Iceland (IS)
Iceland is a North Atlantic volcanic island nation of extraordinary natural beauty — home to geysers, glaciers, lava fields, midnight sun, the Northern Lights, and some of the world's most active volcanoes.
Insurance Guide
Which insurances you actually need in Iceland, prioritised.
Iceland's insurance market is smaller than Scandinavian neighbours but offers comprehensive coverage through a handful of major providers. The three largest are Vörður, TM (Tryggingamiðstöðin), and Sjóvá-Almennar. The public healthcare system (SÍ) provides health coverage with co-payments, so private health insurance supplements rather than replaces it. Mandatory insurance includes third-party motor liability. The key coverage gaps that affect most residents are: dental care (not covered by public system), contents insurance (required by most rental contracts), and supplementary income protection for illness beyond employer sick pay.
Legally Mandatory
- - Motor third-party liability insurance (ökutækjatrygging) — mandatory for all registered vehicles in Iceland
- - Employer liability — employers must provide work accident insurance (slysatrygging) for employees
Home Contents Insurance
Covers your personal belongings against theft, fire, water damage, and other perils. Usually also includes personal liability (skaðabótatrygging) covering accidental damage you cause to others' property or persons.
Who needs it: All renters and homeowners. Most rental contracts in Iceland require contents insurance as a condition of tenancy.
Annual cost: ISK 30,000–70,000/year depending on property size and coverage level
Bundle with personal liability — usually included in standard home contents packages. Keep a documented inventory of valuable items (photos/serial numbers) for claims.
Comprehensive Motor Insurance
Covers damage to your own vehicle in addition to mandatory third-party liability. Includes collision damage, theft, fire, glass breakage, and weather damage. Especially important in Iceland given the risk of sandstorms, ash falls, and rough road conditions.
Who needs it: All vehicle owners. Third-party only (lögboðin trygging) is the minimum requirement but comprehensive is strongly recommended for Iceland driving conditions.
Annual cost: ISK 80,000–200,000+/year depending on vehicle value, driver age, and coverage
IMPORTANT: Standard vehicle insurance in Iceland typically does NOT cover damage caused by driving on F-roads (highland roads) if you are in a 2WD vehicle. Volcanic ash and sand damage (sandfok) may require specific endorsement. Check your policy terms carefully before any highland or off-road driving.
House Building Insurance
Covers the physical structure of a property against fire, storm, water damage, and other perils. Essential for property owners.
Who needs it: All homeowners (not renters — the landlord's responsibility).
Annual cost: ISK 60,000–180,000+/year depending on property value and location
Volcanic and earthquake risk: Iceland has specific endorsements for natural catastrophe (náttúruhamfaratrygging) coverage. The Iceland Catastrophe Insurance (Viðlagatrygging Íslands) provides state-backed coverage for natural disasters. Check how your building insurance coordinates with the state catastrophe fund.
Travel Insurance
Covers medical emergencies abroad, trip cancellation, lost luggage, and emergency assistance when travelling outside Iceland.
Who needs it: All residents who travel abroad. The Icelandic EHIC card covers basic EU/EEA emergency care but not repatriation, trip cancellation, or non-emergency treatment.
Annual cost: ISK 15,000–40,000/year for annual multi-trip policy
Annual travel insurance is good value for frequent travellers. Single-trip policies available for occasional travel. Check if your employer's collective agreement includes travel insurance benefits.
Supplementary Dental Insurance
Subsidises adult dental care costs (check-ups, fillings, crowns, root canals) which are not covered by the Icelandic public healthcare system.
Who needs it: All adults — dental care in Iceland is very expensive without insurance (check-up ISK 12,000–20,000; complex treatment ISK 50,000–300,000+).
Annual cost: ISK 20,000–50,000/year depending on coverage level
Check whether your trade union (stéttarfélag) provides dental benefits as part of membership — some unions in Iceland offer partial dental coverage as a member benefit. Employer group insurance plans sometimes include dental.
Income Protection / Disability Insurance
Pays out a monthly benefit if you become unable to work due to illness or disability, supplementing the state disability benefits from Tryggingastofnun (TR). Life insurance (líftrygging) component pays a lump sum on death.
Who needs it: Employed and self-employed persons — especially self-employed who do not have employer sick pay protection. Also relevant for anyone with dependants.
Annual cost: ISK 50,000–150,000+/year depending on benefit level and age
Check your pension fund (lífeyrissjóður) policy — many Icelandic pension funds include a disability benefit (örorkubætur) as part of membership. This may already provide some income protection. Supplement if the pension fund coverage is insufficient.
Pet Insurance
Covers veterinary costs for dogs and cats — illness, accidents, and sometimes preventive care.
Who needs it: Pet owners — veterinary costs in Iceland are high. A standard consultation: ISK 10,000–25,000; emergency treatment: ISK 50,000–200,000+.
Annual cost: ISK 25,000–60,000/year per pet
Veterinary services in Iceland are expensive due to the isolated island economy and limited veterinary infrastructure outside Reykjavik. Insurance particularly recommended for dogs as emergency treatment and surgery costs can be very high.
Comparison sites
Bundle insurance products with one provider — discounts of 10–20% are typically available when holding multiple policies with the same company.
Check your trade union (stéttarfélag) and pension fund membership — many include insurance benefits as part of membership that you may not be aware of.
Building insurance in Iceland may include Iceland Catastrophe Insurance (Viðlagatrygging Íslands) — the state fund that covers natural disasters including volcanic eruptions, earthquakes, and avalanches. Verify this is included.
Vehicle insurance: check whether F-road driving, sandstorm damage (sandfok), and river crossing damage are covered — these are specific Iceland risks not always included in standard policies.
New residents: arrange contents insurance before or immediately upon moving into your rental property — many rental contracts require proof of insurance before handing over keys.
Insurance
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