Zero-excess car rental in Iceland refers to an insurance upgrade, usually called a Liability Waiver, that brings your deductible down to 0 ISK, so you aren't billed for the first slice of any covered damage.
Short answer
Yes, zero-excess car rental is available in Iceland, including at Blue Car Rental, where it's called the Liability Waiver. It covers gravel chips, wind-blown doors, sand and ash abrasion, tyre damage, and water damage from legal river crossings, all at a 0 ISK deductible. It doesn't cover damage from illegal river crossings, off-road driving, or reckless use, nothing does. Whether it's worth adding depends on your route, season, and how much deductible risk you're comfortable carrying.
Why rental insurance in Iceland works differently
Iceland's driving conditions expose a rental car to risks that rarely come up elsewhere: loose gravel thrown up on unpaved roads, sudden crosswinds strong enough to catch a car door, and fine volcanic sand that can pit paint and glass along the South Coast. Standard collision cover in most countries doesn't anticipate any of this.
That's why Icelandic rental companies, Blue Car Rental included, structure insurance around local realities rather than a generic international template. The base package already accounts for gravel and theft; the optional upgrades exist specifically for wind, sand, ash, and deductible exposure. Understanding this structure before you book means fewer surprises at the counter.
What's included in every Blue Car Rental booking
Every Blue rental starts with a baseline that already covers more than a bare-minimum policy:
- CDW (Collision Damage Waiver) and SCDW (Super CDW), collision cover with a reduced deductible compared to CDW alone.
- Gravel Protection (GP), covers windscreen, headlight, and paint damage from loose stones on gravel roads.
- Theft Protection (TP), standard on every rental.
- Third-Party Liability, required by Icelandic law for all vehicles on the road.
With CDW and SCDW in place, the deductible on a covered claim is typically 90,000 ISK for smaller cars and 120,000 ISK for SUVs and vans. If you were to rely on CDW alone, without SCDW, that deductible rises sharply to 350,000 ISK. These figures are from Blue's insurance page (last checked September 2026) and should be confirmed at booking, since terms can be updated; see car rental pricing, deposits, and insurance for the full breakdown.
Tyre damage and water/undercarriage damage are not part of this baseline. Both are covered only under the Liability Waiver, described below.
What zero-excess cover (the Liability Waiver) adds
The Liability Waiver is Blue's zero-excess bundle. Adding it brings your deductible to 0 ISK and layers in cover the baseline package doesn't include:
- Sand and Ash Protection (SAAP), automatically included
- Wind-blown door damage
- Tyre damage
- Water damage to the undercarriage, including damage from legal, marked river crossings, not illegal crossings or off-road driving, which no protection plan covers
The daily rates on Blue's Liability Waiver page (last checked September 2026) are:
| Vehicle size | Liability Waiver (zero-excess) |
|---|---|
| Small cars | 4,700 ISK/day |
| Medium cars | 5,800 ISK/day |
| Large cars | 6,300 ISK/day |
Prices are indicative and can change with season and vehicle class, so check the current rate at booking or during online check-in. Insurance selections need to be finalised before pickup, you can't add or swap cover once you've collected the car.
Do you need Sand and Ash Protection on its own?
If you'd rather not take the full zero-excess bundle, Sand and Ash Protection (SAAP) on its own is a reasonable middle ground. It covers the specific abrasive damage caused by wind-driven sand and volcanic dust, a real risk near black-sand areas like Reynisfjara and Skaftafell on the South Coast, where strong gusts can carry fine grit that scratches paint and pits glass within minutes.
SAAP alone costs 1,850 ISK/day per Blue's insurance page (last checked September 2026), with a 90,000 ISK deductible still applying to anything SAAP doesn't cover. It's worth adding if:
- You're driving any stretch of the South Coast
- You're travelling in spring or autumn, when dry ground and strong winds combine
- Your route crosses open volcanic terrain, even briefly
If your itinerary is limited to short, paved routes, a day around the Golden Circle, for instance, the baseline SCDW and Gravel Protection cover is often enough, with SAAP as an optional add if the forecast shows wind or dust warnings.
A credit card imprint, not a deposit
At pickup, Blue Car Rental takes a credit card imprint as security, not a deposit. No funds are actually held or blocked on your card; the imprint simply secures the rental against your insurance choices and the rental terms. This is a separate question from your deductible, but the two are often confused: your chosen insurance level (baseline, SAAP, or Liability Waiver) determines what you'd owe if something happens, while the imprint is just a security mechanism at the desk. For more detail, see car rental deposit in Iceland: what are my options?
Coverage options at a glance
| Option | Deductible | Covers | Typical cost (Sept 2026) |
|---|---|---|---|
| Baseline (CDW+SCDW+GP+TP) | 90,000–120,000 ISK | Collision, gravel, theft, liability | Included in rental |
| SAAP add-on | 90,000 ISK | Sand & ash abrasion only | ~1,850 ISK/day |
| Liability Waiver (zero-excess) | 0 ISK | Baseline + SAAP + wind-blown doors + tyres + legal river-crossing water damage | 4,700–6,300 ISK/day by vehicle size |
Check current terms and prices on the insurance page before booking, since rates and inclusions can be updated.
Which option fits your trip
- Ring Road or long multi-region trip: the Liability Waiver simplifies things across changing terrain and weather, one deductible figure (zero) for the whole loop.
- South Coast day trips or a windy shoulder season visit: SAAP alone is a reasonable minimum; upgrade to the Liability Waiver if you'd rather not think about a 90,000 ISK exposure at all.
- Highlands routes on F-roads: these require a 4x4 by law and bring isolated, rough terrain. Pair the Liability Waiver with the Roadside Assistance Waiver so a call-out for towing or a stuck vehicle doesn't add cost on top of the drive itself. See F-roads in Iceland: a rental car guide to the highlands before planning that kind of route.
- Short Golden Circle loop in summer: baseline SCDW and Gravel Protection is typically sufficient on these paved, low-risk roads.
- Winter driving anywhere in Iceland: ice and wind both raise risk, so the Liability Waiver is worth the daily cost for most travellers; pair it with the guidance in driving in Iceland in winter.
If you're travelling with Blue+ loyalty status, discounts apply on top of your rental, Bronze gives 5% instantly, Silver (250+ points) 10%, and Gold (400+ points) 15%. Details are on the loyalty page.
What no insurance covers
No policy, zero-excess or otherwise, covers everything. It's worth knowing the limits before you drive:
- Negligent or reckless driving
- Off-road driving or unapproved routes, and illegal river crossings, these fall outside every protection plan, including the Liability Waiver
- Driving under the influence
- Wrong fuel use or other mechanical misuse
If you're ever unsure whether a river crossing or a stretch of road is passable, the safest choice is to turn around rather than attempt it. Check umferdin.is and safetravel.is before setting out, and consider that some river crossings are better left to an experienced local operator rather than a self-drive rental.
Mistakes to avoid when buying rental insurance in Iceland
- Skipping SAAP on a South Coast trip to save a small daily fee. Sand and ash damage is one of the more common claim types on this route, and the cost of an add-on is modest next to a paint or glass repair.
- Ignoring daily road and weather checks. Even zero-excess cover doesn't remove the need to check conditions each morning, insurance handles cost, not the decision to drive in poor conditions.
Final word
The real question behind "zero excess car rental Iceland" is usually "will I be exposed to a large, unexpected bill if something happens to the car?" With the baseline package, the answer is a bounded one, a fixed deductible rather than open-ended liability. With the Liability Waiver, that number drops to zero, and it also picks up wind, sand, ash, and tyre risks the baseline doesn't touch. Neither option extends to reckless driving or illegal off-road use, and no rental company can insure around a river crossing attempted against official advice. Choosing between the two comes down to your route and season: short paved loops rarely need it, while the Ring Road, the South Coast, the highlands, or a winter trip usually justify the extra layer.
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