Accident insurance

According to VR’s and SA’s collective wage agreement from 2022 employers are obliged to insure the wage earners covered by this Agreement against death, permanent medical disability, and/or temporary disability resulting from an accident at work or on a normal route from their homes to the workplace, and from the workplace to their homes as well to and from the workplace during refreshment breaks. If an employee stays outside of his home because of his work, the venue where he stays replaces the home, and in such instance, the insurance also covers normal travel between the home and the venue of stay.

Scope of accident insurance

The insurance applies during travel within Iceland and abroad if undertaken on behalf of the employer.

The insurance applies to accidents occurring during sports activities, competitions and games, provided that such events are organised by the employer or the staff association and the employee is expected to participate in such events as a part of the employee’s work. In this respect, it does not matter whether or not the accident occurs during normal working hours. Exempted are accidents that occur in boxing, any form of wrestling, driving sports, hang-gliding, paragliding, bungee-jumping, mountain climbing that requires special equipment, rock climbing, scuba diving, and sky diving.

The insurance does not pay compensation for accidents resulting from the use of motorised vehicles subject to registration in Iceland and which are covered by legally prescribed vehicle insurance, irrespective of whether covered by third-party insurance or by the driver’s and owner’s accident insurance under the Traffic Act.

The insurance shall take effect with respect to the employee when he begins working for the employer (is added to the payroll roster) and expire when employment is terminated.

Price indexing and indexation of compensation

Insurance amounts are based on the consumer price index for inflation adjustment effective from 1 November 2022 (555.6 points) and are adjusted on the first day of each month in proportion to the adjustment of the price index.

Compensation amounts are calculated on the basis of the insurance amounts on the date of the accident but are adjusted, however, on the basis of the consumer price index as follows:

Compensation amounts change in direct proportion to changes in the price index from the date of the accident to the date of settlement.

Death benefits

In the event that an accident causes the death of the insured within three years from the date of the accident, the beneficiaries shall be paid death benefits, less already paid-out benefits for permanent medical disability resulting from the same accident.

Death benefits as of 1 November 2022:

    1. To the surviving spouse, the benefits shall amount to ISK 9,830,148. The term spouse refers to an individual who was married to the deceased, in registered partnership or common-law marriage.
    2. To each minor that the deceased had custody of or paid child-support for in accordance with the Children’s Act No. 76/2003, the benefits shall be equivalent to the total amount of child support in accordance with the Social Security Act as current, to which the child would have been entitled due to the death until the age of 18. The benefits are paid in a lump sum. On the calculation of benefits, account shall be taken of child support on the date of death. Compensation to each child however, shall never be a less than ISK 3,932,059. Benefits to children shall be paid to the party who has custody of them after the death of the insured. To each adolescent aged between 18 and 22 who has the same domicile as the deceased and who were demonstrably supported by the deceased, the benefits shall amount to ISK 983,016 If the deceased has been the sole provider of a child or young person, the benefits increase by 100%.
    3. If the deceased demonstrably supported a parent or parents aged 67 or more, the surviving parent, or parents jointly, shall receive benefits amounting to ISK 983,016.
    4. If the deceased had no spouse pursuant to Article 1 above, then death benefits amounting to ISK 983,016 shall be paid to the estate of the deceased.

Compensation for permanent disability

Compensation for permanent disability shall be paid in proportion to the medical consequences of the accident. Permanent disability shall be evaluated according to injury indices issued by the Disability Committee. The evaluation shall be based on the health of the injured party as it is when it has stabilised.

The base amount of disability compensation is ISK 22,412,740. Compensation for permanent disability shall be calculated in such a manner that for each disability degree from 1 to 25, ISK 224,128 is paid, and the payment for each degree of disability from 26 to 50, ISK 448,255 is paid, for each degree of disability from 50 to 100, ISK 896,510. Compensation for 100% disability, therefore, is ISK, 61,635,033.

Disability compensation, moreover, shall take account of the age of the injured party, so that compensation decreases by 2% for each year past the age of 50. After the age of 70, the compensation shall decrease by 5% of the base amount for each year. However, the age-linking of disability pension shall never lead to greater curtailment than 90%.

Compensation for temporary disability

In the event that an accident causes temporary disability, the insurance shall pay a per diem sum in proportion to the loss of working capacity, starting four weeks after the accident occurred and lasting until the employee is fit for work or until a disability assessment has been made, but it shall not be made for more than 37 weeks.

Per diem payments for temporary disability are ISK 49,151 a week. If the employee is able to work to some extent, the per diem payments shall be paid proportionately.

Per diem payments are made by the insurance to the employer during such time as the employee is paid a wage in accordance with collective wage agreements or an employment contract and subsequently made to the employee.

Employers’ insurance

All employers are under obligation to purchase an insurance from an insurance company holding an operating permit in Iceland that meets the above conditions of collective agreements as regards accident insurance.
In respects other than provided for in this section of the Agreement, the terms of the insurance company in question and the applicable provisions as are contained in the Act on Insurance Contracts No. 30/2004.

Effective term of compensation amounts

The above provisions on accident insurance and new compensation amounts apply to accidents that occur after 1 November 2022.