Insurance in its simplest form is meant to protect you from unexpected financial losses. Insurance can be mandatory, which means that the owner of a property or vehicle is obliged to insure the asset or insure it against any damage it may cause. Examples of mandatory insurance are property fire insurance and vehicle insurance. On the other hand, there are numerous optional insurances available designed to protect you and your close ones against a variety of damages, e.g. home and family insurance, health insurance and life insurance.
The terms of an insurance policy stipulate, among other things, what the insurance covers and what it does not cover. The terms of an insurance policy can be complicated, so it is important to familiarise yourself with them before buying the insurance. It is a good idea to get the person who is selling the insurance to carefully explain the terms to you and, if you do not think the terms are clear enough, to ask for more detailed information.
It is a good rule to review all insurances regularly, e.g. once a year. You need to check whether you are properly insured or whether you are doubly-insured for any damage in which case the insurance needs to be reviewed, especially if the circumstances change, e.g. family size, housing or income.
Liability insurance
- If you are liable for damage suffered by an injured party (third party), your liability insurance protects the injured party's right to receive compensation.
- Liability insurance also covers costs you may incur if a claim is made against you.
- The number of liability insurances is increasing because, among other things, it is increasingly common for professional indemnity insurance to be a condition for the issuance of a work permit for various self-employed professionals.
- Construction managers, lawyers and real estate agents are examples of professions where professional liability insurance is mandatory.
- However, professional indemnity insurance for architects and engineering and technical experts, for example, is optional.
- General liability insurance covers other types of liability than vehicles, aircraft, ships and boats.
- Carefully study the information document on the liability insurance.
- Carefully review the terms of the liability insurance.
- Find out how broad the coverage of the insurance is.
- Check specifically what the insurance does not cover.
- Do not hesitate to request detailed information from your insurance company.
- The Central Bank of Iceland grants licences to insurance companies and supervises them to ensure their activities comply with applicable laws and regulations.
- The Central Bank of Iceland supervises financial undertakings to ensure they operate in accordance with rules no. 353/2022 on conduct of business practices, communications with customers and the handling of complaints.
- The Central Bank of Iceland refers people to information on its website about consumer remedies but also guides consumers in other respects about the options available to them to assert their rights. Procedures of the Financial Supervision Authority of the Central Bank of Iceland regarding queries and notifications can be accessed here.
- The Central Bank of Iceland receives comments from consumers if the practices of insurance companies are not in accordance with laws and regulations. You can submit a comment or query here.
- The Central Bank of Iceland does not have the power to rule on individual disputes nor does it determine the rights or obligations of parties under private law or resolve disputes over the merits of cases.
Non-life insurance
- Non-life insurance means insurance, i.e. protection or compensation, against damage or destruction of property, rights or other interests, liability for damages and other insurance that is not personal insurance.
- Non-life insurance includes accident and health insurance, vehicle and cargo insurance, marine and cargo insurance, flight and cargo insurance and property insurance.
- All parties selling non-life insurance are obliged to provide information about the insurance they are offering for sale in a special standard information document on non-life insurance.
Personal insurance
- Personal insurance is tied to the life and health of a specific person, i.e. life, accident and health insurance.
- All parties selling personal insurance are obliged to provide information about the insurance they are offering for sale in a special standard information document on personal insurance.
Life insurance
- Life insurance provides some financial protection for the close ones of those who have taken out such an insurance. For example, if there are people who depend on you and rely on your income for support.
- If you have a life insurance policy and die due to an accident or illness, your family or a person you have chosen as the beneficiary of the policy will receive benefits.
- Spouses receive death benefits in cases where individuals are married.
- It is possible to specify a beneficiary other than the spouse.
- In cases where individuals are not married, it is possible to designate a cohabiting partner as the beneficiary of the life insurance.
- Life insurance benefits are paid to legal heirs or to the person specified in the insurance policy, the insured person decides on who is the beneficiary of the life insurance.
- Life insurance benefits are paid out in a lump sum according to the agreed amount of the insurance. No tax is paid on life insurance benefits and the compensation amount is indexed over the term of the contract.
- It is a good idea to base the amount of the insurance on income, debts and the status and size of the family.
- It is important to review the compensation sum of your life insurance if circumstances change, e.g. if the family grows or shrinks, your salary drops or your debts increase.
- Generally speaking, persons aged between 18-64 can apply for life insurance, although the upper age limit varies between insurance companies.
- In general, life insurance is valid until the age of 75, the validity period of the insurance is specified in the insurance policy.
- Ensure that the life insurance contract is in writing.
- The Central Bank of Iceland grants licences to insurance companies and supervises them to ensure their activities comply with applicable laws and regulations.
- The Central Bank of Iceland supervises to ensure that financial undertakings operate in accordance with rules no. 353/2022 on conduct of business practices, communications with customers and the handling of complaints.
- The Central Bank of Iceland refers people to information on its website about consumer remedies but also guides consumers in other respects about the options available to them to assert their rights. Procedures of the Financial Supervision Authority of the Central Bank of Iceland regarding queries and notifications can be accessed here.
- The Central Bank of Iceland receives comments from consumers if the practices of insurance companies are not in accordance with laws and regulations. You can submit a comment or query here.
- The Central Bank of Iceland does not have the power to rule on individual disputes nor does it determine the rights or obligations of parties under private law or resolve disputes over the merits of cases.
Insurance-based investment products
- Insurance-based investment products are products that contain both insurance components and investments designed to accumulate savings.
- Assessing the value and risk of insurance-based investment products can be difficult, since their value depends on the value of the underlying assets and market conditions. The value of these investment products can therefore fluctuate widely.
- Savings and life insurance savings are examples of insurance-based investment products.
- All entities that provide advice on or sell insurance-based investment products to retail investors are required to make a key information document about the product.
- A key information document is intended to provide retail investors with sufficient detailed information to enable them to make informed investment decisions.
- The key information document on insurance-based investment product should be made available before a contract is signed.
- The key information document should enable you to understand and compare the key features and risks of the policy with other insurance-based investment products.
- Carefully read the terms of both the life insurance and investment sections of the policy before signing it.
- Before entering into a contract, carefully examine the different aggregation options, risk levels, potential benefits, costs and fees, notice periods and the recommended minimum period for you to own the product.
- Carefully research the costs and fees paid for unit-linked insurance.
- Ensure that the contract is in writing.
- The Central Bank of Iceland grants licences to insurance companies and supervises them to ensure their activities comply with applicable laws and regulations.
- The Central Bank of Iceland supervises to ensure that financial undertakings operate in accordance with rules no. 353/2022 on conduct of business practices, communications with customers and the handling of complaints.
- The Central Bank of Iceland refers people to information on its website about consumer remedies but also guides consumers in other respects about the options available to them to assert their rights. Procedures of the Financial Supervision Authority of the Central Bank of Iceland regarding queries and notifications can be accessed here.
- The Central Bank of Iceland accepts notifications from consumers if the practices of insurance companies are not in accordance with laws and regulations. You can submit a comment or query here.
- The Central Bank of Iceland does not have the power to rule on individual disputes nor does it determine the rights or obligations of parties under private law or resolve disputes over the merits of cases.
Health insurance
- Health insurance pays you compensation if you are diagnosed with a disease that is covered by the insurance and is listed in the information document and its terms and conditions.
- Carefully study the terms of the insurance before signing the agreement, i.a. to make sure the insurance is suitable. In most cases, the insurance is only valid for the diseases specified in its terms.
- The policyholder determines the amount of the health insurance when taking it out. Health insurance benefits are generally paid out in one lump sum and no tax is paid on them.
- It is good to base the amount of the health insurance on income, debts, family income and size.
- The Central Bank of Iceland grants licences to insurance companies and supervises them to ensure their activities comply with applicable laws and regulations.
- The Central Bank of Iceland supervises to ensure that financial undertakings operate in accordance with rules no. 353/2022 on conduct of business practices, communications with customers and the handling of complaints.
- The Central Bank of Iceland refers people to information on its website about consumer remedies but also guides consumers in other respects about the options available to them to assert their rights. Procedures of the Financial Supervision Authority of the Central Bank of Iceland regarding queries and notifications can be accessed here.
- The Central Bank of Iceland accepts notifications from consumers if the practices of insurance companies are not in accordance with laws and regulations. You can submit a comment or query here.
- The Central Bank of Iceland does not have the power to rule on individual disputes nor does it determine the rights or obligations of parties under private law or resolve disputes over the merits of cases.
Home and family insurance
- Home and family insurance is intended to protect individuals and families from damage to contents or accidents to people.
- A wide variety of home and family insurance policies are available that include different types of insurance coverage. It is important to choose an insurance policy that suits everyone.
- Home and family insurance commonly includes contents insurance, full contents insurance, liability insurance, holiday accident insurance, credit card insurance, legal aid insurance and travel insurance.
- Carefully study the terms of the insurance before signing the contract.
- Find out which losses the insurance covers and which losses it does not cover.
- The Central Bank of Iceland grants licences to insurance companies and supervises them to ensure their activities comply with applicable laws and regulations.
- The Central Bank of Iceland supervises to ensure that financial undertakings operate in accordance with rules no. 353/2022 on conduct of business practices, communications with customers and the handling of complaints.
- The Central Bank of Iceland refers people to information on its website about consumer remedies but also guides consumers in other respects about the options available to them to assert their rights. Procedures of the Financial Supervision Authority of the Central Bank of Iceland regarding queries and notifications can be accessed here.
- The Central Bank of Iceland accepts notifications from consumers if the practices of insurance companies are not in accordance with laws and regulations. You can submit a comment or query here.
- The Central Bank of Iceland does not have the power to rule on individual disputes nor does it determine the rights or obligations of parties under private law or resolve disputes over the merits of cases.