We offer a wide range of Iceland car rental insurance products for people who want to be on the safe side.

We want all our customers to be able to travel around Iceland hassle-free. It is why we have some great insurance packages to offer. Insurance can be hard to understand, and we want to simplify it. Below you can see our insurances, what is included and what is not so that nothing will be a surprise.

If you have insurance through a third party and want to decline our insurance, it is no problem. We ask you to contact us by email at info@drive2.is and our customer service team will be happy to help. We are also delighted to give our local advice regarding insurance if needed.

We know that accidents can never be predicted, so it is essential to have the correct coverage to avoid unforeseen costs.

All our car rental vehicles come with Third Party Liability, Collision Damage Waiver (CDW), and Theft Protection(TP). CDW covers the bodywork of the car. In case of collision, the body of the vehicle usually gets damaged. The self-risk (excess) for CDW is 350.000 ISK. That means that in case of dents and scratches to the car, the maximum amount to pay is 350.000 ISK. If it is under the excess, we will only charge for the amount that will cost to repair the vehicle.

Some damages are not covered by CDW (included) or SCDW

• Damage caused by animals
• Driving while intoxicated
• Damages to the chassis of the vehicle and undercarriage of the vehicle
• Damages to tires/wheels
• Water damages to the vehicle
• Damages to the door structure (frame, hinges, etc.) caused by wind gusts

We recommend taking some extra coverage to reduce your liability and travel around Iceland without worry. It needs to be taken into consideration that Iceland is unique for the weather conditions and gravel roads that can cause damage to your rental vehicle.
If you have insurance through third-party insurances, such as your credit card, you will first pay Drive2 car rental for any damage. Then you will get reimbursed through your insurance company. We will help you with all documents needed for this reimbursement.
We believe our customers should take additional insurance to reduce the risk and travel around Iceland without worry.

At every stage of your journey — from booking to the return of your vehicle — our goal is to provide clear, straightforward information about our insurance policies. We understand that insurance terms can often be confusing, so we strive to make them simple and easy to understand. Our aim is to ensure you know exactly what is covered and what is not, so you can rent with confidence and avoid any unexpected surprises.

If you have insurance coverage through your credit card and wish to decline our insurance, please contact us via email. Our team will be happy to assist you.

Included Insurance Coverage

When you book a car through our website, four essential insurance policies are included in the price. Each insurance policy comes with a liability (excess), which is the maximum amount you would be required to pay in the event of damage. Here’s a breakdown of the included coverage:

1. Collision Damage Waiver & Super Collision Damage Waiver (CDW/SCDW) (Included)

CDW and SCDW protect against damage to the vehicle’s bodywork — one of the most common areas affected in a collision. The amount of liability (excess) depends on the type of vehicle:

• 2WD vehicles: Liability of ISK 290,000 (approx. €2.000)
• 4WD vehicles and vans: Liability of ISK 325,000 (approx. €2.200)

Example:
If you return a 2WD car with a dent on the passenger door that wasn’t present at pick-up, we will inspect the damage and inform you. The maximum amount you would be charged is ISK 290,000 (approx. €2.000). If the actual repair cost is lower than this amount, you will be refunded the difference.

2. Gravel Protection (GP) (Included)

Gravel roads are common in Iceland, and small stones can chip the car’s paintwork or cause damage to windscreens, mirrors, and headlights. Gravel Protection (GP) ensures you are covered for these types of damage.

Here’s what’s covered under GP:

• Chipped paint on the vehicle’s front bumper (this is considered normal wear and tear and is not charged)
• Damage to the windscreen, headlights, and mirrors: Liability is limited to ISK 60,000 (approx. €410)

This coverage is essential for driving in Iceland, especially if you plan to explore areas with gravel roads.

3. Theft Protection (TP) (Included)

While vehicle theft is extremely rare in Iceland, your rental car is still protected under Theft Protection (TP). This policy ensures you are covered if the car is stolen.

Key Features of TP:

• No liability (excess): You won’t be required to pay any amount if the car is stolen.
• What’s not covered: Theft of personal belongings from inside the vehicle is not covered. Please store valuables securely.

4. Liability (Excess) Explained

For damages covered by CDW/SCDW, GP, and TP, your maximum out-of-pocket cost is the specified liability amount. If the cost of repairs is less than the liability amount, you’ll only be charged for the actual repair cost.

If you want to reduce your liability even further (or eliminate it entirely), we offer optional insurance upgrades like the Premium Zero Liability Waiver. This ensures that your liability is reduced to zero, even for damages that aren’t typically included in standard insurance coverage.

Damages Not Covered by Any Insurance

While our insurance options provide extensive coverage, certain types of damages are not covered under any policyunless you have opted for specific upgrades (like the Liability Waiver or Roadside Assistance Waiver).

These exclusions include:

• Negligence or reckless driving: Damage caused while driving under the influence of alcohol or drugs.
• Tire damage: Includes punctures, blowouts, and any repair or replacement costs unless you have opted for the Roadside Assistance Waiver.
• Damage to the underside of the vehicle (unless you have purchased the Liability Waiver).
• Damage caused by water or off-road driving: Includes driving into water, rivers, or off-road areas unless you have the Liability Waiver.
• Mechanical damage caused by misuse: Damage caused to the clutch or mechanical components as a result of improper driving.
• Fuel-related issues: Damage caused by filling the vehicle with the wrong fuel type or inserting fuel, water, oil, or other substances into the wrong tank.
• Interior damage: Damage to the vehicle’s interior caused by negligence or misuse.
• Sand and ash storm damage: Unless you have opted for Sand and Ash Protection (SAAP) or the Liability Waiver, you are responsible for damage caused by these natural elements.

If you would like to ensure that many of these exclusions are covered, we recommend purchasing the Liability Waiverand/or the Roadside Assistance Waiver.

Additional Charges Not Covered by Insurance

Certain costs and charges are not included in any insurance policy. If you want to avoid being responsible for some of these charges, we recommend opting for the Roadside Assistance Waiver.

Here are the charges that are not covered by any insurance:

• Breakdown-related costs: Includes towing, service fees, and emergency assistance resulting from driver misuse, such as getting stuck in snow, sand, water, or rivers.
• Fuel-related costs: Costs for draining and cleaning the fuel tank if the wrong fuel, water, oil, or other fluids are added to the wrong tank.
• Lost or damaged accessories: Charges for losing or damaging items like the car key, GPS unit, or other rental accessories.
• Fines, penalties, and handling fees: Includes fees for speeding, parking violations, tunnel fees, and other entry-related charges.
• General towing fees: Costs incurred for towing services when the renter’s misuse or mistakes result in the vehicle getting stuck (in snow, sand, water, etc.).

If you choose the Roadside Assistance Waiver, you’ll be covered for many of the assistance-related charges listed above. However, this waiver does not cover fines, penalties, or fees related to speeding, parking, or other legal violations.