivers or water isn’t covered.
Off-road driving: Off-road driving is illegal in Iceland and isn’t covered.
Towing and roadside assistance costs are also not included in Firefly’s car insurance and protection packages.
Always read the current rental terms and protection conditions before starting your trip so you know exactly what your chosen coverage includes and excludes.
Does Credit Card Rental Car Insurance Cover You in Iceland?
Some credit cards include rental vehicle coverage, but you shouldn’t assume that your card provides the same protection as the coverage offered by your Icelandic rental company.
Coverage, exclusions, excess amounts, eligible vehicle types and claim procedures can vary considerably between card providers.
If you’re considering relying on your credit card’s rental car insurance in Iceland, Firefly recommends carefully checking your card provider’s terms and conditions before declining optional protection.
In particular, check whether your credit card covers risks that are more specific to driving in Iceland, such as sand and ash damage, gravel damage, tires and windscreen damage.
Rental Car Insurance and F-Roads in Iceland
Insurance doesn’t give you permission to drive a vehicle somewhere it isn’t allowed to go.
Iceland’s F-roads are mountain roads in the Highlands, and you need a suitable 4×4 vehicle to drive on them.
Not every Firefly rental vehicle is permitted on F-roads. If you plan to visit the Highlands, make sure the vehicle category you book is specifically approved for F-road use and always follow the conditions of your rental agreement.
F-roads are generally only accessible during the summer after they have officially opened. Opening dates vary depending on weather, snow and road conditions.
Even with an F-road-approved 4×4, remember that damage caused by river or water crossings isn’t covered.
You should also never drive off marked roads. Off-road driving is illegal in Iceland and can cause serious damage to Iceland’s fragile environment.
Before setting out, check current road conditions and weather forecasts
How to Choose Rental Car Insurance for Your Iceland Trip
There’s no single protection option that’s right for every traveler.
Before choosing additional rental car insurance in Iceland, think about your itinerary, the type of vehicle you’re renting, the time of year and how much financial risk you’re comfortable accepting.
For example, a traveler staying mainly around Reykjavík may have different requirements from someone driving around the Ring Road or exploring rural parts of Iceland.
Consider:
- Where you plan to drive
- Whether you’ll encounter gravel roads
- Weather and wind conditions
- Your vehicle category
- The excess you’re comfortable paying
- Whether you already have rental car coverage through a credit card or another provider
Most importantly, understand both what is covered and what isn’t covered before you leave the rental station.
FAQ: Rental Car Insurance in Iceland
- Is car rental insurance included when I rent with Firefly Iceland?
Yes. Collision Damage Waiver (CDW) is included in Firefly Iceland’s online rental rate. Additional protections such as SCDW, Theft Protection, Windshield Protection and Sand and Ash Protection can be added separately.
- What rental car insurance do I need in Iceland?
The right coverage depends on your itinerary and your preferred level of financial protection. CDW is included in Firefly Iceland’s online rental rate, while additional options can provide protection against risks such as sand and ash, gravel-related windscreen damage and theft.
- What is SAAP insurance in Iceland?
SAAP stands for Sand and Ash Protection. It reduces your financial liability for damage caused by sand, volcanic ash and other earth materials being blown against the rental vehicle.
- Is sand and ash protection worth considering in Iceland?
Sand and ash damage is a particular risk in Iceland because strong winds can blow loose material against vehicles. Whether you choose SAAP is your decision, but travelers should understand that sand and ash damage isn’t covered by Firefly’s other individual protection options if SAAP hasn’t been accepted.
- Do I need gravel protection when driving the Ring Road?
Much of Iceland’s Ring Road is paved, but you can still encounter gravel on side roads, access roads and rural routes. Loose gravel can also be thrown up by other vehicles, so it’s worth considering gravel and windshield protection even if most of your itinerary uses paved roads
- Does CDW cover everything in Iceland?
No. CDW reduces your financial liability for covered damage to the rental vehicle, but exclusions and a non-waivable excess apply. It shouldn’t be treated as complete protection against every possible type of damage.
- What does zero excess mean?
Zero excess means you have no self-excess for damage covered by the protections included in Firefly’s MAX package. It doesn’t mean every type of damage or incident is covered.
- Does zero excess cover river crossings?
No. Damage caused by river or water crossings isn’t covered, including under Firefly’s MAX / Zero Excess package.
- Does rental car insurance cover off-road driving in Iceland?
No. Off-road driving is illegal in Iceland and isn’t covered by Firefly’s protection packages.
- Can I use my credit card rental car insurance in Iceland?
Potentially, but coverage varies between credit card providers. Check your card’s exact terms, exclusions, eligible vehicles, excess and claim requirements before relying on credit card coverage.
- Does rental car insurance cover towing in Iceland?
No. Towing and roadside assistance costs aren’t included in Firefly’s insurance and protection packages. The renter is responsible for these costs.
Conclusion: Choosing Car Rental Insurance in Iceland
Understanding rental car insurance in Iceland before your road trip can help you choose the level of protection that suits your plans and budget.
With Firefly Iceland, CDW is already included in the online rental rate, and you can add protection such as SCDW, Theft Protection, Windshield Protection and Sand and Ash Protection. Travelers who want broader coverage can also choose Firefly’s MAX / Zero Excess package.
Whichever option you choose, read the current protection terms carefully and remember that some situations—including underbody damage, river crossings and illegal off-road driving—aren’t covered.
Once you’ve decided on the protection that works for your trip, you’re ready to find a cheap rental car in Iceland and start planning your road trip with Firefly Iceland.
