Insurances & taxes
It is compulsory to purchase liability and accident insurance 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 he´s injured and to the owner of the vehicle if he´s a passenger in his own vehicle.
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.
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 customs directorates.
If vehicle tax is not paid on time, the police and inspection authorities are authorised to remove number plates from the vehicle concerned.
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.