Car Insurances and Taxes
Liability and accident insurance are mandatory for all vehicles from an insurance company. Liability insurance covers all damages and loss that others suffer by a car.
Accident insurance pays compensation to the driver of a vehicle if they are injured and to the owner of the vehicle if they are a passenger in their own vehicle.
Mandatory insurances
There are mandatory insurances that have to be in place for all vehicles, purchased from an insurance company. Liability insurance is one and that covers all damages and loss that others suffer by a car.
Accident insurance is also mandatory and pays compensation to the driver of a vehicle if they are injured, and to the owner of the vehicle if they are a passenger in their own vehicle.
Other insurances
You are free to purchase other types of insurance, such as windscreen insurance and collision damage waiver insurance. Collision damage waiver insurance covers damage to your own vehicle even if you are at fault (conditions apply).
Insurance companies
Insurance can be paid in monthly instalments or annually.
You can purchase car insurances from these companies:
Vehicle taxes
All car owners in Iceland must pay a tax on their car, known as “vehicle tax”. Vehicle tax is paid twice a year and is collected by the Iceland Revenue and Customs. If vehicle tax is not paid on time, the police and inspection authorities are authorised to remove number plates from the vehicle.
Information on vehicle tax and calculator on the Iceland Revenue and Customs website.
Information on the duty free import of vehicles on the Iceland Revenue and Customs website.