Appeals court sends 14.7 million króna compensation case back for review

Iceland’s Court of Appeal has annulled a Reykjavík District Court ruling ordering Vörður insurance to pay a man more than 14.7 million krónur in compensation after a traffic accident, mbl.is reports. The case has been sent back to the district court because it did not address the man’s main claim or his first alternative claim.

The Court of Appeal did not rule on which annual income figure should be used to calculate the compensation. That is the central point of dispute between the man and Vörður.

The man was injured on 5 January 2019 when a car he was travelling in collided with another vehicle that had crossed against a red light at the junction of Sæbraut and Kringlumýrarbraut in Reykjavík. Vörður accepted liability for the accident. An assessment put his permanent disability at 12 per cent and his permanent impairment at 12 points.

He was studying at university and working part time when the accident happened. When Vörður settled compensation in 2020, it calculated compensation for permanent disability using his actual earnings in the three years before the accident. He accepted the payment subject to a reservation, arguing that his student-era part-time earnings did not reflect his likely future income and that his annual earnings should be assessed separately under an exception in the compensation law.

In a ruling dated 12 June 2025, Reykjavík District Court found that his part-time earnings were not a reliable measure of his likely future income, since there was no indication he would not later work full time. The court used average earnings for people in general sales and retail jobs, accepting his final alternative claim. It ordered Vörður to pay 14,728,578 krónur plus interest, after deducting an earlier payment of 9,754,512 krónur, and 2,678,400 krónur in legal costs.

Both parties appealed. The man sought more than 18 million krónur plus interest, less the earlier payment. Vörður asked to be acquitted or, alternatively, for the man’s claims to be substantially reduced. The Court of Appeal said the district court had not addressed the man’s main claim or first alternative claim, or the arguments supporting them, and sent the case back for a new hearing and judgment.