Iceland Rental Car Insurance: Gravel, Sand, Ash, F-Roads

For road closures, wind warnings and when the highland F-roads open, see Iceland weather and road closures. This guide covers what the contract pays for when something goes wrong.

What does basic rental car insurance cover in Iceland?

Icelandic rental rates include third-party liability and accident insurance for the driver, because the Motor Vehicle Insurance Act makes both compulsory for every registered vehicle: liability cover under article 8 and a separate accident cover for the driver under article 9. Neither pays for damage to the rental car itself. Everything else is a waiver: a promise by the rental company to cap what it charges you for damage to its car. Each waiver has its own excess and its own exclusions, and each excess applies per incident.

Two companies' current price lists show the range. Figures were checked in September 2026.

Sources: Hertz Iceland protection price list and Blue Car Rental insurance page. Other companies structure their packages differently, so use this table to know which questions to ask, not as a market price.

Gravel, sand and ash: three different risks

Gravel means stones thrown up by passing cars. It cracks windscreens and headlights and chips paint. Hertz's windscreen protection covers gravel damage to the front window and headlights, and states that it does not cover sand or ash storms.

Sand and ash means earth material driven by wind across the whole car, stripping paint and pitting glass. Hertz's terms exclude "sand, gravel, ash, pumice or other kinds of earth materials being blown against" the car from CDW altogether, so only SAAP reduces that liability. Blue Car Rental puts typical sand and ash repair bills at 500,000 to 1,500,000 kr.

Loose rocks under the car fall into a third category. Hertz excludes damage to the transmission, oil pan, engine or chassis from rough roads, from grader-built road shoulders and from rocks lodged in gravel roads, and it applies that exclusion whatever cover you buy.

What isn't covered even with zero-excess insurance in Iceland?

At Hertz Iceland, the price list states that the underbody, damage from river or water crossings, and off-road driving are "NOT covered at any time". The same exclusion list covers damage caused by animals, water damage, intoxicated driving, and damage to passenger cars on F-roads or on the Kjölur (35), Kaldidalur (550) and Landmannalaugar (208) roads.

Blue Car Rental draws the line differently. Its insurance page presents underside damage, wind-blown doors and water damage as extras that only the top tier adds, and its Liability Waiver lists undercarriage damage, "water damage (including river crossing)" and "wind-blown door damage" as covered, at 0 kr excess. Off-road driving, negligence and intoxicated driving remain excluded.

Safetravel, run by the Icelandic search and rescue association, warns that "no insurance covers any damage of a vehicle while crossing a river". The Blue product shows that some rental companies now sell an exception. Whichever contract you sign governs; read its river clause before you reach the first ford.

Which rental cars can you drive on Iceland's F-roads?

F-roads are the highland mountain tracks marked with an F on maps. Hertz Iceland's contract allows them only in 4WD vehicles the company agrees are suitable, and it bars 2WD cars, plug-in hybrids, electric cars and luxury vehicles unless stated otherwise. A breach of that article lets Hertz charge a flat fee listed in the contract as 150,000, on top of any damage you owe.

Safetravel adds that "4x4" is not one category: some F-roads suit a Dacia Duster, others need a Toyota Land Cruiser or larger, and some need a modified vehicle. It also notes that F-roads usually close from mid-September until June or July, and that outside that window they are impassable for anything but a modified vehicle with an experienced driver.

Off-road driving is a separate matter of law, not only of contract. Article 31 of the Nature Conservation Act bans driving motor vehicles off roads, with narrow exceptions such as frozen ground or firm snow. Under article 90, a breach is punishable by fines or up to two years in prison, and where it causes serious damage to nature the minimum fine is 350,000 kr, indexed to consumer prices, or up to four years in prison. Safetravel puts the line simply: F-roads and gravel roads are not off-road driving, but leaving them is. Licensed rental companies are required by article 7 of the Vehicle Rental Act to tell foreign renters about Icelandic traffic rules, road signs and the off-road ban, so expect the rule to be repeated at the desk and in the contract.

Choose your protection by route

Worked example: seven days in a 4WD

A seven-day Hertz 4WD rental with CDW only leaves an excess of 399,000 kr per incident, and sand, windscreen and underbody damage are not reduced at all. The MAX package, at 5,950 kr a day, costs 41,650 kr for the week and brings the excess to 0 kr for collision, windscreen, gravel, SAAP and tyres. It still leaves river crossings, the underbody and off-road damage to you.

At Blue Car Rental, a medium SUV with the Liability Waiver costs 5,800 kr a day, or 40,600 kr for the week, and adds river and underside cover to the list. Compare the two only after confirming that each company allows your chosen vehicle on the F-roads you plan to drive.

At the pickup desk

For speed limits, fines and how penalty notices reach renters, read Iceland speed cameras and fines. If you are collecting the car at the airport, see Keflavik Airport to Reykjavik.