Maximizing Your Iceland Car Rental: What to Look for in a Rental Agreement

Maximizing Your Iceland Car Rental: What to Look for in a Rental Agreement

Emily Draper
(Updated: )
9 min read

While a self-drive trip around Iceland is by far the best way to explore the country, it doesn't come without responsibility. When renting a car, you must sign a rental agreement to accept the terms and conditions of gaining temporary possession. Often, though, we find contracts are so tedious that we tend to skip over the details and sign them without a second glance.

However, it is in your interest to make sure these terms and conditions are favorable to you so that you can maximize your Iceland car rental.

In this article, we show you some of the most important details to look for in a car rental agreement before you sign it that will give you the protection and peace of mind to fully enjoy your self-drive Iceland trip.

Image of the tail light of a vehicle, car rentals in Iceland.
Rental cars
## What is a vehicle rental agreement?

Car rentals in Iceland do the same as everybody else, you sign and then you drive.

A rental agreement is a contract that outlines the terms and conditions of renting a vehicle from a car rental company or broker, which allows them to give you legal responsibility for the car during an agreed time period. This includes responsibility for damage or loss of the vehicle and any insurance you might have added to cover it. You must read through and sign the rental agreement before you can receive the keys to your new rental car.

Image of a person signing a car rental agreement
Signing a car rental agreement.
While some Ts&Cs are the same in each rental agreement, others are unique to your rental vehicle. This makes it really important to ensure all the Ts&Cs of the rental agreement are correct to the best of your knowledge and, most importantly, that you do in fact agree with them.
## Here's what you can expect the rental agreement to cover:
  • Vehicle information: details of the hire car including make, model, and registration
  • Driver's information: driver's name, address, and driving license number
  • Time frame: the period of rental and arrangements for its return
  • Usage agreement: mileage limits and fuel policy (regarding refilling the tank before returning)
  • Total price: breakdown of the price including fees, extra charges, deposits
  • Terms of payment: including the final price and agreed payment method
  • Damage review: details of the vehicle's existing damage (in list and picture form)
  • Insurance: list of insurance cover and liability waiver details
  • Customer information: breakdown and emergency details (including contact numbers)

Why does the vehicle rental agreement matter?

Above and beyond its legalities, the rental agreement provides the car rental broker assurance that the vehicle they're renting out will be cared for and safely returned. More importantly, however, it is designed to give you as the vehicles borrower satisfaction and peace of mind regarding the terms of the brokers service.

Taking temporary responsibility is a serious decision and it should be done with a full understanding of it. It is, therefore, good to know what makes a good rental agreement before signing it to maximize your Iceland car rental experience.

Bad rental agreements

Unfortunately, there are dishonest car rental brokers and companies out there that don't have the customers best interest at heart and include unfair conditions in their rental agreements. This might include vague details about previous damage on the car or an incorrect mileage reading. The aim of this is to charge you extra for the vehicle's use by claiming damages to the car or breaches in the contract.

However, if you find this happens to you, don't assume the worst because more often than not, these details may have been accidentally missed or recorded incorrectly.

However, both of these scenarios are unlikely to happen because most car rental companies are very diligent. Even so, it is always in your best interest to check the details they have provided on the rental agreement regarding the vehicle's condition before it is signed over to you.

Damage review

A ?damage review' lists the marks and scratches on a vehicle prior to it being signed over to its new renter with descriptions and images in the rental agreement. This is to state that the lender is aware of the damage and agrees the new borrower will not be held responsible for it upon their return.

Image of a red scratched vehicle
Vehicle with a scratch.
Therefore, it's in the borrower's interest to ensure there are not any marks on the car they're renting that aren't listed in the rental agreement. If some of the marks have been missed, you could end up taking responsibility for them when returning the vehicle later, so make sure they are added to the rental agreement before signing it.


Your Rental Agreement and Insurance

Once your rental vehicle has been signed over to you for the agreed time period, you're financially responsible for any damage it incurs in your possession. Therefore, it is extremely important to review the insurance included in your vehicle rental agreement because this will show you under which circumstances your rental vehicle is covered.

There are two aspects of rental car insurance: the first is regarding the extent of the damage and liability and the second is regarding the conditions under which the vehicle was damaged. To confidently sign your rental agreement, you should know what types of insurance are available to cover your vehicle rental needs.


The basic insurance cover: Collision Damage Waiver insurance

In Iceland, every vehicle rental must include CWD insurance, a comprehensive collision damage waiver. This means that your insurance provider will cover repair costs (usually up to $3,500) for damage incurred in an accident. At Northbound, this insurance is included in the price of your vehicle rental.

Comprehensive insurance cover: Super Collision Damage Waiver insurance

This upgraded insurance option covers the rental vehicle in the same way as the CWD, but it limits the excess in damages to around $1,500. By taking out an SCDW insurance policy rather than the standard CDW policy, you're providing your bank account with greater protection from pay-out in case of any collision damage.

Insurance that Northbound offers: RentalCover

When you book rental cars on Northbound you have the option to add protection that's up to 50% cheaper than equivalent coverage at the rental desk (according to an analysis from our protection partner ?

Depending on your type of vehicle, typically covers the following, some of which are often not covered by rental companies if you buy their excess waivers at the rental desk:

  • Damage caused by ash, ice, wind, hail, sand and gravel
  • Theft, bodywork damage, doors, windows, mirrors, wheels, tires and roadside repair costs
  • Roof and underbody damage to the vehicle
  • Key loss, replacement or lock out which is often not covered by rental companies
  • Accident-related fees that rental companies may charge including administration/processing fees, loss of use fees, towing, relocation and more.

? The team compared their costs of coverage with the average cost of excess waivers around the world.

Gravel Insurance Cover

While most roads in Iceland are neatly tarmacked, smaller roads leading to more local, remote, and off-the-beaten-track areas of the country are laid with gravel. Since gravel is prone to being kicked up and hitting vehicles as they drive over it, it's not uncommon for it to cause dents and scratches on the paintwork.

Image of a vehicle driving on a gravel road
Gravel can cause damage.
To avoid liability for these dents and scratches as a vehicle renter, it's always strongly recommended to take out gravel insurance cover for it whilst driving in Iceland. Gravel insurance also benefits from including cover for windscreen, headlight, and window damage, which collision damage waivers do not.


Sand and Ash Protection (SAAP)

As the ?Land of Fire and Ice', Iceland can experience sand and ash storms. Not only does the lack of visibility during these storms cause dangerous situations, but the effect they can have on vehicles does too. Sand and ash can get sucked up into various systems within a vehicle that cause it to malfunction or fail and require repairs.

These kinds of storms are infrequent and so SAAP is rarely required. Besides, it's better to simply not drive during a storm anyway. However, it's a useful add-on for those planning to take 4x4s onto Iceland's F-roads (mountain passes).

Mileage Policy

The mileage policy differs from one car rental company or broker to another and one vehicle to another, which makes it a particularly important point to check on your vehicle rental agreement. Some agreements have an ?unlimited mileage' policy that allows vehicle renters to drive as far as they like during their trip, provided they return the vehicle on time.

Image of a speedometer in a car
Mileage policy.
Other rental agreements have limited mileage policies which means the renter is agreeing to not exceed the contract's stated distance during their trip. If it is exceeded, the renter will be charged extra. At Northbound, the mileage policy differs from vehicle to vehicle, but it will be stated clearly upon booking.

Fuel Policy

The fuel policy is the agreed conditions upon which you return the rental vehicle's fuel levels. More often than not, rental companies will provide a ?full/full' policy, which means you're vehicle's fuel tank will be full when you pick it up and you are responsible for returning it with a full tank too. If this fuel policy is applied to your rental agreement, remember to double-check check your vehicle's tank is full before you drive away.

Alternatively, the fuel policy might state that it doesn't require the renter to refill the tank before the vehicle is returned. While this policy saves you from having to fill the fuel tank before returning, it doesn't save money as fuel costs would have been calculated into the price instead.

Get in touch

If you have any further questions about Northbound's rental agreements, insurance options, mileage policies and more, get in touch with us here. We strive to ensure our customers are well informed and happy with their rental agreements before signing them.