There is an article in The Times of London today about some students who went on a holiday to Iceland and rented from Geysir Car Rental. They took out special "gravel protection insurance" which they thought was good as they got caught in some strong winds which kicked up gravel and dust causing damage to their 4x4. Geysir Car Rental held them responsible for the full price of repairing the car, despite having taken out the extra insurance.
Geysir Car Rental said that the insurance only protected against gravel damage caused by other cars, not gravel in the wind. It also said that the car was damaged from being sand-blasted - a problem against which Geysir does not provide insurance, although other car-hire companies including Sixt, Avis and Iceland Car Rental all offer "sand and ask damage" protection as standard.
The article said that the travelling party of five were all students or recent graduates and when they returned the car they were told to pay €4500 on the spot or face arrest. They just managed to scrape together the money after handing over all their cards and clearing out their bank accounts. One of the group had just received her student loan, and had it all taken. They even emptied their pockets of change to that they could not even afford a bottle of water in the airport on the way home.
Despite many attempts to resolve the matter, Geysir Car Rental still have their money, and the party had their holiday spoiled.
I know one car rental company I will not be using if I ever visit Iceland.